President Donald Trump announced

the US will soon impose tariffs on

imports of steel and aluminum.

Tariffs are taxes on imports

designed to boost US production of

goods.

The new tariff will cause costs to go up for businesses that use steel and aluminum – and possibly jump

prices for consumer goods, too.

President Donald Trump announced

Thursday that the US will soon begin

imposing tariffs on steel and aluminum, a

move that will have consequences for a

wide swath of American consumers and

businesses.

Trump said that the US will impose a 25%

tariff on imports of steel and a 10% tariff

on imports of aluminum.

The measures are designed to boost the

US steel industry. But they could also have

serious consequences for businesses that

use the metals – as well as consumers that

buy those goods.

A tariff, in plain terms, is a tax on

goods coming into a country.

In the US, many tariffs are paid at the

time of entry into the US via a

customs broker or agent – along with

other duties and fees that may apply

to the import.

The idea of a tariff is to push up the

price of foreign goods to make the US-

made option more attractive.

In this case, Trump is attempting to

get companies to use more US

produced steel and aluminum.

Hans Mikkelsen, a Bank of America

Merrill Lynch strategist, said the new

taxes will shift the supply and demand for

overseas steel and aluminum.

“International Trade 101 analyses the

partial equilibrium effects of a tariff as

driving a wedge between demand and

supply curves, whereby the price goes up

and the quantity down,” he said in a note

to client.

For many businesses that use steel

and aluminum, the cost to produce

their items will increase.

For example, the Beer Institute – a

trade group that represents beer

manufacturers – said the 10%

aluminum tariff will add on an

additional $347.7 million in costs for

American brewers.

Other companies are also expected to

take a hit from the new tariffs.

Robert Moskow and Neel Kulkarni,

analysts at Credit Suisse, estimated

the new tariffs could increase the

price of packaging for the Campbell’s

Soup company by 15% due to their

metal cans. That would cost the

company an additional $88 million a

year.

Additionally, the higher costs could cause

businesses to find other areas where they

can save money, including paying

workers. Studies found that the most

recent steel tariff imposed by President

George W. Bush in 2002 resulted in as

many as 200,000 jobs lost in industries

that use steel to make their products.

Businesses that see the cost of goods

rise have three options to make up

the losses: cuts costs in other areas,

simply absorb the cost and accept

lower profit margins, or pass the costs

onto consumers.

The latter option is concerning to

economists because it could lead to a

slowdown in consumer spending and

an uptick in inflation.

“So, for consumers, tariffs are like sales

taxes in that they increase prices,” Erica

York, an analyst at the right-leaning Tax

Foundation said in a blog post Friday .

Commerce Secretary Wilbur Ross said in a

CNBC appearance that the increased cost

for a car would amount to about $175,

which he called “no big deal.” On an

aggregate scale, however, the increase

adds up.

Over 17.2 million cars were sold in 2017 ,

meaning that if Ross’s math is right,

Americans would pay about $3 billion

more for vehicles under the new tariffs

amid similar purchasing patterns.