Shapiro – February 2025 Market Insights
TARIFF WARS – METAL AND MANUFACTURING
With the continuous onslaught of tariff news, my market analysis has become more difficult to compile. We are bombarded daily with new volatile information. Tariff news is like taking a sip of water from a non-stop, wide open, fire hose.
The implications of the trade wars will continue to be VUCA: VOLATILE, UNCERTAIN, COMPLEX AND AMBIGUOUS. With that in mind, I will do my best to summarize the potential impacts they will have on metals and manufacturing, knowing that it will most likely be obsolete and irrelevant by the time you read it.
It is important to understand the implications of free trade versus tariffs. Free trade has been an important part of our economy and job growth, especially with our friends and neighbors.
Free trade advantages:
Free trade is a win-win agreement. It allows countries to specialize in the production of goods and services they can produce most efficiently and for less. We import clothing, electronics, produce and toys at far lower prices than we can produce them. The U.S. has favorable advantages exporting pharmaceuticals, vehicles, oil, agricultural, and petroleum products.
Mexico is now the largest exporter to the U.S. Lower-cost car parts are used in producing U.S. cars. They also export 16% of the cars we drive. Other important exports are fruits and vegetables.
Canada is another strategic supplier of primary aluminum, car parts, wood, and petroleum.
China is no longer our largest trading partner but is still a major source of electronics, such as you iPhone and most Apple products.
All of this has enabled the U.S. to have lower-priced goods and to export our value-added products. This leads to lower inflation and economic growth. It also achieves more peaceful worldwide relations.
