Opinion: How tariffs and other changes can have unintended consequences
A proposed foreign steel tariff that would hurt the canned food industry shows how easy it is for one policy change to drastically impact other sectors.
When it comes to implementing tariffs or other restrictions on imports, the unexpected consequences can be surprising.
Consider steel. During last year’s presidential campaign, Donald Trump spoke often about how tariffs against foreign steel could help revitalize the American steel industry.
Leaving aside the complications of a global economy and how tariffs and other trade tactics can affect it, there’s a particular issue with steel tariffs that affects the food processing industry in general and the canned food industry in particular.
Tinplate steel is about 2 percent of all the steel used to make cans. That doesn’t seem like much, but the industry makes almost 20 billion cans of food every year. And, there’s not enough tinplate steel produced in America to meet the demand. According to the Can Manufacturers Institute (CMI), demand for tinplate steel in 2016 was 2.1 million tons, and only 1.2 million tons was produced domestically.
All of this means that an increase in the importation cost of tinplate steel would lead to higher costs for manufacturers, which leads to higher prices for consumers. This would hit lower-income consumers particularly hard, because those who participate in the USDA’s Supplemental Nutrition Assistance Program (SNAP) buy canned fruits and vegetables at a higher rate than average. Why? Because canned fruits and vegetables can be as much as 20 percent cheaper than fresh produce, while still offering healthy food. Because of this cascading effect, CMI is asking the Trump administration to exempt imported tinplate steel from any possible tariffs.
This all seems like a problem with a pretty obvious solution, but it’s an example of how things can be overlooked in the rush to take action that matches up with ideology instead of reality. Our economy and all of its interlocking parts have grown into an intricate, complex piece of moving machinery, and tinkering with one tiny bolt can cause cascading ramifications that can grind the whole thing to a halt — or at least interfere with the efficiency of operations. Applying tariffs or changing regulations needs to be done in a way that minimizes the cascading effects as much as possible, and sometimes, that will mean sacrificing a campaign slogan to avoid problems for people.
This is a lesson that can be applied in our everyday lives as well. We all have processes and procedures in our jobs that make us think “wow, there has got to be a better way to do this,” but how many times do we start to explore a better way and find that making one change here can cause big problems over there? Or that making a change in how we produce one particular product can lead to big cost increases, even if the current process seems overly convoluted?
This can even happen in personal lives. If you and your family have a carefully balanced schedule that gets everyone where they need to be, throwing in another activity or eliminating one can throw the whole thing out of whack. It can also happen with factors beyond your control. In the school district my family lives in — and in many others — the elementary school and middle school have schedules that are out of sync by about half an hour. That doesn’t seem like much, but it creates a lot of headaches for families that have children at both schools. The solution, however, would be doubling the amount of buses the district uses, which would lead to higher property taxes to pay for them.
All of these examples, as varied as they may be, show how knocking over the first domino can lead to results we never expected. Which means that regardless of whether we’re talking personal, professional or political, we need to remember this: Do your homework before making changes, because solutions are only solutions if they actually work.