US cuts tariffs to boost investment in industrial economy

THE White House said that it will reduce tariffs on farm and construction equipment such as harvesters and forklifts, in an effort to boost investment in the industrial economy through next year.

Under a proclamation issued late on Monday (Jun 1), those import taxes would drop to 15 per cent from 25 per cent.

Foreign companies could qualify for a lower 10 per cent duty rate if capital equipment contains at least 85 per cent US steel or aluminum, a White House fact sheet indicated. 

The changes take effect on Jun 8 and are set to run through the end of 2027. The temporary relief will “spur near-term investments that will rebuild the nation’s industrial base”, according to the fact sheet.

US President Donald Trump’s directive is his latest effort to adjust steel and aluminium duties dating back to his first administration, using so-called 232 authority that has broadly produced mixed results on growth, hiring and investment.

The White House claims that domestic steel production is surging, but many users of the metal are grappling with high costs and spending more trying to comply with the evolving tariff regime.

In April, the administration lowered tariffs to 25 per cent on some imported derivative goods deemed to be “substantially made” of steel, aluminium or copper while maintaining a higher 50 per cent rate on many other imports containing the metals.

Globally, aluminium buyers have been shaken by the closing of the Strait of Hormuz and the turmoil in the Persian Gulf, which accounts for nearly 10 per cent of global supply. 

Diesel fuel prices have also sharply risen since the US and Israel launched a war with Iran, while companies such as Deere & Co, the maker of iconic green farm machinery, last month faulted soaring fuel and fertiliser costs for sluggish tractor sales.

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Shares of Kubota, the Japanese industrial machinery manufacturer, rose as much as 7.9 per cent in Tokyo after the announcement.

Trump cited rising costs as a justification for the move. 

“Among other things, (Secretary of Commerce Howard Lutnick) has informed me that recent circumstances have affected and are affecting domestic industries that use agricultural equipment, industrial equipment and machinery and other related products,” the president’s proclamation read.

Democrats have frequently cited rising costs to farmers as a result of Trump’s trade policies as an issue that could help flip key House and Senate seats in the Midwest in November’s midterm elections. BLOOMBERG