I'm not sure what will happen with tariffs and I admit it.
This may help you . . .
Think of it this way: You run a huge “trade deficit†with the grocery store. Why not grow your own food? Well, you’re not
very good at growing food. And if you do, the grocer will not have money to buy what you make, or to give to the bank to fund your
mortgage.
So, trade is good. And tariffs? Tariffs are not good. Tariffs on steel hurt businesses that use steel, especially those that compete with
imported products made of steel. Tariffs hurt consumers, who pay more for steel-using products. But perhaps the greatest damage is
to the steel industry itself. Tariffs, like all protection, shield the industry from competition. And industries shielded from competition
do not innovate, do not cut costs, do not make better products. Only when the Big Three faced import competition did they start to
make better cars, and cut costs.
. . . Why is this so hard to understand? Tariffs, like all protection from competition, are great for the protected business and its workers,
at least for a while. If you’re a practical businessperson you think the way to get the economy going is to just to replicate for the economy
what is good for your business, and hand out protection to everyone. But protection only helps one business at the expense of all the
others, and at the expense of consumers, and the damage is worse than the gain. What is good for an individual business is not good,
scaled up, for the economy as a whole. Business people and bankers turned policy makers miss that.
Tariffs, like other protections, also help visible, large, and politically powerful constituencies. The larger pain is spread throughout the
economy, in ways most of us may not even notice in day-to-day living. But it adds up.
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John H. Cochrane, from "Trump’s Tariffs Will Hurt Trade, and Trade Is a Good Thing — Really," Cato Institute.
. . . [D]uring the 2016 campaign, Bernie (Sanders) had explicitly called for tariffs on steel. Hillary Clinton had also adopted a remarkably
anti-trade posture. Many people are rightly pointing out that Trump’s rejection of the Trans-Pacific Partnership has left the United States
dangerously isolated and economically disadvantaged in Asia, but they forget that Hillary too had campaigned on pulling out of the trade
pact.
Indeed, while Trump’s call for a trade war has shocked Republicans, it has been praised by Democrats, including extreme leftists such as
Sherrod Brown.
For Democrats, of course, opposition to trade fits in with their worldview. Both Hillary and Bernie believed that government should manage
the economy and pick winners and losers. Republicans, on the other hand, have at least argued in favor of free markets, the ability of
Americans to buy and sell with whomever they choose. President Trump has now firmly embraced the “government knows best†position.
The regulation-cutting president now supports regulation of large segments of the economy, a move that will harm countless American
industries that rely on affordable steel to manufacture products sold at home and abroad
Likewise, Republicans have long been nothing if not the anti-tax party. It is a staple of Republican campaigns — from local sheriff to presidential
— to accuse their Democratic opponent of wanting to raise taxes, especially taxes on the middle class. But tariffs are nothing more than a tax
— a tax that will hit the working poor and middle class the hardest. Some estimates suggest that steel tariffs, for example, could add as much
as $300 to the cost of a car. Worse, when Trump’s advisers dismiss the impact of these tax hikes on Americans, they sound suspiciously like Nancy
Pelosi calling the benefits of Republican tax cuts “crumbs.â€
And it certainly seems hard to argue that Democrats are the party of special interests when President Trump tosses out policy proposals while
meeting publicly with industry leaders and lobbyists. The last time steel tariffs were imposed, they cost 200,000 American jobs, according to
some estimates. That’s more than the total number of jobs in the American steel industry. Republicans balked at Obama’s handouts to insurance
companies; conservatives should treat Trump’s latest move on steel as no different.
Until recently, Trump supporters have been able to excuse his most egregious behavior by pointing to the conservative achievements of his
first year in office. “At least he’s not Hillary†has been the almost reflexive response to his latest tweet or controversial comments. But
conservative support for the “lesser of two evils†needn’t devolve into mindlessly adopting the leftist positions of the president. Fox News
host Sean Hannity, who once voiced support for free markets, now praises the president for “making good on his campaign promise to
rebuild American industry in the face of cheap and unregulated foreign goods.†That the president has enacted conservative priorities in
his first year is no reason to praise the anti-free-market policies he is now promoting.
Democrats, of course, will have their own problem if Trump transforms into some sort of big-spending, high-taxing, pro-regulation Hillary-
Sanders clone. Will they continue to “resist†if the Trump agenda becomes their own?
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Michael D. Tanner, from "Trump Returns to His Democratic Roots," Cato Institute.
Trump makes it sound as if our choice is between producing 100 percent of our steel (and having a country) or producing no
steel (and presumably losing our country). He also implies that we are close to having no steel industry in this country and that, as such, we
should panic. Nonsense.
As I wrote for Reason two days ago:
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.
A recent AP story reports the following:
The U.S. steel industry last year earned more than $2.8 billion, up from $714 million in 2016 and a loss in 2015, according to
the Commerce Department. And the industry added more than 8,000 jobs between January 2017 and January 2018.
And the steel industry has been doing well in recent years:
Even before Trump mentioned the tariff last Thursday, the price of the benchmark U.S.-made hot-rolled steel had reached the
highest level since May 2011, according to S&P Global Platts. The price surged even higher on the tariff news.
“We finished 2017 in a good position. We look forward to 2018,†U.S. Steel CEO David Burritt told industry analysts Feb. 1, according to a transcript
at the website Seeking Alpha. He continued: “We’re seeing increased demand from our customers and have rescheduled some projects to ensure
that we can make enough steel to support our customers’ needs.â€
If you believe that steel jobs would come back to the U.S. if — and only if — China started behaving as a perfect free-market economy and was a
free-trade role model, there is this:
In the 1980s, American steelmakers needed 10.1 man-hours to produce a ton of steel; now they need 1.5 man-hours, says
Joe Innace of S&P Global Platts.
Have you seen steel factories these days?
Most American steel is now made at super-efficient mini mills, which use electric arc furnaces to turn scrap metal into steel. (Traditional integrated steel
mills make steel from scratch, feeding iron ore and coking coal into blast furnaces.) Some mini-mills need just 0.5 man-hours to produce a ton of steel,
Innace says.
This explains why steel employment peeked in 1953 at 650,000 and stands at 143,000 today . . .
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Veronique de Rugy, from "The U.S. Steel Industry: A Reality Check," National Review.
