Tariffs

U.S. Steel Manufacturers Eager for Trump to Impose Long-Promised Tariffs

Trump, tariffs and the art of the deal

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Chris Kleponis/dpa/picture-alliance/Newscom

American steel manufacturers are eager for President Donald Trump to follow through on his campaign trail bluster and slap high protective tariffs on steel imports.

Bloomberg recently interviewed John Ferriola, CEO of Nucor, an American steel company, who said after speaking with administration officials, he felt reassured that the tariffs are coming.

"Last week someone in the administration told me they meet with the president every day, and at least two to three times a week Trump asks, 'Where are my tariffs? What are we doing?,'" Ferriola said. The steel company CEO remains confident that President Trump will deliver the goods, Bloomberg reported.

The administration has, so far, been all talk and no action. The White House missed a self-imposed deadline in June to release a Department of Commerce investigation on the impact of imported steel on national security. The report, which could be used to support slapping protectionist levies on imported steel, hasn't materialized.

On the campaign trail, Trump's free-wheeling speeches would typically include shots at China and promises to stop the flow of cheaper steel from across the Pacific. His promise to "put American steel and aluminum back into the backbone of our country," as Trump put it at one rally in western Pennsylvania during the campaign, seemed to resonate with voters in the Rust Belt and helped push him to an electoral victory.

In office, Trump has continued his blunt statements about protecting the American steel manufacturing industry.

"Steel is a big problem," Trump told reporters traveling aboard Air Force One in July. "We're like a dumping ground, OK? [Other countries are] dumping steel and destroying our steel industry. They've been doing it for decades and I'm stopping it. There are two ways, quotas and tariffs. Maybe I'll do both."

Trump's tariffs, however, are a solution to a problem that might not exist. Cheap Chinese steel isn't threatening the American domestic economy, according to Scott Lincicome, a trade attorney and an adjunct scholar at the Cato Institute. The last thing this country needs is more tariffs.

"It's a myth that we don't have steel tariffs already in place," Lincicome tells Reason. "Most of the steel we import is not from supposedly nefarious places like China or Russia; it instead comes from close allies like Canada."

According to Lincicome, between the years of 1990 to 2013, America was one of the most protectionist countries in the world. Of the 373 different trade barriers in place in late 2016, 191 of them were trade restrictions placed on foreign steel. Steel consuming industries, which outnumber steel manufacturing industries 50-to-1, pay the price.

Whatever American jobs are saved in the very concentrated manufacturing sector will come at the cost of jobs involving steel imports. Ultimately, people who work in construction will suffer because higher steel costs will mean fewer construction projects, according to research from Daniel R. Pearson, Lincicome's colleague at Cato.

With the urging of the president, Republicans in Congress spent months unsuccessfully attempting to repeal Obamacare. Now with tax reform on the horizon, the administration's intent to impose tariffs seems to have been put on the backburner.

Commerce Secretary Wilbur Ross is adamant the administration will deal with the question of steel tariffs after dealing with tax reform. Ross, a billionaire, made a fortune in 2002 buying bankrupt steel companies on the same day the Bush administration imposed tariffs on foreign steel imports. He, like U.S. Trade Representative Robert Lighthizer, is one of several strong supporters of tariffs in the Trump administration.

"My best guess is that Trump will impose some sort of steel import restriction at some point. He likes the idea too much to abandon it." Pearson tells Reason. "Both Ross and Lighthizer are quite committed protectionists and are unlikely to try to talk him out of it."

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  1. The CATO document is a joke. It measures a country’s protectionism by the number of protectionist measures the nation has. That is absurd. The raw number of protectionist measures isn’t the proper measure of how protectionist a country is. The total effect of those measures is what matters. By Cato’s logic, a country that has a few very broad-based protectionist measures that protected huge swaths of its economy would be “less protectionist” than one that had many measures aimed at small areas of its economy.

    That paper is bad research and bad logic. It doesn’t matter what your opinion of trade policy is, anyone with any sense of integrity or commitment to honest debate should be offended by that paper. I am increasingly forced to admit that Cato is just not a serious or a trustworthy organization anymore. It is just a hack organization that puts out poorly researched and reasoned garbage. Even if you agree with them on trade, i don’t think Cato is someone you want on your side.

  2. “Steel is a big problem,” Trump told reporters. “It’s just too cheap. People are going around building things with inexpensive steel and they should have to pay more.”

  3. Ultimately, people who work in construction will suffer because higher steel costs will mean fewer construction projects, according to research from Daniel R. Pearson, Lincicome’s colleague at Cato.

    Okay, what is this “research”? Here it is,

    Manufacturers are particularly vulnerable to artificially high steel costs because many of them compete directly with goods produced at lower costs in other countries. It is hard to be a successful producer of automobiles or air conditioners, for instance, if US policies give overseas competitors a built-in cost advantage. Worth noting is that loss of only 2% of jobs at steel-using manufacturers would equal the size of the entire steel-mill workforce.

