Adders Here are some words with which to consider the economic news of the day protectionism mercantile lism also trade war and now one from American Public Media this is Marketplace. Marketplace is supported by Progressive Insurance protecting commercial vehicles and offering specialized coverage is designed to protect your business more and progressive commercial dot com And by Legal Zoom providing business owners with ongoing legal advise through their nationwide network of independent attorneys more info and Legal Zoom dot com slash marketplace and Vantage partners a consulting and training firm helping companies advance by aligning transformational strategies with the power of collaboration partners dot com. In Los Angeles on Congress go it is Thursday today the 41st day of Meghan is always to have you along with everybody so look we have been bandying about the phrase trade war for a couple of 3 months now right ever since President Trump called basically the entire global economy unawares when he said this on the 1st of March 25 percent for steel it will be 10 percent for all of them but one set of tariffs in the various exemptions and exclusions and carve outs to those tariffs does not a trade war make it's when those exemptions go away as did the exemptions for Canada Mexico and the European Union today and the retaliation gets going that things really start to get ugly in response to these measures in Canada intends to impose tariffs against imports of steel aluminum and other products from the United States that's kind of those foreign minister Chrystia Freeland one of the characteristics of a trade war by the way to that are directly retaliatory sometimes referred to although not often on this program as tit for tat 25 percent and 10 percent are the tariff rates today imposed by the United States on Canada. We are today publishing 2 lists of goods one list which will be subject to a 25 percent tariff the 2nd list will be subject to a 10 percent tariff and other trade war indicator specificity in targeting these countermeasures will only apply to goods originating from the United States and also trade wars are typically really tough to end these counter measures will take effect on July 1st 2018 they will remain in place until the United States Flamini its its trade restrictive measures against Canada it might be relevant to note at this point that Canada is the single largest source of imported steel to this economy 17 percent of our imported steel it's also our 2nd largest single country trading partner behind China and it's one of the closest allies the United States has and that gets me to this the statement from the White House this morning announcing these tabs President Trump It said is taking action to protect America's national security from the effects of global oversupply of steel and aluminum the relevant section of the law here is section $232.00 of the trade Expansion Act of 1962 as amended which led to the president a just key imports in the interests of national security but the letter of the law doesn't really explain everything that is going on here global economy strategy was Marketplace's Mitchell Hartman starts off the trumpet ministrations says it's trying to protect domestic metal producers so they can make what we need in a crisis and Jacob Kirkegaard at the Peterson Institute says the national security justification might work under World Trade Organization rules but he says I think the deeper underlying motive you this is an administration that really wants to combat outsourcing to make it unprofitable for American industries to locate production abroad that would keep jobs here and they want to force pretty much everybody else to come and invest in the United States creating more jobs here so. Make and export more import less the trade deficit drops another administration goal though economist Rene Bowen at u.c. San Diego says that wouldn't really help domestic industries it simply means that we're going to restrict consumers from having the products that they would like to pay for and some of the industries the administration is out to help aren't onboard with imposing tariffs on major allied trading partners here's Lauren will of the u.s. Aluminum Association essential issue facing the industry is illegally subsidized overcapacity in China she says making imports from Canada Mexico and the e.u. More expensive will just make it harder for u.s. Companies to add jobs Mitchell Hartman for Marketplace tariffs kind of seem like a thing between countries right but individual business is often one of holding the economic bag Walter Seigenthaler is the executive vice president at the max Detweiler Corp they use imported steel to make among other things something called Dr blades used in industrial printing the 2nd dollar Welcome to the program thank you 1st of all sir tell me what would you your reaction to the news today were what was your gut reaction Well I kind of expected it that it will go this way of course it puts us into some kind of uncertainty but v. Are really focusing on getting I would own exclusion not counting on an exclusion of the e.u. Because I think we have a good case to make since to still be out importing is not it doesn't get manufactured in the us it's not available so I think we hopefully get exclusion approved if you don't get your exclusion your exemption and these tariffs go into effect as the president announced today what happens to you in the steel you need to make those Dr blades Well our product gets considerably more expensive and we're going to have a real problem at hand because the have a number of competitors state produce stop the plates out. Sites of the u.s. And they can import the finished product without the duty on it that it will be in a disadvantage that's an important point because what we're talking about here are tariffs on imported raw materials steel not tariffs on imported finished products that's correct your competitors then I imagine will undersell you or your profitability will go down what happens to the people who work at that plant there in North Carolina well if it gets so that's point then we have to really consider Does it still make sense to manufacture here because we manufacture in Switzerland India and China you could import from there as a finished goods but that's not that's not our target our target is to keep manufacturing here is Abilify to for our What exclusion how many jobs are we talking about are directly affected in production it's 16 but if you have to close down that manufacturing they also have to cut down on overhead so they have