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From: soetoro@excite.com

His idiotic supporters celebrate paying higher prices!


Tariffs are nothing more than a tax on consumers. President Trump's steel
and aluminum tariffs will add up to $600 to the cost of a new car - and
could force thousands to lose their jobs in the beer business.

The financial impact of Trump's tariffs on steel and aluminum
Nick Carey
6 MIN READ
DETROIT (Reuters) - If U.S. President Donald Trump goes ahead with
sweeping tariffs on steel and aluminum imports, it could lower profits for companies making everything from pickup trucks to canned soup, or result
in higher prices for consumers.

Trump has threatened a 25 percent tariff on steel imports and 10 percent
on aluminum, without exemptions for any countries.

Analysts caution that the Trump administration’s plan lacks details, but
say tariffs would hurt manufacturers.

“Domestic producers of steel would make more money, while domestic
consumers of steel would make less money,” said Steve DuBuc, a director at consulting firm AlixPartners’ automotive and industrial practice, noting
that U.S. steel makers will “have increased pricing power” as steel
imports become more expensive.

And because most aluminum is imported, costs would rise.

Polaris Industries Inc (PII.N), a manufacturer of snowmobiles, off-road vehicles and motorcycles, spends more than $300 million annually on steel
and aluminum. Chief Executive Officer Scott Wine said tariffs would raise
its costs around 1 percent, which is “quite manageable.”

But he said Polaris would then have to “mitigate the inevitable price
increases from our domestic steel suppliers.”

U.S. automakers stand to be among the most impacted. The sector accounted
for 26 percent of U.S. steel demand in 2017, behind the construction
industry’s 40 percent, according to data provider Statista.



Even before Trump’s announcement, Ford Motor Co (F.N) was struggling with higher commodity costs.

In January the No. 2 U.S. automaker said higher steel and aluminum costs
would hurt 2018 profits, and it blamed a poor fourth-quarter profit in
part on higher commodity costs.

Appearing on CNBC on Friday, U.S. Commerce Secretary Wilbur Ross said
tariffs would have a “trivial effect.” He said the one ton of steel used
per vehicle, at $700 per ton (0.907 metric tonnes), would have little
impact on vehicle costs.

LOWER SALES OR LOWER PROFIT?

But the picture of steel costs for automakers is more complicated.

Steel is around $700 per ton because prices have already risen $100 per
ton this year largely in anticipation of tariffs.


According to research and consulting firm Ducker Worldwide-FSG, the
average U.S. vehicle weighs in at 3,835 pounds (1.9 tons) and is 11
percent aluminum (422 pounds) and 54 percent steel (2,071 pounds, around a ton).

But producing parts leads to scrap wastage, so Ducker estimates automakers
need 526 pounds of aluminum and 2,925 pounds of steel to make the average vehicle.

Automakers also use more expensive high-strength aluminum and steel
alloys.

Jeff Schuster, head of forecasting at consultancy LMC Automotive, said automakers, already struggling with declining sales, would have to choose between lower margins or lower sales.

“I don’t think there would be much appetite to absorb the added cost, nor
do I think the consumer is interested in doing so either,” he said. He
says it would create “a stalemate and likely lead to a sales decline.”

In a client note, Buckingham Research Group analyst Joseph Amaturo wrote
that tariffs could add $300 per vehicle, and cited Ford and rival General Motors Co (GM.N) being at risk for a bite to their profits.

TRACTORS TO SOUP

For heavy equipment manufacturers Caterpillar Inc (CAT.N) and Deere & Co (DE.N), steel is the biggest contributor to raw material costs.

Polaris Industries Inc
126.01
PII.NNEW YORK STOCK EXCHANGE
+1.15(+0.92%)
PII.N
PII.NF.NGM.NCAT.NDE.N
According to a JP Morgan analysis, the threatened tariffs could dent Caterpillar and Deere’s fiscal 2019 earnings per share by 6 percent and 9 percent, respectively.

Tariffs could also affect the food you eat.

Edward Jones analyst Brittany Weissman said the aluminum tariff would
raise packaging costs for beer brewers, with Molson Coors Brewing Co
(TAP.N) likely heavily affected because the U.S. market is its largest.

Weissman said Campbell Soup Co (CPB.N), which packages soups in tin-plated steel cans, would be affected by steel tariffs.

John Mothersole, director of research at IHS Markit, said tariffs would
lift aluminum can prices 6.7 percent in 2018 - versus an expected 2.3
percent hike excluding any tariffs.

“How much of this increase would be passed along to final consumers is difficult to say,” Mothersole said.

THE BROADER PICTURE

The tariffs are unlikely to significantly hurt Corporate America’s overall earnings, according to stock market strategists, who were not immediately adjusting their profit estimates following Trump’s announcement.

“The impact on total corporate earnings first would be driven by the
impact on the economy,” said Keith Parker, U.S. equity strategist for UBS.

Since Wednesday before Trump's announcement, the S&P 1500 construction machinery and heavy trucks index .SPCOMMCHD fell 4.4 percent and the S&P
1500 automobiles and components index .SPCOMAU dropped 3.4 percent as of mid-afternoon on Friday, underperforming a 1.4 percent decline for the
overall S&P 500 .SPX.

One fear among investors is that the tariffs are a first step toward a
broader trade war, with other countries taking retaliatory measures, that strategists said would cause them to reevaluate their earnings estimates.

“You’re going to see an effect here, if they go through, but ... this is
not going to be the end of the world,” said Scott Wren, senior global
equity strategist with the Wells Fargo Investment Institute in St. Louis.
“If it does turn into a trade war, that’s a different story.”

Additional reporting by Nivedita Balu in Bangalore, Timothy Ahmann in Washington, Rajesh Kumar Singh in Chicago, Lewis Krauskopf and Caroline Valetkevich in New York; Editing by Leslie Adler
Our Standards:The Thomson Reuters Trust Principles.

--- SoupGate-Win32 v1.05
* Origin: www.darkrealms.ca (1:229/2)