The recent tariff increases have affected the American economy and have driven supply chains to make...

The recent tariff increases have affected the American economy and have driven supply chains to make quick changes as they scramble to help offset the added costs of importing goods... mainly how these tariffs affect Americans in LUMBER AND STEEL industries.

I need an answer for both industries:

Q1: If I were a major Steel business owner/ producer, why would I care how these tariffs are affecting Supply Chains? (250 words)

Q2: If I were a major Lumber business owner/ producer, why would I care how these tariffs are affecting Supply Chains? (250 words)

Please answer the question to the point. Thank you

Expert Solution

1. The imposition of tariff on the steel industry is aimed for increasing the production of steel by opening the closed steel mills and also to revive facilities that have been laid idle for a long period. It also aimed to increase the level of employment by recruiting more workers in these rejuvenated industries. Due to the imposition of tariffs the companies seemed to be less expensive than the foreign companies even though they charged a price which was higher than before. The tariffs made the foreign product more expensive. But the profit of the steel business owner relies mainly on the condition of the other industries to which it is depended upon. If the industries which requires steel increases the production you may benefit from the imposition of tariff.

The imposition of traiffs has not worked well for the US. steel business owners . This is because it increased the production costs of many related firms and they pulled back their expansion plans. So now only less steel is required for the economic activity. So, the owners ultimately tend to loose in the long run .

2. The US commerce department , through SLA Softwood Lumber Agreement, allowed the Canadian companies to sell lumber in US markets at susidised price. But, the agreement expired in 2015. Now, the US commerce department has imposed an import duty of 21 percent , on an average. This move , eventhough is unfavourable for the builders, is welcomed by the suppliers. If you are a major lumber business owner or producer , you will be benefitted from such a policy. This is because the imposition of tariff will makes the Canadian imports costlier compared to that of the prices of the commodity produced in the domestic market . The company can expand its production as well as can opt for diversification.

Rahul Sunny answered 2 hours ago

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