model can at about 20 people alter Seigenthaler He's executive vice president at that whether we've got them at their factory in North Carolina Mr Seaton dollar thanks so much for your time sir I appreciate it you're welcome Tim pull is with the Gemini group another imported steel user trying to figure out what's going on Mr Poole it's good to have you on thanks very much glad to be here tell me what the Gemini group does and why you need imported steel Well the Gemini group manufacturers extrusion dies. Out of the it's 13 steel is that good still aged 13 still the ice 13 is a high quality tool still Ok And you've been getting it from overseas right the majority of it yes we can import it from the Brazil and the you are right so give it given the news of the day what it what are these tariffs going to mean for you and for this age 13 steel that you need this leader is going to be an increase in prize coming to us in our purchasing you know that it's going to be a prize that we will or an increase that we'll pass along to the customer and we've already talked to the customer about it you know so. Yeah it does it impact us yet has some impact but it's nothing we can't work with I think for the future and then of course in the future may change have you explored in your capacity as a purchasing guy sourcing this stuff domestically absolutely we have and without a few domestic suppliers that we're working with right now right what are those conversations like when you I imagine you go cold calling these companies saying hey do you have age 13 Still I can buy well you when you're in the business long enough you get to know a lot of the domestic steel mills and so forth and so yeah you just start calling me and say look you know what can you guys do there's one in particular they do make the h. 13 steel that we need is just a matter of pricing at that point oh yes so now you're motivated to find a domestic source for your production with these tariffs right just simply because it's a tariffs are creating such an impact and now the domestic suppliers can be more competitive with their price even though domestic steel is going up substantially what your tolerance level for how how changeable trade policy is nowadays I mean it's seems to be going back and forth and back and forth between trade wars on trade wars off I don't know what's happening where the tariffs are you dealing with that it's like the definition of uncertainty Well it is the definition of uncertainty but we look at it or at least I look at it from a standpoint of there the long term is that is probably the best for our country as a whole to me that it is time for a change you know that's how we make our country better temple the Gemini group is full Thanks so much for your time so I appreciate it yes or no problem so the Canadians and the Mexicans are pretty trade angry with us Mexicans announced their list of tears this morning as well do you know the Europeans they are terrifying and taking the u.s. To the World Trade Organization because after Canada Europe is our 2nd largest supplier of foreign steel products chief among the things they are trying to figure out right now what are they going to do with all that steel if they can't sell it here from the European Desk in London. Marketplace's Stephen Beard has that one it's not yet clear how much European steel will now be priced out of the u.s. Market or exactly what will happen to that European product that's turned away Charles de lis Senor speaks for European steel makers some products might be used in other places some products might be scaled back in terms of that action but we don't know at this stage what that impact is really going to be it's very early days the omens for the European industry are not good however the global oversupply of steel has been put at 400000000 tons yet that's 400000000 tons of the stuff which the world doesn't want to buy Gareth Stace of the u.k. Steel Association says if the u.s. Market dries up a lot of foreign steel will head this way something like 20000000 tons of steel now will need to find a new home to go to because we are a free and open market here in the e.u. It will come here we believe therefore further damage asset to the European Commission said today it may seek permission from the World Trade Organization to bar these unwanted imports it will file a complaint against the u.s. Tariffs and impose its own retaliatory tariffs on $3000000000.00 worth of American imports into the e.u. It all looks very ominous and not just for the steel industry says Stephen booth of the Open Europe think tank this possibly the 1st steps as part of a trade war and I'm asked why one is concerned about the E.U.'s countermeasures that could escalate this dispute are expected by the middle of June in London I'm Stephen Beard for Marketplace you know Wall Street traders hate almost as much as a whiff of another European debt crisis when the with a trade war gets real We'll have the details when we do the numbers. On the theory that there is definitely stuff you'll want to know about trade wars and trade policy in general that we here are not thinking of I went out on Twitter this morning and asked for your questions we got bunches of them it's safe to say this one came from Sean Byrnes he asked How long will it take for these tariffs to affect the prices of consumer goods Marketplace's Amy Scott was on Answer duty today that's actually starting to happen already prices of aluminum and steel have been rising in the last couple of months due to the tariffs already in place on countries like Russia and China that did not get exemptions now adding in Canada Mexico and the European Union prices are only going to go up further It takes a while for that to sort of work itself through the rest of the economy maybe weeks in some cases months in others but ultimately consumers are going to end up paying more for things like cars and refrigerators cans of food and beer there's just a whole range of products that could be affected by these tariffs we got this one from Met Dietrich which requires just a tiny bit of a set up he wants to know under what conditions China might leverage its reserves of u.s. Debt and how likely are they to use it in a trade war before we get to the answer you need to know that according to the Treasury Department as of March this year trying to hold a bit more than $1.00 trillion dollars in u.s. Government debt those are Treasury bonds in other words we're told Mary lovely She's a professor of economics at Syracuse University for the answer to this one China has never threatened to leverage the debt any kind of retaliation that China. Uses is a response to the Section 301 tariffs or steel tariffs or any other tariffs will almost certainly be another set of tariffs on our goods so they've already indicated pretty clearly how they intend to retaliate their. Quite clearly. We put a bunch of. Really it's not a bunch but. The show is at Marketplace. To make it 1st. Division. 