Since March 8th, President Trump has threatened to impose a 10% aluminum and a 25% steel tariff on enemies and allies alike. Mr. Trump reasons that foreign firms have damaged the United States’s steel and aluminum industries, so rebalancing is necessary to save domestic firms. Unfortunately, while the reasoning is sound, this ignores that these industries employee less than 1% of the United States workforce. This proposed protectionist policy also goes against the Republican’s creed of promoting free trade, earning President Trump condemnation by Republicans and Democrats alike.
In fact, Trump’s protectionist pursuit lead to the resignation of Gary Cohn, the White House chief financial advisor that oversaw the Republican’s tax effort and a staunch opponent of the President’s plan. Cohn’s departure makes tariffs look increasingly likely as there are fewer people to reign in the President’s protectionist tendencies.
Despite these measures aimed at shoring up Trump’s supporters in the steel and aluminum industries, Stansberry Research has examined Mr. Trump’s proposed tariffs and has come to the conclusion that more Americans will be damaged in the ensuing conflict than would benefit from the proposed duties.
Stansberry Research believes that such a move would bring retaliation from the European Union and China, raising the costs of goods for ordinary Americans. Furthermore, without foreign investors such as China buying US debt from the Federal Reserve, the National Debt will spiral out of control. Thus Stansberry concludes that while it is unclear that a trade war will break out, if one were to do so it could be destructive to all those involved (http://stansberryresearch.com/products/stansberry-alpha/).
Stansberry Research is a private publishing firm dedicated to investment research. Founded initially as Stansberry & Associates Investment Research, Stansberry Research is headquartered in Baltimore, Maryland, and publishes a bi-monthly newsletter that keeps their clients informed about industry topics ranging from natural resources to Biotechnology.