Promises Kept: Donald Trump Signs Steel and Aluminum Tariffs to Protect Workers, by Charlie Spiering.
President Donald Trump signed his official establishment of tariffs on aluminum and steel on Thursday in a dramatic ceremony in the Oval Office.
The tariffs were exactly as he proposed them last week — 25 percent on steel, ten percent on aluminum.
Trump said that the tariffs were important to sign, citing the industry communities that were devastated by bad trade deals and failed promises from failed politicians.
“Our factories were left to rot and to rust all over the place,” Trump said. “Thriving communities were turned into ghost towns.”
During his remarks, Trump explained how fundamental the tough actions on trade and tariffs were to his presidency and the core his personal beliefs.
“Those who poured their souls into building this great nation were betrayed. But that betrayal is now over,” he said. “I’m delivering on a promise I made during the campaign and I’ve been making it for a good part of my life.”
Three points commonly get overlooked about the US steel tariffs:
- While the tariff creates widely-distributed harm by causing steel products to cost more for all US consumers, it also creates narrow-distributed benefits by making jobs and helping some communities in the US. Where is the cost-benefit analysis showing which is greater? Purely from an economic viewpoint, the costs of tariffs are generally reckoned to be usually greater than the benefits. And I’m sure they are. But this doesn’t take into account social benefits, or side effects such as shoddy steel in vital equipment.
- The US is a special case because it produces the world’s trading or reserve currency, the US dollar. Currency is a good like any other, with prices fluctuating in response to supply and demand. Strong demand for the US dollar outside its borders pushes up the value/price of the US dollar, higher than it would be if the US weren’t the world’s trading currency. Thus, US manufacturers are under a special burden that those in other countries do not face — their currency is “artificially” high.
- The US and most western nations have tariffs on all sorts of things, but especially agricultural goods. For example, the US has a high tariff on sugar imported from most countries (e.g. Australia). The world does not end, and there is no trade war. I don’t hear most of the current lot of tariff critics complaining about these existing tariffs.
hat-tip Stephen Neil