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Monday, December 23, 2019

It's now obvious that President Trump's steel tariff didn't work

Posted By on Mon, Dec 23, 2019 at 11:07 AM

click to enlarge JON REHG / SHUTTERSTOCK.COM
  • Jon Rehg / Shutterstock.com

Last year, President Donald Trump used Section 232 of the Trade Expansion Act of 1962 to impose tariffs on imported steel and aluminum without Congressional approval, citing national security.



But with last week's announcement that Pittsburgh-based U.S. Steel Corp. was laying off more than 1,500 employees at its Detroit area steel mills next year, it's obvious the tariff didn't work.  

For a time, it appeared that it would. As PBS News Hour reported in November, steel prices skyrocketed in the immediate aftermath of the tariff announcement. But then, the steelmakers went on an expansion spree — what Bank of America Merrill Lynch analyst Timna Tanners described to PBS as "Steelmageddon."

"We're shooting ourselves in the foot now because of all the extra capacity being built," a former steelworker told PBS.

Within a year, prices jumped from $650 per ton to more than $900 per ton, and then down to $500 per ton — lower than what they were before the tariff was imposed. The industry was also hurt by the fact that steel from Canada, Mexico, and Australia was exempt from the tariff.

In all, the entire industry only added some 1,800 jobs since February 2018, the month before the tariffs took effect — "a mere rounding error in a job market of 152 million and over a period when U.S. companies overall added nearly 4 million workers," as PBS reported. (The industry employs only 142,000, or 10,000 fewer people than it did five years ago. By contrast, Home Depot employs 400,000.)

"Anyone that understood economics knew there was no way (Trump's steel tariffs) would work any longer than a year," Ned Hill, a professor at Ohio State University who studies economic development, told PBS.

Even Forbes said, "The national security argument is a sham and everyone knows it."

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