Posted on 03/04/2018 8:00:35 AM PST by Kaslin
One of the ironies of trade protectionism is that tariffs and import quotas are what we do to ourselves in times of peace 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 by punishing with tariffs in order to make Americans more prosperous. If ever there were a crisis of logic, this is it.
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, it puts at risk 5 million manufacturing and related 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 above the price paid by our foreign rivals.
In other words steel and aluminum may win in the short term, but the steel and aluminum users and consumers lose. In fact tariff hikes - which are really tax hikes.
Some of those 5 million jobs will be put in harm’s way. And if they sell less to foreigners, the trade deficit goes up, not down. Since so many of the things Americans consumers buy today are made of steel or aluminum, a 25% tariff may get passed on to consumers at the cash register. This is a regressive tax on low income families.
Trump should also examine the historical record on tariffs, because they have almost never worked as intended and almost always deliver an unhappy ending.
The Smoot Hawley tariff of 1929 signed into law by Republican President Herbert Hoover gave us and worsened the Great Depression.
Richard Nixon’s 10% import surcharge contributed to the stagflation of the 1970s.
George W. Bush tried to save the steel industry by imposing tariffs on steel and If those tariffs worked, we wouldn't be having this discussion today. We tried to save the color TV industry with protectionist measures and instead they wiped out the domestic production.
We aren't persuaded by the Trump administration 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 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 to the U.S.?
What does worry us is that Canada and Mexico are now both threatening retaliatory tariffs against America. This tit for tat trade breakdown could put NAFTA in serious jeopardy. That could inflict severe economic damage to all three nations, and a stock market meltdown.
Trump should continue to make American producers more competitive in global markets through tax, regulatory, energy, and other pro-America policy changes that bring jobs and capital back to the United States. That is happening at a furious pace right now as Trump has made America almost overnight the best and most reliable place in the world to invest. Steel and aluminum import tariffs work decisively against this goal.
In the early 1980s Ronald Reagan’s invoked anti-dumping provisions against Japanese steel. It was one of his few decisions he later confessed he wishes he hadn’t made. Trump will come to learn the same thing, and we hope it is sooner, not later.
I know that and I also know that DJT kicked Gary Cohn to the curb when he decided to PROTECT American steel & aluminum. God bless Trump for keeping his promise to the rust belt states while turning his back on the internationalists who shameless vie for political power.
Trump's tax cuts and deregulation efforts will likely more than pay for the tariffs.
“I’ve heard all this internationalist slop x 30 years while watching American jobs flee our shores, China become a superpower and our trade deficit explode”
BTTT!
“And they work. Just look at the overbuilding we’re getting of wind and solar power. Not that these are strategic, but subsidies work.”
Subsidies are a tax on everyone. Tariffs are more specifically targeted.
Yes, in an ideal situation there would be no tariffs, which would remove the possibility of any government picking winners and losers within their own country or anywhere else. And no need to identify certain industries that might need protection or some other euphemism for protection or favor. That probably depends on the other side going along with the same philosophy, all the time.
That doesn’t explain why tariffs were imposed against a trading partner as benign as CANADA, does it?
Every industry makes the same special pleading.
Subsidize farmers because troops need food.
Subsidize oil because tanks use gas, etc.
Are you telling me the you support tariffs only for these two metals and nothing else?
I don’t think tariffs are a bad thing. They just make a hell of a lot more sense if they’re imposed uniformly on ALL imports from any given trading partner.
There is that, but the trading partners would also have to consider the relative value and scarcity of the various imports. As in a rare metal, or a complicated finished product, might be worth a higher tariff than wood or corn. I just don’t think there is one size fits all that works here.
If I own a company in the U.S. that uses steel or aluminum in a manufacturing process, a tariff on steel and aluminum is a huge incentive for me to relocate my company to another country that does NOT impose this tariff. That’s really what drives economists like these authors nuts about these targeted tariffs.
Why on earth would anyone believe anything Free Traitors say when they have a 30 year track record of failure?
You've perfectly described the 30-year lure of NAFTA/GATT/WTO and incidentally that relocated American company ceases to be an American company when it moves. You get that right?
Do research. An aluminum pot line can take 6 months to restart after it’s shut down. That’s why countries dump metals in America. Once a steel mill shuts, it stays shut.
Yeah ok. Find my latest post here. Then tell me what you think.
We’ll see.
Trump is business first and while remedying some inequalities is not going to throw the baby out with the bath water. Trump is not an isolationist 1930’s Pat Buchanan
No manufacturing jobs were exported, ever. Production was moved. Had the production remained in America, the jobs would have been lost because because the company failed
How exactly are you defining “failure” in this context?
Right. But there are plenty of companies headquartered in the U.S. with operations all over the world.
Eff NAFTA! Shut NAFTA down!!
Those #nevertrumper bush loving WTO people who oppose the 30% tarriff on steel and aluminum imports most likely are bed buddies with the koch brothers and the rothchilds
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