    But manufacturers aren’t the only businesses hurt by high steel prices. Construction activities account for 42% of all US steel consumption and employ 6.8 million workers. Raising the cost of steel will mean fewer construction projects started and fewer workers employed, not the best possible approach to rebuilding American infrastructure.

    1. I am sorry but that doesn’t count as “research”. That is spending ten minutes doing some googling and then making a bunch of intuitive but ultimately unsupported and most importantly unquantified assumptions based on a few basic numbers. That paper is written on the level of a B high school report. Actual research would look in detail at the numbers and margins in these industries and quantify just how much the higher price of steel costs these industries and compare it to the value of the increased wages and employment that come with the tariffs. I don’t know what the answer to that question is, but Cato doesn’t even try to give it.

      1. Shorter John: “real research would involve coming to my predetermined conclusion that everything Trump does is wonderful”

        1. Bullshit. I didn’t say that at all. Which part of “I don’t know what the answer to that is” are you having a hard time understanding? It may very well be that the steel tariffs cost us more than they are worth. But, the CATO paper doesn’t provide any meaningful answer to that question much less any real research or proof.

          It is more than a bit ironic that you accuse me of confirmation bias when that is exactly what you are doing. The CATO paper is telling you what you want to hear, so in your mind, it must be right and anyone who questions it or points out its flaws, no matter how reasonable or obvious those are, is just demanding the “research fit their conclusion”.

          Serious question, was your post meant to be ironic and to give a textbook example of projection? I honestly can’t tell.

      2. “That paper is written on the level of a B high school report.”

        Which is all that’s required here.
        When a bowling ball lands on my foot, I don’t need highly detailed numbers to tell me it’s not a good thing. Similarly, high steel costs are bad. B-A-D, bad.
        How bad? You can get to that later if YOU care to spend the time and money. All I need to know is that high-priced ssteel (and tarrifs in general) are BAD.

        1. You don’t know that. Without looking at the actual numbers, you can’t claim to know what they are. More importantly, claiming you do just makes you look like an adherent to a religion rather than a supporter of a rational economic policy.

          Sorry, but I don’t view economics as a religion. Show me the numbers or shut the fuck up. And if you understood economics, you would know that the actual numbers and results of good economic analysis is not always what your gut or common sense tells you. You never know until you look. And for whatever reason CATO is no longer interested in looking.

          1. What research would need to be done to show that increasing the price of a commodity increases the costs of using that commodity?

            1. That is not the question. The question is are the costs associated with the increase in the price of the commodity greater than the benefit of the increased domestic manufacturing associated with it. The answer to that question is hardly obvious. Cato just acts like it is.

              1. Anyone paying the higher prices is adversely affected by the higher prices. That’s a given. Only a few would benefit from the increased prices, and the fact that they’ll benefit is not at all a given.

                1. No. Lots of people benefit from the high prices. It is not just the workers in the plant, it is the people who own the plants, the people who do business with the plants and all those downstream from that revenue. So you can’t say, “it is just the workers”.

                  The truth is the tariffs likely do cost some money. The question of just how much is much more complex than CATO pretends. At this point, CATO is just a religious institution. I don’t see any reason to take it seriously even if they happen to put out a position you agree with.

                  1. John|10.4.17 @ 5:34PM|#
                    “No. Lots of people benefit from the high prices.”
                    What a pathetic excuse for a thinking human.
                    Let’s try this again, absent your ignorance:
                    Every free trade increases the wealth of humanity.
                    Every increase in price, absent an increase in quality, reduces the number of trade.
                    Hence, every market distortion by the government reduces the gain in the wealth of humanity.
                    John, you can often be a real lying piece of shit.

                  2. Why the hell should government policy benefit relatively low-wage resource extraction industries over relatively high-wage manufacturing and construction?

                    Resource extraction is often dirty and hazardous in addition to not paying very well. It’s in our interest to get cheap inputs like steel from other countries, so that we can make higher value added products out of them.

          2. John|10.4.17 @ 4:16PM|#
            “You don’t know that.”
            Bullshit, John. You can be every bit as dishonest as Tony when your ox gets gored.
            Here’s the deal:
            Every free trade increases the wealth of humanity.
            Every increase in price, absent an increase in quality, reduces the number of trade.
            Hence, every market distortion by the government reduces the gain in the wealth of humanity.
            John, you can often be a real lying piece of shit.

  4. What’s ironic is that Nucor likes to portray itself as a Lean, Mean, Steel-Makin’ Machine, the nimble little steel company that succeeded through the Free Market and God-Fearin’ American Hard Work! *patriotic music plays in background*

    Now that they are the largest US steelmaker, they’ve morphed into the 1970’s version of US Steel.

  5. RE: U.S. Steel Manufacturers Eager for Trump to Impose Long-Promised Tariffs

    Trump wants tariffs and protectionism, so he must be a democrat, right?

  6. Protection rackets gotta protect now and then.

  7. When will Trump learn, it’s not about the basic steel, it’s about which nation turns that steel into giant fighting mecha!

  8. Why does Trump hate the construction industry?

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