4 Bad Arguments for Trump's New Tariffs

[EasyAce]

When it comes to trade, the president believes a lot of nonsense
By Veronique de Rugy
http://reason.com/archives/2018/03/06/4-bad-arguments-trump-steel-trade-tariff

Last week, President Trump's announced sweeping tariffs on all steel and aluminum imports into the United States: 25 percent on American buyers of imported steel-mill products and 10 percent on American buyers of imported aluminum-mill products. Trump has favored strong tariffs for years, and some of his most prominent economic advisors are supplying him with arguments in service of his policy.

Those arguments are all wrong. Here are the facts about some of the favorite arguments made by protectionists. For the sake of simplification, I will mostly focus on the steel tariffs.

Argument 1: Trump's tariffs are necessary because our domestic industry has been decimated . . . The domestic steel industry is not vanishing—far from it. 70 percent of the steel bought for use in the United States is produced here in the USA. Also, American steel production hasn't changed much over the past decades. In fact, since 2010 it's actually increased.

Argument 2: We have to impose tariffs because foreign governments subsidize their industries . . . That's rich coming from a country that imposes some 150 duties and tariffs on steel imports. It is also hypocritical from a country that claims to believe that cronyism is unethical and economically damaging. Precisely because cronyism truly is unhealthy and unfair, the appropriate response to cronyism abroad is not more cronyism at home . . .

Argument 3: We should impose tariffs for national security reasons . . . The U.S. military itself argues that it doesn't need the tariffs since 3 percent of our domestic steel production is enough to meet its needs. It even produced a memo saying this to the Department of Commerce. In addition, six of the 10 top importers of steel in this countries are our NATO allies.

Argument 4: We need tariffs to fight against China's overproduction of steel and Chinese subsidies . . . First, 10 countries export more steel than China to the U.S. Also, as the Commerce Department's own report on steel shows, the decline of jobs in the steel industry started before competition with China. Industry experts know that this decline in jobs is due mostly to innovation and industry consolidation . . .