Trump Tariffs Actually Incentivize US Companies to Buy More from China

On March 8, 2018, President Trump issued a proclamation slapping a 10% tax on steel and aluminum imports. Businesses around the country cried foul, claiming that prices of many items will go up from soda cans to washing machines.

However, the new taxes only apply to aluminum and steel “raw material”. This means large bars or sheets of metal that are imported into the US by metal suppliers and sold to factories around the country. If the metal is cut, bent, drilled, etc. in an overseas factory before entering the US, then it is often not subject to this new 10% tax because it is no longer “raw material”. Here’s a 2011 ruling from US Customs and Border Protection that dictates why this is legal.

The new Trump tariffs mean US companies can avoid the 10% tax by employing Chinese factories to cut, bend, drill or otherwise process the raw aluminum and steel before it enters the US, instead of having American workers do it at home.

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