The Perfect Storm Simplified
With the advent of the new GOP tax bill, the auto industry on the up and up. Business Insider, in an article titled “The GOP tax bill is a huge gift to the US auto industry,” predicted this upturn. This article quotes Jonathan Smoke, Chief Economist at Cox Automotive, saying, “The additional spending power that most households will have due to tax reform should result in a continued 'move up' in what consumers purchase,” (Business Insider).
In regard to the construction industry and the tax plan, Constructiondrive.com writes this: “The public construction sector will benefit from the uninterrupted flow of private-activity bond financing, and both the contractors who are structured as pass-through entities and C Corporations will see significant tax relief.” With this tax relief now being realized, construction industries have increased profits and have experienced growth (Construction Drive).
The mining industry was also projected to have seen a significant boost. Financial Times writes, “Without the bill, the average effective tax rate for the mining industry was expected to be about 16 per cent next year. If the bill passes, that will drop to just 7 per cent,” which allows mining companies to invest in themselves with new equipment, more jobs, and ultimately more production (Financial Times).
The Trucking Shortage
According to an article titled, “Trucking Industry Struggles With Growing Driver Shortage,” from National Public Radio, “The trucking industry needs to hire almost 900,000 more drivers to meet rising demand.” With more than 70 percent of US goods moved by truck, this low supply is forcing many companies to delay nonessential shipments and, in some cases, pay high-climbing prices for goods to arrive on time. For industries like steel that rely heavily on truckers, this high demand and low supply are continuing to drive prices up for the products themselves.
The Risk of the Perfect Storm
Initially, these elements of this “Perfect Storm” have been beneficial to the steel industry across the nation; however, there is much apprehension as to what the long-term effect will be. Ana Swanson of the New York Times details the possibility of a trade war. She writes, “Imposing tough sanctions would fulfill the president’s promises but could tip off trade wars around the world as other countries seek to retaliate against the United States. Foreign governments, multinational companies and the Pentagon have continued to push against broad tariffs, arguing that the measures could disrupt economic and security ties,” (New York Times).