Posted on 03/02/2018 6:13:39 AM PST by reaganaut1
Donald Trump made the biggest policy blunder of his Presidency Thursday by announcing that next week he’ll impose tariffs of 25% on imported steel and 10% on aluminum. This tax increase will punish American workers, invite retaliation that will harm U.S. exports, divide his political coalition at home, anger allies abroad, and undermine his tax and regulatory reforms. The Dow Jones Industrial Average fell 1.7% on the news, as investors absorbed the self-inflicted folly.
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The immediate impact will be to make the U.S. an island of high-priced steel and aluminum. The U.S. companies will raise their prices to nearly match the tariffs while snatching some market share. The additional profits will flow to executives in higher bonuses and shareholders, at least until the higher prices hurt their steel- and aluminum-using customers. Then U.S. steel and aluminum makers will be hurt as well.
Mr. Trump seems not to understand that steel-using industries in the U.S. employ some 6.5 million Americans, while steel makers employ about 140,000. Transportation industries, including aircraft and autos, account for about 40% of domestic steel consumption, followed by packaging with 20% and building construction with 15%. All will have to pay higher prices, making them less competitive globally and in the U.S.
Instead of importing steel to make goods in America, many companies will simply import the finished product made from cheaper steel or aluminum abroad. Mr. Trump fancies himself the savior of the U.S. auto industry, but he might note that Ford Motor shares fell 3% Thursday and GM’s fell 4%. U.S. Steel gained 5.8%. Mr. Trump has handed a giant gift to foreign car makers, which will now have a cost advantage over Detroit. How do you think that will play in Michigan in 2020?
(Excerpt) Read more at wsj.com ...
So are income taxes
So you don’t think there are going to be beneficiaries to these tariffs?
Follow the money—the businessmen who invested in steel and aluminum industry when it was pennies on the dollar. <cough Wilbur Ross, commerce sec)
A tariff of 25% won’t hurt anyone, except maybe China. A weaker dollar and more manufacturing will only help the US gain a little independence from the bankers.
Reagan successfully used tariffs, and so did our founders.
As late as 1912 Tariffs were 30% of our budget.
By the way, this is when the American quality of life was unparalleled anywhere on planet earth.
Total revenue: $992 million
Tariffs $311 million
Postage stamps & fees $245 million
Liquor taxes $230 million
Tobacco taxes $77 million
Corporate income taxes $35 million
Panama Canal receipts $33 million
All other* $96 million
* Land sales, fines, fees for patents and forestry.
In his 1790 State of the Union Address, Washington justified his tariff policy for national security reasons:
A free people ought not only to be armed, but disciplined; to which end a uniform and well-digested plan is requisite; and their safety and interest require that they should promote such manufactories as tend to render them independent of others for essential, particularly military, supplies.
Henry Clay
In 1832, then the United States Senator from Kentucky, Henry Clay said about his disdain for “free traders”[9] that “it is not free trade that they are recommending to our acceptance. It is in effect, the British colonial system that we are invited to adopt; and, if their policy prevail, it will lead substantially to the re-colonization of these States, under the commercial dominion of Great Britain.”
Clay said:
When gentlemen have succeeded in their design of an immediate or gradual destruction of the American System, what is their substitute? Free trade! Free trade! The call for free trade is as unavailing as the cry of a spoiled child, in its nurse’s arms, for the moon, or the stars that glitter in the firmament of heaven. It never has existed; it never will exist. Trade implies, at least two parties. To be free, it should be fair, equal and reciprocal.
Clay explained that “equal and reciprocal” free trade “never has existed; [and] it never will exist.” He warned against practicing “romantic trade philanthropy… which invokes us to continue to purchase the produce of foreign industry, without regard to the state or prosperity of our own.”
Andrew Jackson
Henry Clay’s longtime rival and political opponent, President Andrew Jackson, in explaining his support for a tariff, wrote:
We have been too long subject to the policy of the British merchants. It is time we should become a little more Americanized, and, instead of feeding the paupers and laborers of Europe, feed our own, or else, in a short time, by continuing our present policy, we shall all be paupers ourselves.
In contrast... republican and conservative hero Woodrow Wilson made a drastic lowering of tariff rates a major priority for his presidency. /s
Why is it anytime Trump initiates a policy that is not conservative, so many people float “Well Bush or Obama did it” or “Well media did not scrutinize Bush or Obama.” ??
I don’t care what WSJ did in past or says now—my opinion is not formed by their editorial boards.
Regardless of what happened a decade ago, this is going to raise the cost of gods sold—this will increase military upgrades (think tanks), it will increase cost of infrastructure spending, and it will increase consumer spending—think cars, homes, appliances etc.
I suspect any tax reduction consumers had will be eaten up in increased prices for consumer durables.
Trade imbalances drive up prices too, as one currency strengthens and the other falls. China handles this problem by buying our government bonds which funds socialism and big government here. Wow, what trade.
As a retiree how many steel products are you buying? How much food and pharmaceuticals are you buying from China? A trade war won't impact retirees much. The trouble is worth it because eventually it will create more jobs for young people that will fund Social Security payments.
