With inflation surging to a new pandemic-era peak in June, with U.S. consumer prices jumping by 9.1% year-over-year and expectations for even higher inflation throughout this summer, we have reached the breaking point for many New Jersey businesses.
It is time to closely examine the country’s trade and economic policy — determining if and how tariffs are unnecessarily causing further inflation, ultimately impacting our state’s economy and falling heaviest on consumers seeking basic goods.
Just look at the case of foreign-made steel or aluminum, which have caused construction and renovation costs to skyrocket in the Garden State. Before a builder can even make a profit, he or she is struggling to find building materials that are affordable, accessible and of good quality.
Fortunately, there is now plenty of attention on the issue in Washington, D.C.
U.S. Sens. Pat Toomey (R-Pa.) and Mark Warner (D-Va.) are proposing to eliminate Section 232 aluminum and steel tariffs in order to provide much-needed relief for U.S. consumers. These tariffs on imports from foreign sources are a direct contributor to higher consumer prices.
Just over the past few years, aluminum prices have increased from $1,600 per ton, to over $3,000 per ton.
The high cost of raw goods increases the cost of fundamental operations, such as the ability of a sign maker to sell affordable products or for our local craft breweries to can beer in an affordable way. As a result, we are seeing New Jersey businesses with no other alternative than to raise consumer prices.
Just think of the impact. The manufacturers of aluminum food containers, beverage cans and bottles use a combination of recycled aluminum, scrap aluminum and imported primary aluminum for their products. They are now relying on imported, heavily taxed aluminum to create crucial everyday goods as U.S. aluminum smelters choose to produce other alloys that are more profitable.
The American Security Project released a report this year detailing how tariffs are directly linked to high aluminum costs, a central mineral for crucial economic sectors. This think tank, as well as several lawmakers and businesses in New Jersey, have become outspoken in calling for Congress to repeal Section 232 as part of the strategy to control inflation.
Most economists across the political spectrum would agree that foreign trade helps to lower prices and expand choice for consumers. Yet Section 232 has become a backward policy, serving as a counterweight to policy-makers who are trying to drive down the cost of goods nationally and, of course, in New Jersey. Tariffs have become taxes with no benefit, just further driving up inflation.
New Jersey businesses are drowning with high wholesale costs. Eliminating tariffs can provide immediate relief. To strengthen our state’s economy, our federal lawmakers need to take the necessary — and obvious — action.
Michael Melham has been mayor of Belleville since 2018.