Chickens Coming Home To Roost, Trade War Edition

Donald Trump’s plan to enact stiff steel and aluminum import tariffs has caused alarm among economists and pundits alike, which is really odd, since this is one issue he actually ran on and talked about all the time. This seems to be another case where people heard what they wanted to hear and ignored the rest.

Be that as it may, the announcement caused the stock market to crash (again, totally Obama’s fault, or maybe Hillary’s right?) and there have been some other, more immediately damaging repercussions for Tennessee Trump-lovers:

Electrolux puts $250 million U.S. investment on hold over Trump tariff hike

STOCKHOLM (Reuters) – Sweden’s Electrolux (ELUXb.ST), Europe’s largest home appliance maker, said on Friday it would delay a planned $250 million investment in Tennessee, after U.S. President Donald Trump announced tariffs on imported aluminum and steel.

On Thursday, Trump said the duties — 25 percent on steel imports and 10 percent on aluminum — would be formally announced next week, although White House officials later said some details still needed to be ironed out.

“We are putting it on hold. We believe that tariffs could cause a pretty significant increase in the price of steel on the U.S. market,” Electrolux spokesman Daniel Frykholm said.

Electrolux buys all the steel it uses in its U.S. products domestically.

“So this is not the possibility of tariffs directly impacting our costs, but rather the impact it could have on the market and that it could damage the overall competitiveness of our operations in the U.S.,” Frykholm said.

Electrolux’s Tennessee plant is in Springfield, a hard-right, deep-red district that overwhelmingly voted for Trump. It is represented in the U.S. Congress by the pro-Trump Diane Black, now running for governor, a woman who said helping Trump pass his tax cuts was the “proudest moment of her life” but who has remained silent about Electrolux putting investment in her district on hold.

You know, it’s so rare that these chickens come home to roost in the deep-red districts that are the source of such wingnuttery. Usually when a far-right policy is enacted in, say, a statehouse, the repercussions are felt in the blue urban areas. For example, when our state legislature passed an anti-LGBT counseling bill, the rural districts whose homophobic reps pushed this hate leg got off scott-free, while major conferences pulled out Nashville — represented by Democrats in the legislature, who had voted against the bill. As I’ve said more than once, boycotts and national shaming don’t work if they hurt your allies, not your adversaries.

But when it comes to trade policy and tariffs, those chickens are going to come home to roost in red districts, because global companies located their plants in cheap-labor, cheap-land rural areas. So far, Tennessee Trump voters have been able to have their cake and eat it, too. But globalism is a fact of life everywhere — even in rural Tennessee. Electrolux is anticipating higher U.S. steel prices and higher inflation. So, too, will Nissan USA, Toyota, Volkswagon, Mercedes-Benz, BMW … all of the major car brands who have plants across the rural South, and all of their multinational suppliers: Germany’s Mann+Hummel, which builds car parts at its plant in Dunlap, TN. Or YAPP Automotive Systems, a Chinese company with U.S. plants in Gallatin and Chattanooga. They make gas tanks for cars. Or the Spanish auto parts manufacturer Ficosa, which has a plant in Cookeville, TN where they make rear-view mirrors.

Do these companies use steel and aluminum? Some may, some may not, but that’s the thing about trade wars: when the bombs detonate, the repercussions are felt across all sectors. Beware the unintended consequences of your trade war, Trump lovers. The rhetoric of “America First” may sound good, but the reality will be far less pleasing. And there will be no blaming the Democrats this time.