President Donald Trump’s new attempt at putting America first is going to hurt the economy.
Making good on his campaign promise, last week President Donald Trump signed an order creating a new tariff on steel and aluminum, going against his economic advisors. The tariff would be a 25% tax on steel, and a 10% tax on aluminum entering the country from anywhere in the world. The only countries that would be exempt would be Canada and Mexico.
A strong steel and aluminum industry are vital to our national security, absolutely vital,” said President Trump in a news conference. “Steel is steel. You don’t have steel, you don’t have a country.”
Indeed the growth of the steel industry is important, but such a tax on imported steel would only impede economic growth instead of fostering it.
Trump’s tariff stemmed from a 2017 Commerce Department report, which claimed that lower quality metal imported at a lower cost, than that available within the U.S., presented a threat to U.S. national security by undermining the U.S. manufacturing base.
If President Trump were to institute a tariff, it would effectively raise the price on incoming steel and aluminum. Therefore, American manufacturers would be better able to compete against global consumers, and more likely to save American jobs… in theory.
Tried and Failed
Simply put, American steel and aluminum costs more to produce, and in turn will increase the consumer cost. On the production end, industries related to steel and aluminum are more likely to lay off workers in order to accommodate for increased costs.
By increasing the price of steel, the prices of everything else made from steel skyrocketed.
Such policies have been tried before and they have failed disastrously. Both former Presidents Bush and Obama placed a temporary tariff on steel in order to curb Chinese imports. As a direct result, the U.S. steel industry experienced little to no job growth and consumer prices rose sharply. Naturally, by increasing the price of steel, the prices of everything else made from said steel also skyrocketed.