Trump on Tariffs: The Right says he’s Wrong (And they’re Right)

Donald Trump, Economics, Global Politics, International Relations, Rundown, Taxes, Trade

US conservatives have expressed great concern regarding Trump’s plan to impose tariffs on all steel and aluminium imported to the United States. Many of Trump’s greatest allies have pushed back on this, saying the move is not only extremely careless but carries tremendous geopolitical implications while doing little for domestic steel and aluminium production.

The list of conservatives that oppose Trump’s views on tariffs includes, but are not limited to Ben Shapiro, Senator Sasse, Sen. Orrin Hatch, Paul Ryan, Senator Pat Roberts, Senator Sen. Pat Toomey, Brian Kuehl, Gary Cohn (Trump’s chief economic adviser), Steve Moore, and others. This is just a list of political players that oppose the measures and does not take into account other players in think tanks, automotive associations, construction lobbying, conservative economists, and others who say this would be terrible for the US economy.

One thing to take into consideration is that US steel is not in a bad place. Over 50% of all steel consumed in the US was produced domestically, and the industry saw strong growth last year and at the beginning of this year. In essence, this is a move to revitalize an industry with strong vitality.

Another point is that a trade war is looming. Contrary to Trump’s recent tweets, trade wars are not simple and easy to win. Many countries have threatened to impose tariffs on US goods as retaliation. This prompted Trump to say he would impose tariffs on goods against countries who imposed tariffs on US goods (such as European cars) and you can see how this vicious cycle turns into a trade war rather quickly.

Also, jobs will be lost. The last time there were (more moderate) tariffs placed on steel, around 20,000 jobs were lost. The tariffs lasted just under two years, and the domestic steel industry showed no signs of verifiable or significant improvement, though consumers did see a significant increase in prices.

Speaking of prices, consumers can expect higher ones. The issue with imposing tariffs on a good as bountiful across the economy as steel and aluminium are that consumers will feel the burden of the tariffs more than US trading partners or the US government, impacting negatively on the quality of life and PPP per-capita of Americans.

Now, this would not be the first time that Trump talked big and did not implement. NAFTA, for example, does not seem to be going anywhere, perhaps because of the negative economic impact on red states in the US. This may be a power play meant to lead trading partners to concede to certain US interests, but for now all that can be said is that steel and aluminium tariffs are a bad idea, and are counter to free-market and fiscal conservative ideologies.

Emilio Garcia
Deputy Editor, The Unshackled
Host of the Front and Center Podcast
www.frontandcenter.net.au
@FrntAndCenter