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Rampell, Catherine. The Washington Post (Online)WP Company LLC d/b/a The Washington Post. Apr 18, 2024.
Tariffs are kind of funny. Politicians sometimes acknowledge that they raise prices and kill jobs. But they seem to realize this only when the other team proposes them.
On Wednesday, President Biden called for tripling the tariffs on steel and aluminum from China, an announcement he coincidentally made while visiting the United Steelworkers union headquarters in Pittsburgh. This isn't pandering ahead of an election, the White House insists; it's about protecting U.S. manufacturing from "unfair trade practices" overseas.
Because it apparently bears repeating: No, steel and aluminum tariffs are not good for the U.S. manufacturing sector or its workers. That's because many fewer workers are employed by firms that make these metals than they are by firms that use these metals as a product input (e.g., for cars or kitchen appliances). The ratio of steel-using jobs to steelmaking jobs is about 75 or 80 to 1.
Raising input costs puts those downstream firms and workers at a competitive disadvantage. We saw this happen when then-President Donald Trump imposed worldwide steel tariffs in 2018. U.S. prices for steel predictably rocketed upward, far above prices in other countries. Within two years, these tariffs resulted in about 75,000 fewer jobs across downstream manufacturers, according to calculations from researchers Kadee Russ and Lydia Cox. And by the way, that number doesn't even include the additional job losses among U.S. exporters that faced painful counter-tariffs levied by other countries.
The metal duties weren't the only Trump-era tariffs that economically backfired. As I've noted before, at least four separate studies found that the costs of Trump's various import duties (on Chinese goods, washing machines, solar panels, etc.) were borne mostly or entirely by Americans, in the form of higher prices.
This proved useful for some of Trump's political rivals. In campaign ads and speeches, Democrats sometimes (correctly) accused Trump of raising the costs of back-to-school shopping or Christmas gifts. Among the more high-profile critics was then-presidential candidate Joe Biden.
"President Trump may think he's being tough on China," Biden said in 2019 of Trump's China tariffs. "All that he's delivered as a consequence of that is American farmers, manufacturers and consumers losing and paying more." Biden's 2020 campaign site likewise argued that Trump's "tariff war" had cost hundreds of thousands of jobs.
Biden was right. But once he won the election, his tune changed. As president, Biden has extended (almost) all of Trump's tariffs — or in the case of steel and aluminum, swapped out some of the tariffs for slightly different trade barriers (such as import quotas). Biden has extended those Trump tariffs even when doing so conflicts with other parts of his economic agenda, such as increasing competition, cutting consumer prices or accelerating clean-energy adoption.
Now Trump is on the campaign trail promising new 10 percent global tariffs if granted a second term. Economists have warned that his plan would reignite inflation and likely hobble both U.S. and global economies, with exact degrees of destruction dependent on how other countries choose to retaliate.
Biden has, rightly, pointed out the folly of these plans: Mere days ago, the White House warned in a statement about the catastrophically inflationary effects of Trump's proposed tariffs. Then, in Pittsburgh on Wednesday, Biden promptly forgot his own warning. In fact, in addition to his plans to increase tariffs on Chinese steel, he also signaled support for new tariffs on China's shipbuilding sector.
After all, the U.S. shipbuilding industry is struggling. That's partly because of high input costs, including for materials such as — you guessed it — steel.
The best thing you can say about Biden's proposed tripling of tariffs on Chinese metals is that it might be toothless. Why? We've already levied so many different kinds of tariffs on Chinese metals — under both Trump and earlier presidential administrations — that China doesn't sell much steel here anymore anyway. Chinese-made steel accounted for just about 2 percent of U.S. steel imports in 2023, so raising the price of Chinese-made steel might not move overall market prices much. ("Biden's basically putting Chinese steel on double-secret probation," said Cato Institute trade researcher Scott Lincicome.)
Even so, Biden's tariff actions are hardly benign. A White House news release hints of ongoing union pressures to also limit steel imported from Mexico, which actually is one of our top sources of steel imports. Meanwhile the Biden administration is vigorously defending his predecessor's tariffs in court. If successful, these efforts would make Trump's next round of tariffs — or Biden's, for that matter — even easier to implement, regardless of Biden's on-again-off-again warnings about their costs.
