Huge Price Hikes a Possibility in 2017

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“I would do a tax [on China]. And the tax, let me tell you what the tax should be … the tax should be 45%.”

  • Donald Trump, January 7th, 2016

When Donald Trump won the general election for the US presidency last week, one of his central and recurring promises was the tearing up of existing trade treaties between the US and a number of countries to seek a more equitable trade balance and possibly bring manufacturing jobs home to American soil. Trump also labeled the Peoples Republic of China as a currency manipulator, regularly adjusting the value of their currency to fit its economic goals and spur growth at home, oftentimes at the expense of other nations. Since the bulk of diecast manufacturing is done in China, and the GOP now controls both houses of Congress as well as the executive branch, there’s a good chance that one of Trump’s first acts when he takes office will be revisiting each ratified trade treaty, and, perhaps as a means of leverage, walking away from each deal, and imposing tariffs as high as 45% on foreign made goods. How this will affect new products being imported into the US going forward is anyone’s guess, no doubt increasing the cost of bringing in finished goods in an effort to bring about trade parity. Trump has likewise threatened to impose heavy tariffs on Mexico, the next most likely choice for relocating production capacity from Asia to the Americas, so anyone thinking that a Mexican gambit closer to home might be in for a rude awakening when NAFTA is reexamined.

Our guess is that many diecast manufacturers will seek to hasten the import of goods into the US ahead of his taking office and prior to Chinese New Year, in an effort to bring in as much product before any tariffs are imposed. Its unclear how the balance of 2017 will shake out, particularly if the price hikes remain in effect for an extended period of time or if the economy takes a turn for the worse, as some economists predict. http://www.nbcnews.com/news/world/donald-trump-trade-war-china-would-hurt-america-experts-n685886

 
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