Protectionism vs. Jobs

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Bush's steel tariffs were supposed to protect jobs in the rust belt. But there have been unintended consequences:

When President George W. Bush announced last March he would impose three years of tariffs on imported steel, it was supposed to save jobs, give struggling steelmakers a chance to fight off cheap imports and create good will in a swath of important battleground industrial states—including Michigan.

Eighteen months later, the steel policy has helped avert layoffs, bring faltering factories back online and improve profits at steel facilities from Pennsylvania to Illinois.

But there is more controversy about the steel tariffs than ever. The higher steel prices have helped the steel industry but wreaked havoc on scores of other manufacturing companies.

Michigan's extensive network of auto parts suppliers has been particularly hard hit. The companies use steel as a basic building block for their products. They say the tariffs, which range from 8 to 30 percent, have had a devastating effect on their industry by raising their costs. They say they have laid off more workers than have been saved in the steel industry.

[Via Liberty & Power.]

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  1. Does anyone think Bush actually believed he was doing the right thing, rather than blatantly pandering? Anyone?

  2. joe,

    Of course he was pandering….but the reasons for the increased tariffs don’t affect the outcome.

  3. “Does anyone think Bush actually believed he was doing the right thing, rather than blatantly pandering? Anyone?”

    Nope. Blatant pandering it was. I was fortunate enough to have a short conversation about this sort of thing with Ron Paul once. I mentioned that I found it remarkable that he was electable when he was essentially running against Santa Claus in his Democratic opposition. He sighed and said that there are a lot of Republicans who would vote the way he does if they had more courage. They tell him that they are proud he is ‘doing the right thing’, then vote for a subsidy of some sort.

    When the fundamental premise of one party in a two party system is free goodies for people who vote donkey, the other party had better get religion, as it were.

  4. “they have laid off more workers than have been saved in the steel industry”

    no shit.

  5. This issue seems like it should be a major blow to Bush’s popularity. How come it doesn’t recieve more attention in the national media? Perhaps its just because i am a libertarian and big on free trade, but I am surprised this has not been seized on by more people.

  6. Ben, this issue isn’t seized by more people because most people believe in these sort of tariffs. What are Democrats going to say? They support stuff like this so they can’t exactly use it against Bush. Free-trade advocates knew all along that this is what happens when you impose tariffs so all we can say is “told you so!!”.

  7. The idea was that it didn’t matter. It took away an issue and didn’t have much effect, in the big picture. Everybody knew it cost jobs.

    The media template for the story though is that it saves jobs, and that’s what makes it an issue in the first place; nothing can stop a media template. So the Democrats had this issue, and Bush took it away.

    It’s not about the jobs, it’s about the issue.

  8. The biggest problem for Bush is that the unemployment is hitting Michigan in particular. Michigan is a swing state, or at least it was in 2000. Pennsylvania, where Bush was pandering, is also a swing state, or at least it was in 2000.

    If the unemployment hit Texas or California or Vermont or Idaho or South Carolina or Massachusettes it could be ignored by the Presidential candidates. All of those states are (as far as I can tell) guaranteed to go one way or the other. But Bush screwed up big time when he signed a bill that hurt workers in Michigan.

    (And yes, as a matter of principle I oppose any market-distorting law that destroys jobs. My only point was that the steel tarriff didn’t even serve the President’s immediate political interests as he was hoping, because it still hurt him in a swing state. If you’re going to harm the American economy, at least have the brains to make sure you benefit from the damage you do;)

  9. Good point Thoreau… protectionism in this case is an oxymoron.

    🙂

  10. vote dean and he really will save jobs

    really!

  11. I’m surprised our old friend Kevin Carson hasn’t weighed in on this.

    One of the stories I heard on this was of some of some English workers who had taken over their old steel plant who were threatened by the US tariffs in spite of the fact that they had “done everything right”.

    Now I realize that there are conflicting reports here, but there are questions about the fact that these guys could compete in “trans-Atlantic” trade without subsidies, and I frankly don’t care who makes the steel for my SUV.

  12. Auto parts makers need to get more pictures of politicians with farm animals like steel workers & farmers have.

  13. Its too bad politics and common sense economics so rarely mix. Will protectionists ever learn?

  14. One more reason Bush is unlikely to win Michigan in 2004.

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