Posted on 03/04/2018 7:13:16 AM PST by Oklahoma
One of the ironies of trade protectionism is that tariffs and import quotas are what we do to ourselves in times of peace and what foreign nations do to us with blockades to keep imports from entering our country in times of war.
Or consider that we impose sanctions on U.S. enemies such as North Korea, Russia, and Iran because we want them to feel the economic pain of being deprived of imports.
But now we are imposing sanctions on our own country, putting up tariffs supposedly to make Americans more prosperous. If ever there were a crisis of logic, this is it.
President Donald Trump genuinely believes that his steel and aluminum tariffs will save thousands of blue-collar jobs. And we know from our interactions with him that he truly cares about these workers in Pennsylvania, Ohio, and other Rust Belt states. We do, too, and we don’t want factories to shut down.
But even if tariffs save every one of the 140,000 or so steel jobs in America, they put at risk 5 million jobs in industries that use steel. These producers now have to compete in hyper-competitive international markets using steel that is 20 percent above the world price and aluminum that is 7 to 10 percent higher than the price paid by our foreign rivals.
Steel and aluminum may win in the short term, but steel-and-aluminum users and consumers lose.
Tariffs are really tax hikes. Since so many of the things American consumers buy today are made of steel or aluminum, a 25 percent tariff on these commodities may get passed on to consumers at the cash register. This is a regressive tax on low-income families.
Meanwhile, up to 5 million jobs will be put in harm’s way. And if U.S. steel-and-aluminum-using industries sell less to foreigners, the trade deficit goes up, not down.
Trump should also examine the historical record on tariffs. If he does he’ll see they have almost never worked as intended and have almost always delivered an unhappy ending.
The Smoot-Hawley tariff of 1929 was signed into law by Republican president Herbert Hoover. It gave us the Great Depression and worsened it along the way.
Richard Nixon’s 10 percent import surcharge contributed to the stagflation of the 1970s.
George W. Bush tried to save the steel industry by imposing tariffs on steel. If those tariffs had worked, we wouldn’t be having this discussion today.
Remember when we tried to save the color-TV industry with protectionist measures? Instead of saving it, we wiped out domestic production.
We aren’t persuaded by the Trump administration’s claim that we need to impose these tariffs for national-security reasons. Despite stiff competition from imports, many specialty steel producers are doing just fine, and are actually exporting steel to Mexico and Canada.
Meanwhile, Canada is the number-one exporter of steel to the United States. Does anyone really believe Canada is a national-security threat?
And tariffs, to be sure, are a two-way street. Canada and Mexico are now threatening retaliatory tariffs against America. This tit-for-tat trade breakdown could put NAFTA in serious jeopardy, inflict severe economic damage on all three nations, and spark a stock market meltdown.
Trump should continue to make American producers more competitive in global markets with tax-, regulatory-, energy-, and other pro-America-policy changes that bring jobs and capital back to the United States. This is happening at a furious pace right now. Almost overnight, Trump has made America the best and most reliable place in the world to invest. But steel and aluminum import tariffs work decisively against this goal.
In the early 1980s President Ronald Reagan invoked anti-dumping provisions against Japanese steel. It was one of the few decisions he later confessed he wished he hadn’t made.
Trump will come to learn the same thing. We hope he does so sooner, not later.
— Lawrence Kudlow, Arthur B. Laffer, and Stephen Moore are co-founders of the Committee to Unleash Prosperity.
Canada 16%
Brazil 13%
S Korea 10%
Mexico 9%
Russia 9%
Turkey 7%
Japan 5%
Taiwan 4%
Germany 3%
India 2%
A country often mentioned on these trade threads is missing. For ten points and a chance to play in the bonus round, can you name it?
Economic ignorance runs rampant among the populace. It seems each generation needs to relearn the hard lessons from the past. The only thing we learn from history is that we don’t learn from history.
Have you noticed we have some AFL-CIO members that post regularly on this topic?
We are going to have to fight a war. And it wont be the shoot and scoot kind of war that is going on in the mid east right now.
I wonder how long these people think we will last if we have to fight a full blown war against the likes of China without our industrial capacity we used to have?
Jackasses.
But why is it that every (okay, okay, not every) other country on earth imposes tariffs on us?...and they don't go broke, their economies don't die, and they don't have huge negative trade balances with us.
Is there a simple answer?
I’m confident that in the case of a full out war with either Russia or China or both, that we would be able to ramp up production of both raw steel and aluminum to fight that war. I’d also remind you that in the list posted above of our biggest steel importers only Russia and Turkey would be unreliable. They only make up 16 percent of the total imports.
The main drawback to swift defense production would be in the fabricated product.
Cheap import without tariffs are taxes, too.
If a person sells a product at $10, but is undercut by foreign products at $1, he has suffered a $10 loss at the hands of government. That’s a $10 tax.
Free Trade is not Fair Trade.
How can Americans with a high standard of living compete with slave labor or people living in mud huts?? That’s not fair to ask them to do that.
It just a race to the bottom when that happens.
