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 hear that. So what you are saying then is that only steel and aluminum should get special tariffs because of their national security implications. Right?
Good post. Trump won an election on this and other pledges. It is not the least bit surprising to me that he is doing this. BTW, Bush did it and cancelled two years later, we have fewer steel producers today than at that time. So Bush did not save the steel industry. Was that because the tariffs did not work, or because he cancelled them in favor of global trade before they had a chance to work?
Personally, if the globalists are against the tariff, that makes my decision easy. Also, does this “tax” mean that we will pay off some of the tax break with tariff money? That sounds cool too.
And what about exempting some countries? The steel dumping countries will simply go through these exempt countries and run the blockade so to speak.
My guess, Trump will end the tariffs through the adoption of new trade deals with Canada and Mexico — what he wanted all along. Take that Larry.
On the subject of tariffs, I trust Wilbur Ross(secretary of commerce).
I think he knows what he’s talking about.
They are protective taxes.
I’m saying that Trump is right at every level. The so-called free traders never talk about the cheating or the dumping or the unequal access of other nations. His tweet is just the opening salvo that begins a process. Like Braveheart negotiating on the battlefield, why would you not show a united front? The swamp resist EVERYTHING that makes America stronger.
So you don’t mind paying one way(subsidize), just the other way(tariff) is bad?
My argument for subsidies is that if you want to ensure that we have production capacity for a militarily strategic good, then just subsidize it.
That would require an analysis of how much base production we would actually need to subsidize, realizing that we can usually quickly scale up production so long as the expertise is in-country, and then targeting the subsidy to one or two producers. If there’s already more than that, why subsidize at all?
Now look at tariffs. A fair percentage of the comments in here about maintaining production of steel for strategic reasons are worried about China. We buy hardly any steel from China and not that much from Russia. So what’s the point of the tariff? It’s certainly not to protect strategic production.
I call BS.
And the taxers never talk about the job loses due to these tariffs. There are millions more people who work for steel buyers than steel sellers. These are solid blue collar jobs. The margins for these manufactured steel products are thin. A 25% tariff will mean job loses. Get ready to own that.
I think it is. China will just get worse on the trade cheating unless they are slapped. China needs to be slapped in many areas. I see this as kind of an easy warning which shows great restraint on POTUS’ part. I personally do not think is nearly strong enough. Strategic materials is a part of it for me but there are other reasons we shouldn’t play nice with China. Competing with commie gubmint owned factories using labor working for slave wages is a fool’s game I do not think we should play. Tariffs help take away their slave wage advantage. I like the idea of tariffs much better than subsidies.
Since you still haven’t figured Trump out yet, I’ll just assume I’m pushing the stone uphill. It truly amazes me just how hard it is for people to understand his genius.
Since the EU butt wipes are s quick on the draw it seems they are protectionist too.
We are all protectionists now.
This supposed expert is just another Free Traitor™ liar. Smoot Hawley went into effect in 1931, 2 years AFTER the 1929 crash. What a bunch of BS.
Well he is an idiot like you if you think Smoot Hawley was passed in 1929. Smoot Hawley had minimal effect on the economy and didn’t go into effect until 1931. It was passed in 1930 way after the stock market crash. You are both buffoons and lairs. The only bigger hoax that free trade is good for the USA is global the warming hoax....
If the noose fits wear it.
Go ahead find a nation that makes steel with no import tariff LOLOLOLOLOL
“We buy hardly any steel from China...”
China dumps it’s steel into Mexico and Canada, then it gets here via NAFTA.
“So what’s the point of the tariff?”
Same reason we need a Wall.
Tariffs are taxes, period-—it’s basic economics.
Tariffs are taxes and so are income taxes. So what?? Consumption based taxes should be favored over income taxes with tariffs being the quintessential consumption based tax. Every Conservative should be wildly in favor of them.
These pinheads think tariffs imposed by other nations is great but the US doing so is a disaster.
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