Commerce Secretary Wilbur Ross defies claims of price rise after tariffs on aluminium and steel

It has been a year President Trump announced tariffs on steel and aluminium.  Further tariffs on Chinese goods were started kicking-in a few months later and in late September of 2018 a 10 per cent import duty was applied to US$200 billion of Chinese goods. A report from the Department of Labor in the US claims that contrary to the expectations that the tariffs would hurt U.S. consumers; the actual market data defy predictions of tariff-led inflation. A report from  the Department of Labor in the US said Friday that its consumer price index was up just 2.0 per cent YoY, indicating that prices are not rising at a faster rate after the tariffs. The Federal Reserve says it targets 2 per cent inflation, although it uses a different measure of prices.

Commerce Secretary Wilbur Ross insisted that all the predictions about higher prices turned out to be wrong. Ross argued that tariffs would have little to no effect on U.S. consumers. He held up cans of Campbell’s soup and Budweiser beer to illustrate his point and insisted that the tariff on metals had a negligible impact on consumer prices and they are unlikely to rise significantly due to import tariffs.

As put forward by Secretary Ross, the price of soup is down 0.3 per cent YoY and the price of beer consumer at home is down 0.3 per cent. He however added that that canned variations might have seen more price inflations, but from a consumer prospective it is not much relevant because the consumers can shift to the cheaper options.

Prices of canned fruits and vegetables, another category of consumer goods that was widely predicted to see prices rise because of increased aluminium costs, are up by 2.9 percent. In April, prices fell by 2.2 per cent after rising by 2.1 per cent a month earlier. He said the price volatility is not because of the cans but because of the can content.

The upward pricing pressure on beer consumed in bars and restaurants, which is notable because the price of beer kegs has reportedly gone up because of the aluminium tariffs, is no longer showing up. Beer consumed outside of the home is up just 1.7 per cent compared with a year ago.

He argued that the car and truck prices, which were forecasted to rise due to tariffs on metals, have hardly moved. Compared with a year ago, car prices are up just 1.4 per cent. The price of new trucks was up just 1.2 per cent.

He added that the impact of tariffs were much lesser than what was predicted.  The reports according to him do not necessarily say that prices will remain low or tariffs will never push prices up, but demonstrate that even after several months of tariffs, prices on consumers are not rising as expected.