Assuming that what we should have is capacity, I suspect it would be a lot cheaper to provide tax credits and/or a direct subsidy to US steelmakers in order to keep their plants in a "lightly mothballed" state so that they could be quickly brought on line.
I think this would cost a lot less than raising the price of steel for all US manufacturing and construction, and would not piss off the Canadians and the Brazilians and the Koreans.
Free markets mean that the individual concerns make their own decisions on what, when and where to buy the goods needed in their business or personal lives, not the government or some labor union or corporation.
Ideally two countries would mutually agree not to place tariffs or give subsidies to businesses involved with trade with the other country. In the absence of the perfect agreement getting as close as you can is better than limiting trade or even worse completely shutting it off.
Nobody mentions the jobs involved with handling or transporting goods. Manufacturing itself is only one aspect of an economy. As a general rule the countries with the freest trade have the stronger economies. Freedom equals prosperity.
Trade balances mean nothing. Sooner or later that money will come home. Think of it like a check written on a bank account. Unless you can cash that check it’s worthless.
Every dollar which will now have to be spent for steel and the things that are made of steel is a dollar that will not be spent for other goods and services.
Other goods and services whose providers employ people.
People who, as a result, will have less work.
I look around and I see all kind of work needing to be done. Infrastructure, private homes and apartments, business establishments, transportation vehicles, etc. At the same time we are at an all time high in employment according to the Trump Administration. So where is it we can’t compete?
Fair trade is just another name for government control.
A broad tariff without exemptions is needed to prevent cheating by that country not named on your list.
How much steel from those top ten countries originated in China?
If you don’t know or think the answer is none, than you’re not literate about international trade.
Some of these posters need to find and read Frederic Bastiat, Adam Smith, Ludwig Von Mises, Friedrich Von Hayek, Murray Rothbard, Henry Hazlitt, Milton Friedman, Thomas Sowell and Walter Williams.
And your confident hey? You havent a clue.
Right now, over 90% of the mines that produce that raw material (Iron) in this country are shut down. All the machinery has been torn down and the mines closed.
Now tell me I dont know WTF I am talking about since I lived in those areas where over 95% of the iron ore was mined to supply the needs of the war in WW2.
Iron River Michigan?-nope shut down.
Crystal Falls Michigan?-Shut down
Iron Mountain Michigan? Nope
Mather mine in Negaunee Michigan-nope
Ishpeming? nope
Iron River?-nope.
The Humbolt mine in Republic Mich? Nope.
Hibbing Mnn? Nope two of the three there are shut down.
Copper mines in the copper country of the UP? Nope..done, shut down.
The tilden and empire mines in Marquette Mich? Nope..they managed to shut that one half down saving a little less of 50% of the production there. That mine’s’ was combined in the later years.
It takes years to start up those mines as most of the equipment is demolished after shutdown-that stuff cant stay idle and then simply started back up, after a time, by the flip of a switch.
All the result of the dumping of cheap, way below quality steel from CHINA.
Now to be sure, the German and Swede steel is very high quality, and those I would not tariff. But the steel from the Chinese I would BAN from ever entering this country again.
What are you in the United Steel Workers Union?
Maybe we need to be buying all of that under priced foreign steel and stockpiling for the next war, then. And as far as the quality are you telling me it’s not priced on its grade? Can’t buyers tell what grade of steel they are getting?
Isn’t part of the problem with these older mines that they are played out? How long can you continue to produce at a profit when the ore is of reduced quality? And how can you pay exorbitant labor wages when you are squeezed by the cost of the resource?
Maybe it’s possible you don’t know WTF you’re talking about.
“Fair trade is just another name for government control.”
You could say the same thing about the word “Country”.
Not one of those mines were played out. They went to a lower grade of ore and to pellets. But they are played out now because they will NEVER be able to re-open them EVER.
I bet you think you got some real nads right? Why dont you take a trip up there and open your smart mouth up there and see what happens.
The average wage up there was 1400 a week in a 65 hour work week. So thats a lot right? Would you care to go work underground like a lot of those fellows do? I doubt it.
And you are correct on one thing. They do grade that steel. It goes from China to another country and they sort out the higher grade and sell the shit to us.
You better quit riding them sheep. Its turned your mind to mush.
Citation please.
So you are a damn union man. And tough to boot. It’s easy to be the bully on a website forum, isn’t it? I live in an area that hates the unions. Why don’t you come down here and mouth off. Tell them you don’t believe in Right To Work and try to force them to join a union. See how that works out for you.
Since you seem to have missed it let me repeat something that has been said over and over: When we buy foreign goods we pay in US Dollar denominated bookkeeping accounts. We are no longer on the Gold Standard so those bookkeeping accounts are really just electronic bytes on a computer. Ultimately they are worthless until they are brought back to the US or a US Bank and deposited.
Even assuming that 100 percent of our imports really come from China (and they don’t) that means they still have to spend that money. They can postpone spending it by investing in US Treasury Debt but if we get in a war with China the bonds and notes they hold will be worthless to them. We will have effectively traded thin air for cheap steel.
If we only import one third of our steel each year just how much is really coming from China? Destroys your argument that only these tariffs can save us if we go to war.
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