The Cost of Input Tariffs on the Manufacturing Sector

Most industries in the U.S. manufacturing sector source at least 10% of their intermediate inputs from countries outside of the United States. Recent legislation to raise import tariffs will likely increase costs for U.S. manufacturers purchasing foreign intermediate inputs. In an article for Tax Foundation, writer Erica York offers an overview of a recent analysis from an economist at the Federal Reserve. The analysis examined the impact of the tariff and how it will hurt, rather than help, U.S. manufacturers.

Although every type of manufacturing industry will likely be affected by the tariff, it is presumed that the auto, trailer, basic metal, refined petroleum and nuclear fuel industries will be hit the hardest.

In the end, the increased production costs are expected to result in either higher prices for U.S. consumers or less profit for U.S. manufacturing companies. Read the full article by visitingĀ The Tax Foundation.

Be sure to contact your De Boer, Baumann & Company business advisor for guidance on improving profits and financial performance.