“And what moral right do you have to dictate to me from who and how much I pay for steel? If you aren’t part of the transaction it’s none of your damn business”
Washington, Jefferson, Adams, Lincoln, Madison, Jackson, Clay, et al completely disagree with you. But don’t worry, you have Woodrow Wilson in your corner.
Too bad the worked steel is exempt.
China exports 25 % of the worked steel to the US
President Trump has good instincts. I trust him more than the WSJ. No action such as this takes place in a vacuum. This most likely is part of an overall negotiating strategy. The foreign governments and entities want the tariffs to go away... then they have to stop doing it to us.
Check your memory. Bush II did exactly the same thing with sheet steel. Rather than protect steelworker jobs, the result was that appliance manufacturers left the US for Asia.
Bush II anti-free trade was a major reason for the loss of manufacturing jobs in the Rust Belt. Once gone, they are hard to get back, even when the mistake is eventually corrected.
He did that for a year and this was the result
“o Since then, steel prices have stabilized, imports are at their lowest level in years, and U.S. steel exports are at record levels.
The President’s determination was based on significant improvements in the U.S. steel industry and other changed circumstances since last year, including:
o Industry consolidation and restructuring that have reduced production costs and increased productivity;
o New labor agreements that increase flexibility, boost productivity, protect retiree welfare, and empower steel workers; and
o An improving economy that will create new opportunities for America’s steel industry.”
“Why is it anytime Trump initiates a policy that is not conservative, so many people float “Well Bush or Obama did it” or “Well media did not scrutinize Bush or Obama.” ??
I don’t care what WSJ did in past or says now—my opinion is not formed by their editorial boards.
Regardless of what happened a decade ago, this is going to raise the cost of gods sold—this will increase military upgrades (think tanks), it will increase cost of infrastructure spending, and it will increase consumer spending—think cars, homes, appliances etc.
I suspect any tax reduction consumers had will be eaten up in increased prices for consumer durables.”
Because the Wall St. Journal is an economic paper. I don’t trust them on this, because they defended Bush’s spending and his debt. You want American industries to die.
Why? Because all of economics is dynamic. That is, nothing is written in stone and people, companies, nations adapt.
As far as economists are concerned it is as Cooledge said about them. He said that an economist looks at reality and then tries to find a theory that fits.
onically, the GOP of Lincoln, McKinley, Teddy Roosevelt, Coolidge, Ike, was protectionist. Eve Reagan imposed tariffs
You forget to name Bush II, who famously went protectionist on sheet steel to protect steelworker jobs. But it backfired and sent appliance manufacturer jobs to Asia. Bush II protecting steel is a major reason for loss of Rust Belt manufacturing jobs. Once gone, they are hard to get back.
As a Jeffersonian, I do not like tariffs. But the real point about our military—upgrades or otherwise—is really the most compelling reason that the President had to act. Too much of our once heavy industry needs have become dependent on foreign manufacturing. This creates real danger. We won World War II when we clearly outproduced Germany & Japan by a wide margin, building far more ships & planes—for a prime example—than they were able to produce, by that wide margin.
Good! Its about time America started to build with quality steel. No matter how good they say their steel is its been proven to have inconsistent purity. And their fasteners, chain, shackles, plate and girder steel.
And tools!
All crap!
Because the Wall St. Journal is an economic paper. I don’t trust them on this, because they defended Bush’s spending and his debt. You want American industries to die.
And because I disagree with you,
your reply: “You want American Industries to die”
That is just ignorant and obnoxious. Clearly you don’t wish to have a discussion, but I will post for other cerebral people who are actually wanting to discuss and debate.
I don’t want American Industries to die, I want American industries to be streamlined and competitive in order to survive. That is not going to happen when they are protected by tariffs. The auto industry had to go thru paradigm shifts and adjust to be able to “not die” and few would now argue that was a mistake. Automakers are on top of there game making quality products at a competitive price.
I just don’t see why we need tariffs on 2 industries that will be pivotal in the cost of our infrastructure and military spending going forward. Corps received a huge tax cut and onerous regulations are being peeled back.
Most importantly, I don’t think middle class should have to be subsidizing these industries—tariffs are a tax on the consumer—remember this next time you buy an appliance, home, car, etc. even your beer.
Oh, and you enjoy subsidizing the steel industry in your purchases, and watching your savings and 401K go down unless you invested in steel early on like Commerce Secretary Wilbur Ross...
Trust Trump! Wait and see what/how this works out.
Predicting the future is IMPOSSIBLE!
“Bush II protecting steel is a major reason for loss of Rust Belt manufacturing jobs”
No, nothing could be further from the truth. The actual reason was free trade where we literally gave tax credits to companies to relocate manufacturing offshore near sources of destitute 3rd world labor and then send the products home tariff free. And usually from nations that impose tariffs on us!
Very true about steel quality.
And also, broad brush here, but the rest of the world and WSJ is angry about it. That tells me a whole lot on it’s own.
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