Trump Tariffs Will Affect the Water & Wastewater Industries

Trump Tariffs are disrupting different industries across the US and might force the economy to recession if the US President continues issuing tariffs threats. The country’s trade partners are forming a retaliation that results to global trade conflict.

Trump argues that the tariffs on items like washing machines, water equipment, solar panels and wastewater equipment are just meant to protect American industries from collapsing and for a long-term benefit. However, business leaders, lawmakers, politicians, and economists say a different story. A good example is the steel and aluminum tariffs.


Steel and Aluminium Tariffs Story

In March 2018, it was proposed a 10% tariff on aluminum and 25% tariff on steel. Later in May 2018, it was announced that there are plans to impose steel and aluminum tariffs on EU, Canada, and Mexico. The tariff came into effect at midnight the same day of the announcement.

The announcement intensified trade war between America and its trading partners. The trade partners quickly reacted to the imposed new regulation especially E.U, Canada, and Mexico.


Steel and Aluminium Tariffs Impact on Trade Partners

The European Commission led by their president Jean-Claude released statements criticizing the new tariffs. The European Commission statement defined the proposal as, “a blatant intervention to protect U.S domestic industry” and announced countermeasures to Trump’s Tariffs.

The E.U responded by saying it would levy import taxes on items like Bourbon from Kentucky- a home state of Senate majority leader Mitch McConnel. Plus, Harley-Davidson motorcycles.

Mexico responded by saying it would levy import taxes on various types of steel. Also, American farm products such as grapes, certain cheeses, pork bellies, cranberries, apples were not spared.

While Canada levied taxes on the same metals (steel and aluminum) and other products like candy, coffee, pizza, and quiche. Also, the Canadian Prime Minister Justin Trudeau announced that he had rejected the ultimatum from Vice President Pence.

The World Trade Organization –WTO was not left behind. The director general of WTO, Robert Azevedo was quick to respond that the unfair regulation and quick trade policy statements by trading partners will result in a global trade war. He termed it as, “real risk of triggering an escalation of trade barriers across the globe.”


Water and Wastewater Industries

The recent move to Trump’s Tariffs on E.U, Mexico, and Canada has made a substantial effect on equipment production for various industries. The steel and aluminum tariff will make them expensive to import, thus making water infrastructure projects cost more. Wastewater equipment and water equipment made from the metal alloy that is imported will drive demand up for locally produced steel.

Water infrastructure projects like repairing water and wastewater plants plus their collection systems will become expensive. Primarily, when water and wastewater utility sector wants to build or repair the plant and their collection systems, they will receive funding from federally subsidized loans as per the Water Infrastructure Finance Innovation Act.

It is foreseen that the tariffs will make the prices of steel and aluminum high thus affecting the water and wastewater utilities just like any other industries. Nevertheless, the director of Water and Wastewater Equipment Manufacturer’s Assn, Vanessa Leiby argues that the said tariff will affect small-sized to medium-sized manufacturing enterprises. Reason being they have not stocked materials affected by the taxes like large manufacturing enterprises.

Although the regulation was payback for some unfair trade practices, the American Iron and Steel Association were happy and praised the decision made. The Aluminum Association too applauded the decision made. The two groups represented the domestic industry and felt that the policy could be more of directed towards China –the most significant competitor- other than their allies (Canada, Mexico, and E.U).

Trump’s tariffs are slowly losing long-term traditional allies by forgetting the written and unwritten global trading rules written in the past. In the pretense of protecting their industries, forgetting to look at the bigger picture.