I'm saving this here so in a year, after everything is fine DESPITE the tarriffs...I'll have it here...Digg, collecting everybody being wrong about Trumps trade decisions...
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What Will The Real-World Effects Of Trump's Tariffs Be? Here's What's Going On
Benjamin Goggin Mar 2 2018, 12:18 PM
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On Thursday, President Trump announced that he would impose harsh new tariffs on steel and aluminum imports, taxing each by 25% and 10% respectively. President Trump says that that the move is in the interest of American jobs and the economy, but is that really the case? Here's what you need to know.
Trump Argues That The Tariffs Are In The Interest Of National Security, But They May Go Against It
The Trump Administration argues that the tariffs will address a trade deficit that undermines nationals security, but putting tariffs on military allies could create other national security issues.
The Trump administration is on more uncharted ground by basing the tariffs on national security concerns — Section 232 of a law enacted in the Cold War. The argument is that with domestic metals production undermined, the United States is left vulnerable in the event of conflict that disrupts trade flows.
Expect furious lobbying in the days ahead to try to persuade the president to exclude military allies’ metals from the tariffs. Defense Secretary James Mattis has warned that tariffs should be targeted so as not to damage relationships with allies, but it appears the president did not heed that advice.
[The New York Times]
The Tariffs Will Affect Prices Of Everyday Items
The US is heavily reliant on foreign steel and aluminum for the production of everyday items. 90% of aluminum used in the US comes from other countries, while a third of steel used domestically is sourced from abroad. The tariffs will undoubtedly affect prices of everyday items.
Both metals are crucial raw material for autos, airplanes and appliances made in the United States. The construction, oil and utility industries use them for beams, pipelines and wires, as well as cans for food and drinks...
The tariffs by themselves will probably make ordinary items produced with aluminum — think beer cans and baseball bats — more expensive, assuming the companies that make them decide to pass the cost of the tax on to customers. History shows that's generally what happens.
[CNN Money]
The Move Could Slow Growth And Jobs
The new tariffs may save some jobs in the US steel industry, but they are also likely to slow economic growth and eliminate jobs in industries that rely on steel and aluminum.
If other countries hit core U.S. industries such as aerospace, that would ding growth. American consumers, the driving force of the U.S. economy, could also get angry if prices of many items jump... the jobs saved in one industry could be offset by jobs lost in other industries if prices rise and buyers dry up for items such as cars. Former president Barack Obama put a tariff on Chinese tires in 2009, but it backfired, many economists say. Obama touted the 1,000 jobs saved, but the Peterson Institute says that more than 3,000 jobs were lost in other industries.
[The Washington Post]
It's Unlikely That The Tariffs Will Have Their Desired Effect
Steel jobs in the US have greatly declined in the last 100 years, but Jeffry Bartash argues in MarketWatch that Trump's tariffs are unlikely to upend the trend, which he says are largely due to technological advances in steel production and recycling.
[A] stream of technological advances have spawned huge increases in productivity, allowing steelmakers to do more with fewer workers.
Steelmakers also gather up and reform scrap metal more than ever, a form of recycling that also requires fewer workers...
Higher tariffs have encouraged other US manufacturers to seek out cheaper substitute materials to avoid the higher cost of steel that often results. Or they’ve tried to pass the cost onto customers. And in the worst-case scenario they’ve had to reduce production or layoff workers to cope with higher steel prices.
[MarketWatch]
History Shows That Tariffs Generally Don't Help
Charles Hankla argues in The Conversation that history shows that tariffs are generally counter-productive for the economy.
Lawmakers, already in a protectionist mood, responded to the pain of the Great Depression by passing the infamous Smoot-Hawley Tariff Act of 1930, which raised duties on hundreds of imports.
Meant in part to ease the effects of the Depression by protecting American industry and agriculture from foreign competition, the act instead helped prolong the downturn. Many U.S. trading partners reacted by raising their own tariffs, which contributed significantly to shutting down world trade.
[The Conversation]
Most presidents have used quotas to help the steel market. In 2002, George Bush imposed tariffs on imported steel and was forced to rescind them.
Most presidents, including Johnson, Richard Nixon, and Ronald Reagan, have used quotas — limits on the amount of steel that can be imported in a given timeframe — to help bolster the US steel industry. For instance, Johnson set a limit for steel imports of 5.75 million tons in 1969.
More recent presidents have also attempted to bolster the steel industry as well...Perhaps the most analogous case to Trump's broader tariff comes from President George W. Bush in 2002. Bush attempted to institute tariffs on steel products, ranging from 8% to 30%. After just over a year, Bush was forced to rescind the tariffs due to international backlash and negative economic consequences.
[Business Insider]
And Trading Partners May Retaliate Against American Industries — Particularly In Swing States
Reports over the last few weeks have said retaliation could take the form of tariffs on exports that hurt Republican states in particular, and put pressure on the GOP to get Trump to remove the tariffs. For example, tariffs or other restrictions could be imposed on exports of motorcycles made by Harley Davidson, which is headquartered in House Speaker Paul Ryan's home state. Kentucky bourbon has also been the subject of speculation, to hit Senate Majority Leader Mitch McConnell's state. "The plan seems to be, let's go after Trump's allies, red states, make them pay a price," said one trade expert in Washington to wanted to remain anonymous.
[Washington Examiner]
Apart From Trade, Trump's Decision May Have Big Reverberations In The White House
President Trump announced the tariffs after a chaotic period of debate between his chief economic adviser, Gary Cohn, and trade hawk and adviser Peter Navarro. Politico reports that Cohn may leave his post as a result of the decision:
One person close to Cohn, a former Goldman Sachs executive, said he wouldn’t be surprised if he eventually left the chaotic and deeply exhausting administration as a result of the decision. A second person close to Cohn described it as a brutal blow that violated one of the NEC director’s core beliefs—that protectionism is economically backward and won’t lead to increased prosperity.
[Politico]