2 point. Fuels the innovation necessary for a brighter smarter future learn more at data makes possible dot com Western Digital creating environments for data to thrive and see through. The software platform for digital transformation using artificial intelligence and to solve previously unsolvable business problems learn more at c 3. I'm Scott Shafer ost of k.q.e.d. Political breakdown Tuesday June 5th is primary day in California and there's no one I'd rather break down the returns with the my co-host Maury Salada sounds like a date to join us at 10 pm for results from the race for governor Senate Congress and more we'll also hear live from the candidates and reporters across the state tune into political breakdowns primary election night special Tuesday at 10 pm on this public radio station you can hear the election night coverage at 10 o'clock this coming Tuesday here on k c b x local support for marketplaces provided by Thoma electric delivering electrical engineering for small business residential and commercial projects and 160 to learn more Thoma electric dot com They'll turn the lights on for you supporters also provided by Moore and brothers automotive with tips on driving green and selecting a green vehicle at their website. And b r o s dot com You're listening to Marketplace on public radio k.c.b. Accts. This is Marketplace on Kyra's dull as we talk about a little bit more than a little bit of the top of the program you can talk trade policy until the cows come home but it's where that policy meets the actual economy that you get to an understanding of how much it really matters we've been doing a survey of one of the key parts of the American trade economy this week manufacturing 3 slices of how we make things in this country today we've done textiles denim in particular and a company that's had to reinvent itself as the trade economy changed around it we've done iron literally an iron foundry where some of the new changes to American trade policy are more than welcome and today a company that makes Well it makes a whole lot of stuff we're in Columbus Georgia once again and I think our John is for common where John anchor started anchor pack of 2004 he'd been a salesman and you can tell he was good at it in that salesman kind of way but he wanted to run his own business originally he was doing full service packaging literally wrapping up products that other companies had made getting him in boxes around shipping pallets and getting them on their way and then he saw his chance one of my 1st customers I ever had was closing the plant and off showing it to China and Iran to him and I said White why you go in China can I do that and I said John we're moving all our manufacturing all you do is packaging for us and. Ended up they came back and gave me an opportunity to keep some of the manufacturing here as opposed to moving it as I originally planned so you went from acting to manufacturing What were your what was at 1st manufacturing. It was a really hard one and it was manufacturing Bobby pans I was in the water here yeah I can still watch our flat and then we had to paint it and then the 3rd step was put in on I a bob in forming machine and forming the pan and automatically carting it and you made all the investment in capital equipment and worker training. And all of that so it was a partnership and it is truest sense they already own the Quitman There were moving and closed down moving to China so their choice was number one Senator John a lot of plan on just move the equipment China and China have the labor they had to supply Assad and good products had the demand side and so we picked up their equipment gave him a 2nd option that was outsourced to an American company at the same price as an overseas provider I mean the same process showing around a bit anchor competes and flexibility more than it does on price he is profitable maybe not as profitable as others might be but he hustles anchor packages 3 facilities all of them in Columbus about 240000 square feet total the one we're in now is where the manufacturing happens all kinds of manufacturing to composite fabrics commercial refrigerator compressors kind of backing for rugs known as monks cloth and so much more. So what is that what is that smell is that like something and what is well so we were running bobby pins and we had another opportunity I'm going out trying to find ways to manufacture large volume of small widgets and I found another company that was closing down in Tennessee and they were moving this hope factory to Mexico what were they making or my competitors and pans on the razor's all kinds of Office products so the smell that you asked about as it were heating up we got up and worked there adding stuff a knob and then when we got it in that room. And but you could smell it it's great that one of these guys make it over here and I want my going to a special marker this company was closing down in Lewisburg and we ran to him and said What can we do for you so that I said Oh is that your business model what does it do where you're going to send those overseas what can we do for you absolutely I'll tell people I'm like the old life commercial give it to Mikey Hill eat anything I might he likes it that. Closing this whole factor down I'm moving to Mexico and when I ran in there said What can I bid I said John it's all been slated Here's the plant layout in Mexico here's where these machines are going I left I came back home and they called me 2 weeks later and said you know what we've been thinking about it we might giving up to you to quote on some of the stuff that might be suited to keep here in America this is going to sound worse than a minute this sound but you almost don't care what you're making so long as you're making something here in Columbus Georgia that's right I'm not real picky I've said it many times thanks a 100 pennies Mike a dollar and I want to buy one penny at a time I'd like to make a dollar of the time but if it takes $100.00 families I'll do that way. Oh wait I know what those are those are those little markers that you peel back the string in the wrapper and you peel off like the paper sort of coating or whatever it is right that's right it's like a greas