Chamber event highlights how politics impact business
When it comes to the tariffs President Donald Trump plans to impose, the only thing for certain is uncertainty.
The topic of tariffs and their impact on Butler County and beyond was the main discussion point Monday, March 31, during the Butler County Chamber of Commerce’s The Effects of Politics on your business: How Political Decisions Affect Your Bottom Line event at the Penn Theater.
Three experts from their respective fields comprised a panel designed to field questions from the audience related to how political actions impact businesses and the decisions made by the leaders of those organizations.
Right from the get-go, Kurt Schimmel, a professor of marketing at Slippery Rock University, opened with his take on why Trump is using tariffs in the first place.
“I think what we find ourselves in right now is uncertainty,” Schimmel said. “I think we are using tariffs as a negotiating tool at this point in time. I think markets react to every proclamation because we don’t see the grand plan at this moment.”
Milton Koch, an international trade adviser at Buchanan Ingersol & Rooney in Washington, D.C., said it is hard to say for certain at this time what industries will or will not be impacted the most, but ones that certainly will be looked at are steel and aluminum.
What he could speak to was the “unfair trade practices” the Trump administration claims is happening with some of its biggest trade partners.
“The reason you see steel and aluminum on the tariff list is lots of governments like to subsidize their steel factories,” Koch said. “They recognize the steel industry is important both as supplying downstream goods, but also for a time for building tanks and things of that nature. Canada has long history of subsidizing their steel industry.
“That’s when people in the U.S. or other countries, say ‘that isn’t fair, can I get relief.’ Canada is peanuts to what China does. They are generally a good neighbor to have in the north.”
Koch said in general there are two types of tariffs. First there are baseline tariffs that are imposed to collect revenue. Then there are reciprocal tariffs which also bring in revenue, but also are put into place for policy reasons by a government, which is what Trump has been planning for.
Whether these reciprocal tariffs actually get imposed has yet to be seen, as Koch believes they could be used as a negotiating tactic.
“This is an attempt to create a scorecard for other countries,” Koch said. “With that, it will generate leverage, start negotiations and see if we are able to create a more level playing field.”
Bob McGee, chief investment strategist and senior vice president at Wesbanco Bank, also was part of the panel and spoke to the side effect of tariffs on consumers, which in the short term is inflation.
McGee said once tariffs are put into place, it would take consumers about 30 days to feel the effect of those tariffs, in the form of higher prices due to some United States manufacturers being dependent on Canada and Mexico for materials.
However, he does see some upside to this down the line.
“In the short term, the tariffs will cost more for the U.S. consumer,” McGee said. “We will have a little bit of an inflationary environment and slow economic growth. The long-term effect is that infrastructure spending in the U.S. should come through. The biggest opportunity when you start thinking about infrastructure spending, you get manufacturing jobs back into the United States.”
Koch said he thinks tariffs with regards to oil and gas will help offset price increases.
“If you have a low cost of energy you are able to manufacture more efficiently,” Koch said. “The U.S. is one of the best places to manufacture in terms of resource availability and workforce availability.”
Trump has promised to unveil a new tariffs plan on Wednesday, April 2, which he has dubbed “Liberation Day.” This is when the experts on the panel believe Trump will officially impose tariffs on certain countries and or industries, but all of that is currently still up in the air.