Maybe President Biden should consult with presidential candidate Biden. He might learn something.
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Tariffs are kind of funny. Politicians sometimes acknowledge that they raise prices and kill jobs. But they seem to realize this only when the other team proposes them.
On Wednesday, President Biden called for tripling the tariffs on steel and aluminum from China, an announcement he coincidentally made while visiting the United Steelworkers union headquarters in Pittsburgh. This isn't pandering ahead of an election, the White House insists; it's about protecting U.S. manufacturing from "unfair trade practices" overseas.
Because it apparently bears repeating: No, steel and aluminum tariffs are not good for the U.S. manufacturing sector or its workers. That's because many fewer workers are employed by firms that make these metals than they are by firms that use these metals as a product input (e.g., for cars or kitchen appliances). The ratio of steel-using jobs to steelmaking jobs is about 75 or 80 to 1.
Raising input costs puts those downstream firms and workers at a competitive disadvantage. We saw this happen when then-President Donald Trump imposed worldwide steel tariffs in 2018. U.S. prices for steel predictably rocketed upward, far above prices in other countries. Within two years, these tariffs resulted in about 75,000 fewer jobs across downstream manufacturers, according to calculations from researchers Kadee Russ and Lydia Cox. And by the way, that number doesn't even include the additional job losses among U.S. exporters that faced painful counter-tariffs levied by other countries.
The metal duties weren't the only Trump-era tariffs that economically backfired. As I've noted before, at least four separate studies found that the costs of Trump's various import duties (on Chinese goods, washing machines, solar panels, etc.) were borne mostly or entirely by Americans, in the form of higher prices.
This proved useful for some of Trump's political rivals. In campaign ads and speeches, Democrats sometimes (correctly) accused Trump of raising the costs of back-to-school shopping or Christmas gifts. Among the more high-profile critics was then-presidential candidate Joe Biden.
"President Trump may think he's being tough on China," Biden said in 2019 of Trump's China tariffs. "All that he's delivered as a consequence of that is American farmers, manufacturers and consumers losing and paying more." Biden's 2020 campaign site likewise argued that Trump's "tariff war" had cost hundreds of thousands of jobs.
Biden was right. But once he won the election, his tune changed. As president, Biden has extended (almost) all of Trump's tariffs — or in the case of steel and aluminum, swapped out some of the tariffs for slightly different trade barriers (such as import quotas). Biden has extended those Trump tariffs even when doing so conflicts with other parts of his economic agenda, such as increasing competition, cutting consumer prices or accelerating clean-energy adoption.
Now Trump is on the campaign trail promising new 10 percent global tariffs if granted a second term. Economists have warned that his plan would reignite inflation and likely hobble both U.S. and global economies, with exact degrees of destruction dependent on how other countries choose to retaliate.
Biden has, rightly, pointed out the folly of these plans: Mere days ago, the White House warned in a statement about the catastrophically inflationary effects of Trump's proposed tariffs. Then, in Pittsburgh on Wednesday, Biden promptly forgot his own warning. In fact, in addition to his plans to increase tariffs on Chinese steel, he also signaled support for new tariffs on China's shipbuilding sector.
After all, the U.S. shipbuilding industry is struggling. That's partly because of high input costs, including for materials such as — you guessed it — steel.
The best thing you can say about Biden's proposed tripling of tariffs on Chinese metals is that it might be toothless. Why? We've already levied so many different kinds of tariffs on Chinese metals — under both Trump and earlier presidential administrations — that China doesn't sell much steel here anymore anyway. Chinese-made steel accounted for just about 2 percent of U.S. steel imports in 2023, so raising the price of Chinese-made steel might not move overall market prices much. ("Biden's basically putting Chinese steel on double-secret probation," said Cato Institute trade researcher Scott Lincicome.)
Even so, Biden's tariff actions are hardly benign. A White House news release hints of ongoing union pressures to also limit steel imported from Mexico, which actually is one of our top sources of steel imports. Meanwhile the Biden administration is vigorously defending his predecessor's tariffs in court. If successful, these efforts would make Trump's next round of tariffs — or Biden's, for that matter — even easier to implement, regardless of Biden's on-again-off-again warnings about their costs.
Maybe President Biden should consult with presidential candidate Biden. He might learn something.
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Continue reading...
