Valdez: Colorado’s congressional delegation should make ending aluminum tariffs a priority
From kitchen tables across Colorado to the halls of the Federal Reserve, inflation continues to dominate the discussions about the American economy. Just a week ago the Federal Reserve raised interest rates yet again — the 11th rate hike implemented since last March — in an effort to rein in rising prices that have plagued American families and businesses. The Federal Reserve rate now sits at its highest level in more than 15 years, with many speculating that the United States could be plunged into recession.
Across Colorado, as in other states, small businesses are still suffering under what has become an unfortunate new normal. Production costs have increased due to supply chain disruptions and the inflated costs of materials, making day-to-day processes more costly and in many cases preventing producers from meeting the demands of the marketplace altogether. The end result? We all pay more for the goods we need.
With the stakes so high for Coloradans, our congressional leadership in Washington, D.C., needs to do everything in their power to right the ship. One thing we can all agree on is that removing tariffs on the import of aluminum, a basic building block of so many modern products, is one relatively easy solution. By doing away with tariffs on imported aluminum, we can lower the cost of a number of products that have seen sharp price increases over the past few years. No one has worked harder than me to encourage the purchase of ‘Made in America’ products, but aluminum is a component that must be imported for the foreseeable future.
Colorado has benefitted greatly from an upsurge in Electric Vehicles — which use a great deal of aluminum. Lowering the cost of aluminum will encourage the purchase of EV’s and greatly benefit the dynamic recycling programs across Colorado — since aluminum is such a highly recyclable material.
In March of 2018, President Donald Trump pulled the trigger on Section 232 tariffs as a way to combat what his administration viewed as unfair practices by rival nations to manipulate global steel and aluminum markets. The tariffs were intended to level the playing field for American producers, protecting jobs here at home and giving American manufacturers a fighting chance to compete with their counterparts in China and elsewhere. However, not only did the World Trade Organization deem the tariffs in violation of international trade rules, but the tariffs wound up hurting the U.S. economy more than helping it. Instead of achieving a laudable goal it became just one more example of the incompetence of the Trump team.
How bad was the damage caused by these misguided Trump tariffs? The respected and apolitical U.S. International Trade Commission reported that U.S. importers bore nearly the entirety of the cost of the tariffs, raising the price of aluminum by 1.6%, increasing prices in downstream industries by .2%, and decreasing production in downstream industries by .6%. The tariffs were especially harmful because the U.S. only produces about 20% of the aluminum it consumes, relying heavily on imports and having little power to influence global prices. Despite these drawbacks, the Biden administration has kept the tariffs in place, prolonging the pain for manufacturers and leaving a number of industrial sectors to cope with high prices. President Joe Biden has done much good for the United States economy but continuing these poorly conceived tariffs is an unforced economic error.
As a rancher whose family roots in the San Luis Valley go back five generations, I have seen the effect of aluminum tariffs firsthand. Our family grows small grains and alfalfa and runs a cattle operation. I worked hand in hand with farmers across Colorado for the United States Department of Agriculture Natural Resources Conservation Service; I later represented many of them in the Colorado Legislature.
With 39,000 farms and ranches, most of which are far shy of a thousand acres, Colorado’s agriculture sector is mostly a family affair. Four out of five Colorado farms are owned by individuals, not corporations, with the majority of these farms falling in the $1,000 - $9,999 economic sales class. For farming families running lean operations such as these, every penny counts and even the smallest increase in production costs could severely impact their ability to turn a profit or just break even. Because aluminum used in many lightweight agricultural tools and machinery, including tractors and plows, and as a structural material in agricultural buildings such as livestock housing and grain silos, rural farmers in Colorado and across the country have certainly felt the pinch of rising aluminum prices.
Other related industries are hurt by aluminum tariffs, too, including the food and beverage industry, transportation, aviation, defense, and automobile production. Research from The Beer Institute shows that the beverage industry, a thriving sector in Colorado, has been hit with nearly $1.9 billion in costs from Section 232 tariffs. Many small restaurants and breweries in Colorado have been hit hard as well as aluminum prices have gone up.
It’s time for U.S. officials to pull the plug on Section 232 tariffs and provide some relief to American industries that rely on aluminum and steel. Colorado’s two Senators and eight House members, Republican and Democrats alike, should make this a priority as they get to work following the August recess. This is not by any means a partisan issue — in the U.S. Senate, Democrat Mark Warner has led the way on this issue, fighting to protect U.S. Jobs. In the U.S. House of Representatives, Colorado Republican Ken Buck has recognized the need to find a solution to lower aluminum prices. Both parties need to come together and work to fight for Colorado ranchers, farmers, small business owners and consumers, by repealing these misguided tariffs.
Donald Valdez is a fifth generation Southern Colorado rancher and a former member of the Colorado House of Representatives.
This article originally appeared on The Pueblo Chieftain: Valdez: Ending aluminum tariffs should be priority for congressional reps
