---
title: "ITR Experts Say: Tariffs Threaten Exports Across the Country"
description: We find that tariffs are almost always inflationary, as they raise the price of imported goods to protect often higher-cost domestic production.
image: https://blog.itreconomics.com/hubfs/aug22blog.png
---

# ITR Experts Say: Tariffs Threaten Exports Across the Country

We find that tariffs are almost always inflationary, as they raise the price of imported goods to protect often higher-cost domestic production.

[ Lauren Saidel-Baker ](https://blog.itreconomics.com/blog/author/lauren-saidel-baker)

 Aug 22, 2018

---

Unintended consequences remain the overarching theme of tariffs. We find that tariffs are almost always inflationary, as they raise the price of imported goods to protect often higher-cost domestic production. Elevated input costs are contributing to rise in Producer Prices, which were up 4.0% in June from the prior year.

We have written in detail about the higher input costs facing domestic companies that utilize raw materials such as steel and aluminum. The 25% tariff on steel and 10% tariff on aluminum are likely contributing to the rising prices of these materials, with Steel Prices in July up 25.5% and Aluminum Prices up 8.2% on a year-over-year basis. As these increased input costs threaten profit margins, many companies are choosing to raise prices. In recent weeks, several major consumer brands, including Coca-Cola, General Motors, Toyota, and Whirlpool, have announced price hikes in response to the tariffs.

While tariffs result in higher prices for US consumers, foreign buyers of US goods, meanwhile, have the option to substitute away from more expensive US products. Consequently, US items with high steel or aluminum content become less competitive as exports in the global market.

US vehicle exports, for example, are vulnerable, as vehicles contain high quantities of these raw materials and are already high-priced. Toyota recently estimated that higher input costs alone would raise the price of a new Camry by $1,800. Michigan leads the country in vehicle exports, with $24.8 billion in value exported in 2017, and is therefore the state most susceptible to reduced export competitiveness stemming from production costs. California, South Carolina, and Texas will also be vulnerable.

Machinery is another metal-intensive product which will cost more due to tariffs, posing risk to top machinery-exporting states such as Texas and California. Our current **[ITR Advisor™](https://www.itreconomics.com/content/itr-advisor)** analyzes export-competitiveness vulnerability on a state-by-state basis.

For more detail on this topic, please see the most recent Advisor.

**[Lauren Saidel-Baker, CFA](https://www.itreconomics.com/content/speaking-services)**  
Economist

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