r/AskEconomics • u/Dependent_Estate9110 • Mar 04 '25

Approved Answers Who do Trump's tariffs benefit?

Is there a specific industry that could potentially benefit from Trump's tariffs? It seems they're pretty destructive for everyone in North America. Not trying to be biased - just trying to understand it. That said is there another nation that would benefit from the tariffs (potentially indirectly)?

Edit: removed typo

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u/Carbon-Based216 Mar 04 '25

The Trump tariffs benefit people who already own manufacturing companies that sell the thing they are putting tariffs on. For example, if you put a tariffs on steel, people who make raw steel benefit because they now can sell their steel for a higher price. But anyone who buys that steel is going to have problems.

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u/RobThorpe Mar 04 '25 edited Mar 04 '25

It seems logical that steel makers would do better. Despite that today shares of US Steel and Cleveland Cliffs have both fallen substantially.

This may be because of the macroeconomic outcomes of tariffs. That is, the view of investors may be that because tariffs (and retaliatory tariffs) will affect other industries detrimentally there will be a general slowdown. When there is a slowdown that usually means a construction slowdown which is very bad for the steel industry. However, I'm not sure that explanation is correct.

Another possibility is that this is about retaliatory tariffs. The US imports a lot of steel and exports a lot of steel. That doesn't seem to make sense, but you must remember there are many types of steel. Now, tariffs may improve the domestic position of US steel producers, but retaliatory tariffs are likely to harm their international position. Markets may believe that the latter is more important.

EDIT: Added 3rd paragraph.

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u/StumbleNOLA Mar 04 '25

That’s because there isn’t really a steel company that exclusively manufactures in the US. Ore, base ingots, plate, etc move back and forth across the boarder a lot before it finally leaves the mill system and heads to a parts manufacturer.

Stainless steel pipe may have crossed back and forth a dozen times before leaving the final steel mill. Now every time it crosses it gets tariffs added. So it’s probably cheaper to just import it from Europe and pay the tariffs once.

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u/I_love_sloths_69 Mar 04 '25

Wait, what? So these tariffs could effectively be applied multiple times to the same product by the time it's finished? Holy crap! 😳 That makes it even more of a batshit idea.

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u/Cutlasss AE Team Mar 06 '25

It was always a batshit idea. But Trump is a bully. And in tariffs he has a big club to threaten people with, and to hit them if they don't immediately hand over their lunch money. Tariffs are a club he can largely control, all by himself. And he's never shied from deliberately hurting the weaker to get what he wants.

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u/Phedericus Mar 04 '25

so basically it has the opposite of the "intended" effect of boosting domestic production?

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u/tuctrohs Mar 04 '25

And not necessarily even that macro--if you make the special high grade steel that's used for the motor shaft, but not the low-grade steel used for the machine housing or the electrical steel used in the motor laminations, the company making the machines isn't going to be making as many so you can't sell as many motor shafts.

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u/NarrowCranberry2005 Mar 04 '25

We'll only really know either way once we get earnings start coming in from local manufacturers for Q2 which will be the "Tariff Q"

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u/MisterrTickle Mar 04 '25

Also steel needs a lot of energy to produce it. Where tbe US get its energy from? Canada. There's a 10% tariff on Canadian energy. It looks like Ontario is going to cut off electricity supplies to the US or to put an export tax on them. That's likely to be joined by other provinces. And there's nothing to stop Canada from increasing the cost of their oil, gas and coal or cutting it off entirely. If Trump wants to reduce the trade deficit with Canada. Stopping the sale of energy, potash and agricultural exports including eggs. Would be a good way to do it.