- - Sunday, March 4, 2018


Donald Trump’s pro-growth economic policies have been impressive and successful early in his presidency, and there’s even a little grudging applause on the left. It’s hard for Stupid to argue with a rebounding economy. That’s what makes the president’s decision to impose steel and aluminum tariffs stand out like an ugly duckling. His announcement last week that he would impose 20 percent tariffs on steel and aluminum has been felt already by consumers and manufacturers.

A critic doesn’t have to be a doctrinaire Milton Friedman free trader to see the folly of protectionist trade policy. President Trump ran as an unconventional Republican on trade, and his protectionist sympathies were clearly an important factor in his 2016 sweep through the Rust Belt states of the Middle West, where blue-collar voters see shuttered factories and ghostly Main Street and blame, rightly or wrongly, China, India or the North American Free Trade Agreement for their misery.

Mr. Trump had earlier imposed selective tariffs on Canadian softwood lumber, dishwashers and solar panels from China. The wisdom of those targeted tariffs — in response to what the Trump administration believes to be trade law violations, such as dumping — is debatable, but the harm they may do to the U.S. economy is negligible. If Americans have to pay $25 more for a dishwasher, it’s a pinch in the pocket, but hardly a budget-wrecker.

China has clearly emerged an economic and security adversary of the United States, and using trade as leverage to force China to behave in the South China Sea, lay off Taiwan, or curtail the nuclear program in North Korea makes a certain sense as part of the president’s America First economic strategy. China steals $500 billion worth of American copyrights, patents and technologies every year, and that cannot stand.

Standing up for America first is a good idea for any American president — if the president won’t protect America’s blue collar factory jobs, who will? — but the steel and aluminum tariffs are counterproductive. In the wake of the steel tariff announcement, domestic steel prices have risen by 20 percent on the spot market. The 85,000 steelworkers in the United States might benefit from these higher steel prices, but Veronique De Rugy of the Mercatus Center at George Mason University counts 2 million American workers in industries that use steel and aluminum, such as automobiles, trucks and heavy machinery. They have different interests that must be taken into account.

American companies compete in hypercompetitive global markets. If they must use steel that is 20 percent more expensive than steel bought by the Chinese, Japanese, Mexican or European manufacturers, Made in America products will become more expensive. Some of those 2 million jobs will surely be soon in harm’s way. Since so many of the things Americans consume are made of steel or aluminum, a 20 percent tariff will be passed on, one way or another, to the customers at the cash register or credit card. These tariffs become the definition of a regressive tax.

The Trump administration argues that the tariffs are necessary for national security reasons, to support a vibrant and prosperous domestic steel industry, but despite stiff competition from imports many American specialty steel producers continue to do well. Many steel imports come from Canada, one of the nation’s closest allies, and no one should worry about American dependency on Canadian steel.

The best way to make American producers more competitive in global markets is through tax, regulatory, energy and other reforms that bring jobs and capital back to the United States. That is happening at a furious pace now as the Trump economy has almost overnight restored the United States as the best and most reliable place in the world to invest. Steel and aluminum import tariffs make the U.S. less attractive and more expensive and in the short, medium and long run will cost many times more jobs than they protect.

Imposing tariffs can be a precursor of a trade war, and it’s foolish to want that. “Trade wars are never won,” Sen. Ben Sasse of Nebraska, a Republican, rightly observed last week. “Trade wars are lost by both sides. Kooky 18th-century protectionism will jack up prices on American families, and will prompt retaliation from other countries.” Trade wars kill jobs, and ultimately a lot of them. That would be sad, as a president of our acquaintance would say.

Copyright © 2019 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide