Protectionism

Trump's Tariffs Keep Hurting American Manufacturers

The Tariff Man doubles down on bad economics.

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The Tariff Man has done it again. President Donald Trump recently announced that he will expand import taxes on American consumers of auto parts, nails, and other goods made in the United States with steel and aluminum. Apparently, untaxed imports of these metals put our national security at risk.

Under the latest proclamation, some imports of products made with aluminum will be subject to an additional 10 percent tax, while some steel products will be hit with a 25 percent one. The decision comes two years after the first round of steel and aluminum tariffs, a little over a month following the United States-Mexico-Canada Agreement's approval by the U.S. Congress, two weeks after Trump signed a phase one trade deal with China, and while the U.S. government is in the middle of some trade negotiations with the Europeans.

Thanks to the new trade agreement, Canada and Mexico are exempt from these new levies. Argentina and Australia are exempt from the added aluminum tariffs, while Brazil and South Korea are exempt from the additional steel tariffs. This complexity could make a phase two agreement with China difficult, and it likely won't help with the Europeans.

Interestingly, the president does seem to understand that his original tariffs on steel and aluminum have had a negative impact, as predicted by many economists.

The recent proclamation acknowledges that the metal levies have reduced imports of foreign metals and that, as a result, U.S. imports of some products made with those metals "have significantly increased since the imposition of the tariffs and quotas." The net effect, the proclamation continues, "has been to erode the customer base for U.S. producers of aluminum and steel." Exactly!

This outcome is a well-documented impact of tariffs on intermediate goods such as steel and aluminum. First, these tariffs raise the cost of the imported metals, and as a result, that raises the production costs for American manufacturers that use these inputs. Unsurprisingly, this means higher prices for American-made products and an increase in imports of goods made with those metals.

For instance, over a year ago, I wrote in this column that an increase in the cost of steel was raising the cost of producing garbage disposals in the United States. Having to cover the tariff expense by charging higher prices, these American producers saw some of their customers switch to foreign-made garbage disposals. The same thing happened with sugar. As domestic sugar producers were protected from foreign competition with sugar tariffs, the importation of candy bars increased significantly.

Even if we ignore the additional cost of the retaliatory tariffs imposed by our very annoyed trade partners, Trump's tariffs have had many other documented negative effects on American consumers of steel and aluminum. These effects are revealed by the thousands of requests by American manufacturers for exemptions from the import tax. These manufacturers, some of them steel manufacturers themselves, are finding that the higher prices they must now pay for some inputs are making them less competitive.

A recent study published by economists Aaron Flaaen and Justin Pierce at the Federal Reserve Board researched whether the recent wave of tariffs has delivered on the president's promise to help U.S. manufacturing. After taking into consideration the retaliatory tariffs, the answer is pretty clear: no. The American Enterprise Institute's Michael Strain summarizes the findings in detail for Bloomberg magazine. "Beyond reducing manufacturing employment," he notes, "the study concluded that producer prices increased, but that manufacturing output did not. So the tariffs didn't just hurt the economy as a whole, but damaged the manufacturing sector specifically."

Most people, when faced with this evidence, would back away from using tariffs—but not the Tariff Man. Trump has brazenly decided that he will now double down with new tariffs on derivative products. Unfortunately, these same policies will yield the same sour results.

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  3. Tariffs as ongoing policy are harmful as Veronique indicates. But as a tactic to ultimately get open markets and free trade, it is fine. She apparently does not understand this.

    1. Not everyone can be a stable genius, or the type of person (uneducated, downscale, white male bigot from the sticks) who adores a stable genius,

      1. But enough about you.

    2. The current tariffs have neither led to open markets nor free trade.

      The China deal is really a big nothing burger, and certainly not free trade. It forces China to buy so much of our agricultural products under the threat of more tariffs. Talk about market distortion.

      The USMCA essentially doubles down on NAFTA’s management of trade, particularly in the auto industry. We exported our minimum wage laws to Mexico… in the name of free trade?

      Trump and his staff don’t want free trade. Trump seems to really just be trying to force our prop up certain sectors of the economy by either protecting them from competition or by forcing countries to buy our products. That isn’t free trade at all. It’s cryonism. It’s picking winners (steel, aluminum, farmers) and losers (primarily manufacturers who use steel and aluminum).

      All in the name of #NationalSecurity.

      1. Poor Leo. He rejects facts like Trump offering Free Trade at the G-7 Summit and tariffs can lead to trading partners lowering trade restriction.

        All in the name of #ResistTrump.

        1. Poor lc, mired in ignorance, per usual.

          1. Your citation fell off sock troll wearingit.

            1. Here’s a bit of arithmetic you ignore: unilateral zero tariffs are a better weapon to get free trade.

              Goes right along with you thinking 1789 includes amendments ratified in 1791.

              1. Zero tariffs don’t get free trade when the other country doesn’t respect intellectual property. It begets looting, which is what Trump is trying to stop.

              2. How do you figure that us eliminating our tariffs will stop China and Europe from being protectionist? That is like arguing if we got rid of all our military, everyone else would too. Come on you are better than that, usually.

                1. If other countries want to punish consumers of imports, then by golly the US better punish consumers of imports too! Two wrongs make a right!

                  1. So, how will not “punishing consumers of imports” by the US help to convince China to do the same? Your snark doesn’t even start to address the fundamentals of my question. And it is also a bit of a strawman, because I said nothing about tariffs being good, just asked if one side unilaterally ended tariffs, does that mean others will follow suit?

                    1. And what is the evidence for that assertion?

                    2. if one side unilaterally ended tariffs, does that mean others will follow suit?

                      Who cares? Seriously. What does it matter what other countries do? The point of lowering tariffs is to stop punishing consumers who choose to purchase imports. If other governments enact tariffs on imports, then that’s their problem. Stop punishing Americans for the actions of the Chinese government.

                    3. I understand that if you’re a producer of exports targeted for tariffs that you’re gonna be pissed. I fail to see how punishing fellow consumers is the solution.

                    4. Don’t those consumers likely work for the exporters, so aren’t they also being harmed by the other countries tariffs? Less sales equals lower pay. Try logic sometime rather than ideology and sarcasm. A little pragmatism and cynicism would also help you.

                    5. You do realize that hurting their people means that less American goods will be being purchased, which hurts American workers. I’m not certain where you work, but most people benefit when their industry is able to be competitive.

                    6. “Who cares? Seriously. What does it matter what other countries do? The point of lowering tariffs is to stop punishing consumers who choose to purchase imports. If other governments enact tariffs on imports, then that’s their problem. Stop punishing Americans for the actions of the Chinese government”

                      Like a crackhead, you display zero big picture or long term thinking here

              3. “Here’s a bit of arithmetic you ignore: unilateral zero tariffs are a better weapon to get free trade.”

                That’s not arithmetic, it’s credulous dogma

            2. I feel lucky today. 2 trolls after me.

              wearingit and Alphabet troll

              1. and $parkY and Leo

        2. I honestly don’t think Trump knows what free trade is, or he was only offering free trade because he knew nobody would accept it. There is no evidence in Trump’s actions on trade that suggest he wants free trade. The only consistency in Trump’s trade policy is that he’s consistently willing to strong-arm other countries to buy our goods by leveraging taxing Americans who wish to import goods. That’s hardly free trade. That’s cronyism.

          1. And he somehow thinks he can force other countries to buy more of our stuff than we buy of theirs. That might work for a short while with gold for currency, but it won’t work with fiat currency. Dollars out have to equal dollars in, and the very phrase “trade deficit” is inapplicable to two specific nations taken out of the context of global trade.

          2. Leo‘s assumptions make asses out of him and HIM.

    3. Gulags as an ongoing policy are harmful. But as a tactic to ultimately create the new Soviet man, it is fine. BigT apparently does not understand this.

      1. Yes!!! If ONLY we will trust Government Almighty ENOUGH (it just MIGHT be till the end of Time Itself, as a test of our Faith), and we tax-tariff ourselves every time we scratch one another’s asses, or pick each others’ fleas… EVENTUALLY, the State will wither away!

      2. That’s a pretty dumb comparison.

        1. It’s an entirely apropos comparison: attempting to achieve a goal using a method that causes immense human suffering and has low chance of success.

          BigT also assumes that critics of this technique misunderstand it, when in fact they do, but consider it a poor strategy. BigT, like all socialists, thinks that *wanting* his strategy to work is sufficient justification for using it.

          1. Haha! You are a fool.

            Think instead of killing an enemy. As policy it’s very bad, but in a war it is a tactic. When the war is over, you quit the killing. Is that simple enough for you?

            The tariffs have caused many countries to re think their policies on trade with the USA. China is a work in progress, and will likely never be completely open due to their communist government. But even partial success is worthwhile. We lose hundreds of billions each year to their IP theft.

            1. The analogy to killing wars is apt, but not at all positive! In both cases, BOTH sides are losers! Today, real war can end in nuclear war, and the suicide of the human species, dragging untold innocent species with us! If we were wise and had a picogram of decency and compassion, we’d say NO to both real wars and trade wars!

            2. We lose hundreds of billions each year to their IP theft.

              Is there a chart where I can find out how much China stole from me?

              1. No, only the people who actually produce anything of value have had their intellectual property stolen from them.

          2. Because a constitutionally valid function of government that was once used to provide the entire federal budget is exactly like putting millions of people into hard labor camps for 20 years to life and killing most of them.

            I can’t imagine why your grade school sophist philosophy isn’t taken seriously by anyone.

            1. Constitutional validity implies neither efficacy nor moral character, and is entirely moot to the analogy.

              Analogies, by definition, are not identical equivalences, but equivalences in relation, so no “exactly” required; the analogy is in high cost and low chance of achieving the (ostensible) goal.

              I think you might benefit from a return to grade school yourself, since you don’t seem to have learned that the first time around.

          3. “It’s an entirely apropos comparison: attempting to achieve a goal using a method that causes immense human suffering and has low chance of success”

            You religious fanatics really are quite melodramatic

    4. Trump has proven that adjusting tariffs with trading partners can lead to trading partners lowering their trade restrictions.

      It can also bring obstinate trading partners to the discussion table when they reject an American offer for free trade.

      1. Your cite fell off. Specifically, what trade restrictions have been lowered?

        1. Would you like me to find the other post where I specifically linked those lowered trade restrictions to YOU?

    5. Unilateral zero tariffs are the best free trade weapon. But apparently basic econ 101 is beyond Trumpistas and statists in general.

      Tariffs are taxes.

      1. Unilateral zero tariffs are the best free trade weapon.

        And unilateral nuclear disarmament. And appeasement of fundamentalist religious terrorists. It’s odd, but all of the libertarian “101” courses seem to lead inevitably to absolute fucking disastrous policy, and their opposite has been used to end the cold war and get a major trade agreement passed that lowers tariffs across the US, Canada and Mexico. Maybe you guys should consider taking some 200 level courses eventually.

        1. So, Stable Genus Junior here, WHEN are you going to tell us, WHAT horrible things would happen to us if we practiced “unilateral trade disarmament”? Besides, we get all of their goods and services, and they get our paper dollars? I am NOT quaking in my boots at this supposedly-horrible prospect!

      2. Indeed, tariffs are taxes.

        As are payroll taxes, income taxes, capital gains taxes, sales taxes, etc.

        Why should American labor be paying taxes, but not Emperor Xi?

        What Globalists call a free market is a set of foreign trade, tax, and immigration policies that benefit foreigners and US corporate ownership over US labor.

  4. So… It’s FAIR to tax domestic American businesses 30% to 90% but it’s UNFAIR to have a sales-tax on foreign business that can do anything they want ( being outside of our own regulation boundary) set at 25%??

    Granite; it should be across the entire spectrum of imports not just picking out winners & losers.

    Exactly what reason is there to exempt foreign trade from the general “trade-taxing” government that has been taxing anything that moves for centuries?

    If you want free-trade; maybe the best place to start is RIGHT HERE AT HOME!!! And that’s not going to happen until the “tax-them then subsidize-them” CONTROL model is utterly obliterated.

    1. Granite indeed.

      1. Anthropomorphic, androgynous anthracite is more diverse, though!

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    2. Libertarianism is just another word for cronyism to some – as long as that cronyism is directed to outsourcing.

      1. The only way that sentence makes any sense is by having no clue what cronyism means.

        1. Nardz is right and blasts unreason for the hacks that they are.

        2. “Reducing tariffs for favored industries while protecting others and using policy to facilitate offshoring in an effort to create economic dependency because a few dozen diplomats at the end of WWII decided that was a good way to prevent total war” is as good a definition of “cronyism” as any. Let’s hear yours.

          1. That covers it well.
            I’d add gutting the importance of US laborer, politicians who take bribes, and policy that favors a group of transnational oligarchs whose loyalty resides firmly with their caste, and whose goal is to see national interests destroyed so that they can rule as a high global cabal

      2. What Globalists call a free market is a set of foreign trade, tax, and immigration policies that benefit foreigners and US corporate ownership over US labor.

  5. Tariffs might be causing headaches for American businesses, but it’s not like they’re causing bone spurs. Suck it up, you panty-waisted whiny little snowflakes! It’s your job to produce good-paying jobs for American workers in order to serve the greater glory of the Motherland, not to be selfish, greedy bastards looking out for your own self-interest. Look at all the good things Trump has done for you out of the kindness of his heart, providing you with roads and schools and electricity and gorgeous sunrises and this is how you repay him, by refusing to pay the debt you owe to him? For shame!

    1. I laughed. Bravo!

    2. If only our trading partners had accepted Trump’s offer for Free Trade at the G-7 Summit.

      1. If only the New Soviet Man had obediently shown FAITH in being sent to the Gulag, in hordes and droves, and over-worked and under-fed to death, then EVENTUALLY, the State would have withered away!

        1. When you can’t even come up with y our own non-sequitur so you borrow it from the total fucking retard upthread.

          1. It’s a DAMNED GOOD analogy, and so YES, I am gonna steal it!

            USSR citizens were DAMNED FOOLS for believing this line, for 70 years… “Bear with us through endless pain, so that it can get better, Some Sunny Day, when the State will wither away!”

            “Bear with us through endless pain, so that it can get better, when The Donald will give UP on protectionism! Some Sunny Day, The Donald will STOP playing golf with his protectionism-fattened corporate exec-buddies, and STOP accepting sloppy seconds from Stormy Daniels, as favors-payback.”

            I am NOT holding my breath!

        2. I’ll take Red Herrings for a thousand, Alex.

  6. Know who’s been especially hurt by Drumpf’s tariffs? Reason.com’s benefactor Charles Koch, that’s who. Because of these disastrous high-tariff / low-immigration policies, Mr. Koch’s net worth has been stagnating in the $58,000,000,000 to $62,000,000,000 range.

    This. Is. Not. Normal.

    #DrumpfRecession
    #HowLongMustCharlesKochSuffer?

  7. The Tariff Man has done it again

    I’m sure unreason had pet names for Obama when he used tariffs?

    All those Presidents since 1789 and pre-Trump that used tariffs….

    1. Obama personally created the strongest 8-year run in US economic history. You’d know this if you paid attention to Palin’s Buttplug.

      #IMissObama

    2. I agree. Making up stupid nicknames for everyone you disagree with is pretty ridiculous. I wish Reason would stop.

  8. Oh no, you’ve angered the trumpflakes again. You know, by speaking the truth.

    1. You wouldn’t know the truth if it came all over your face at the glory hole tonight.

  9. Oh no, you’ve rallied the sock trolls again. You know, by speaking the Propaganda.

    Poor unreason. FREE PROPAGANDA AND FREE SOCK TROLLS

    1. You’re free to leave at any time. Why would you support a website that’s so blatantly anti-Trump?

      1. Because if he leaves how will everyone know how outraged he is?

        1. I think we could monitor Trump’s twitter feed. It’s a pretty safe assumption that whatever triggers Trump also triggers LC.

          1. What’s Twatter?

            Is that the place where only media hacks go to find primary sources?

      2. It’s fun to counter the utter propaganda coming from the hacks that work at unreason.

        Plus, exposing the sock trolls unreason runs to defend their shitty writing is fun too.

        1. lovescontroll69 isn’t the hero anybody wants, but he’s the hero he needs.

        2. Says $parkY, the sock troll nobody, even unreason wants to acknowledge.

      3. I was here before most of them were.

  10. Yet another article decrying taxes on domestic labor.
    Oh wait…
    It’s another article that says taxing domestic labor and industry is awesome, but don’t dare touch imports!

    1. another article that says taxing domestic labor and industry is awesome

      Let’s see if I’ve got this straight. When someone doesn’t say that taxing domestic labor and industry is bad, they’re saying it is good? Does this mean you are implicitly endorsing rape because you didn’t specifically say it’s bad?

    2. It’s another article that says taxing domestic labor and industry is awesome

      … by not saying anything at all about domestic labor and industry.

    3. Pre-trump tariffs, taxes, regulations, and labor cost requirements are just #MemoryHoled as far as unreason is concerned.

      1. Fuckin weird that Reason writes primarily about the policies and actions of the current administration instead of the one that ended four years ago.

        1. Three years ago, rather.

          1. Don’t worry, we know you can’t count.

            Also fuckin weird how Reason didn’t write one single article critical of Obama trade policy in the entire 8 years he was president. And licked his nuts when he tried to unconstitutionally adopt TPP without senate approval.

            1. Oops.

              And by Shikha of all people.

            2. Don’t worry, we know you can’t count.

              Doesn’t really work when I corrected myself hours ago, but you do you.

              Also fuckin weird how Reason didn’t write one single article critical of Obama trade policy in the entire 8 years he was president.

              Weird, I searched “Obama TPP” and found this as the first result.

              https://reason.com/2013/11/16/the-tpp-obamas-dangerous-international-d/

              Go back to rape threats, you’re better at those.

              1. Poor bignose. So many crappy u reason articles to defend, so little time before Trump is reelected.

        2. All current law is current.

    4. Reason: Free trade is when American workers pay payroll and income taxes on their wages, while Emperor Xi pays no tax on his slave produced exports to the US.

      “Muh liberty!”

      What Globalists call a free market is a set of foreign trade, tax, and immigration policies that benefit foreigners and US corporate ownership over US labor.

  11. I remain as opposed to Trump’s tariffs as the next capitalist, but I think the difference between me and the other critics is that I understand that Trump’s intent isn’t to impose tariffs as a protective measure on a permanent basis. He sees them as a means to and end–which is trade agreements that favor American workers.

    If Trump isn’t reelected and we never see the end of the tariffs at the heart of the phase two negotiations with China, that will be all his fault. If we persuade swing voters who oppose tariffs to vote against Trump because they want to get rid of those tariffs addressed by phase two of the China agreement, that will be our fault. The fact is that if Trump isn’t reelected and doesn’t remove those tariffs in his second term, there is no reason to believe that a Democrat president will–especially if Bernie Sanders wins the nomination.

    P.S. USMCA = ratified.

    1. Note that our tariffs are way too *low* to satisfy that Arch Commie rat bastard, Adam Smith, who favored tariffs to offset local taxes on production:
      Wealth of Nations, pg. 356
      https://ibiblio.org/ml/libri/s/SmithA_WealthNations_p.pdf

      “It will generally be advantageous to lay some burden upon foreign industry for the encouragement of domestic industry, when some tax is imposed at home upon the produce of the latter. In this case, it seems reasonable that an equal tax should be imposed upon the like produce of the former. This would not give the monopoly of the borne market to domestic industry, nor turn towards a particular employment a greater share of the stock and labour of the country, than what would naturally go to it. It would only hinder any part of what would naturally go to it from being turned away by the tax into a less natural direction, and would leave the competition between foreign and domestic industry, after the tax, as nearly as possible upon the same footing as before it.”

  12. According to Kitchen & Bath Design news they claim the opposite that tariffs have helped manufactures in the U.S. but what do they know about growth

    1. It’s almost like in reality policy choices are always a set of trade offs and freshman level economic models are only intended to be illustrative, not definitive.

      1. And who better to pick those winners and losers than a stable genius like Trump. Amirite?

        1. “…Amirite?”
          Seek help for your TDS.

        2. According to you, leo. Bill Clinton Diane Feinstein, George Bush, etc

  13. “Most people, when faced with this evidence, would back away from using tariffs—but not the Tariff Man.”

    Economy, employment, and wages booming.

    Most people, when faced with this evidence, would back away from arguing against tariffs—but not the Globalist Shills at Reason.

  14. Tariffs are absolutely the right thing for the US.

    This country spent the last 150 years or more making the american workplace safe and fair to the worker, with unemployment compensation, workmen’s compensation, paid vacations, OSHA, NIOSH, the 40 hour workweek, health insurance, retirement, Social Security, and on and on.

    Now, an American company, making a product for the American marketplace, can avoid all these labor expenses yet still have access to the american marketplace by simply making his products overseas.

    Tariffs ought to be, and must be set to the amount to equal the difference in labor costs as if the product were made here.

    President Trump has done the tight thing in imposing tariffs, even though perhaps for the wrong reason.

    But tariffs are without question the right thing to impose.

    1. Thank you Mr Sanders

    2. access to the american marketplace

      The American marketplace isn’t for Americans, it’s for the rest of the world.
      US government isn’t for Americans, it’s for the global socialist class.
      Why should the American marketplace have any standards for entry for anyone but Americans?
      US leadership using leverage to gain better circumstances for Americans is totes evil!

  15. The market is never wrong; so all the whining about Trump’s activities ignores the fact that the US economy is barreling along nicely.
    Tariffs, qua tariffs, are an impediment to trade; bad. Agreed.
    Tariffs, seen as negotiating tools, may not be seen as bad.
    If the market and the resulting economy saw Trump’s efforts as simply applying tariffs, do any of you think the economy would be doing what it is?
    Let’s deal with results, not theory.

    1. “The market is never wrong”

      Faith alone!

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