The steel and aluminum tariffs to be imposed in 2 weeks are a shining example of how decision making from the top creates winners and losers that may have truly unpleasant consequences.
For every job in the US in steel or aluminum production there are 80 jobs in US companies that use metal to make value added products.The consensus of economists seems to be that 5 jobs will be lost for every job gained under the President’s plan.* Raising tariffs with this imbalance didn’t make sense to me. In an attempt to understand the logic, I focused on discussions of winners and losers. Since this was suddenly announced by President Trump, I checked his tweets and it appears that the countries he is concerned about are Canada, Mexico, the EU, South Korea and Australia. Not so much China. And, most importantly, he is concerned with renegotiating NAFTA. So, when our former partners and allies come back at us with tariffs of their own, don’t believe these will be limited to metals. The EU is already planning tariffs on Harley-Davidson motorcycles, blue jeans and bourbon.
China is sitting back and calculating how to take advantage of this new dynamic.
As leaders of our own businesses, how often do we come up with a new idea or direction and tell our staff we want to make it a go immediately, without carefully evaluating all the effects of our decision, or, dismiss the range of consequences out of hand as irrelevant? Then later, we feel the effects and slowly bury our heads under the weight of fixing the unintended consequences of our enthusiasms.
In Conversational Capacity, Craig Weber suggests that when you, as the leader, feel particularly enthusiastic about a new idea, ask your team to give you 3 reasons why it won’t work. Then 3 more, then 3 more until you get all the objections out. Resolving the possible fall-out as you put the plan together may reduce the unpleasant consequences and may give you a much bigger win than even you, the enthusiastic entrepreneur could imagine.
* http://tradepartnership.com/wp-content/uploads/2018/03/232EmploymentPolicyBrief.pdf
Other articles on the tariffs: http://money.cnn.com/2018/03/02/news/economy/steel-industry-statistics-us-china-canada/index.html