“President Donald Trump on Monday imposed a 25% tariff on all steel and aluminum imports into the United States with no exceptions or exemptions,” reports CNN:
Although the United States gets most of its steel from Canada, Brazil and Mexico, the tariffs are largely — albeit indirectly — aimed at China. America imports very little steel directly from China, by far the world’s largest producer of steel…Yet Chinese steel does make its way into the United States secondhand. Some is purchased by foreign countries and reshipped to the US. And some of it is mislabeled and resold through various channels.
The United States is not the manufacturing-focused economy it once was, but it still consumes tens of millions of tons of steel and aluminum a year. Steel is a key component of everything from consumer goods such as cars and appliances to such large scale infrastructure projects, such as skyscrapers, oil rigs and pipelines, bridges and roads. Aluminum also is a key component of such goods as cans of food and beverages, cars and commercial jets…Tariffs could increase the cost of production of many if not all of those items because of the increased cost of the imported and domestic steel – and aluminum makers could raise the price of their products because of the reduced competition from low-priced imports….When the Trump administration put tariffs of 25% on steel and 10% on aluminum in place in 2018, it briefly cut imports and increased domestic production. But many customers of imported steel and aluminum still found it necessary to import those goods from lower priced producers elsewhere. Those actions also ignited a trade war that hit American goods with retaliatory tariffs that raised prices on other items.
Past tariffs on steel and aluminum “resulted in 75,000 fewer manufacturing jobs in firms where steel or aluminum are an input into production,” note two economics professors, by subjecting those firms to “increased costs of inputs” that made their products less competitive. That is far more than the paltry number of jobs gained in the U.S. steel industry. “Tariffs on steel may have led to an increase of roughly 1,000 jobs in steel production,” the professors say.
Tariffs result in higher prices for the products affected by them, which is unpopular with consumers. In 1890, a Republican Congress passed the McKinley Tariff, which raised import duties. It was so unpopular with the public that Republicans were decimated in the next election by angry voters. As Wikipedia explains, the McKinley Tariff devastated the Republican Party, costing nearly half of all Republican House members their seats:
The Tariff Act of 1890, commonly called the McKinley Tariff, was an act of the United States Congress, framed by then Representative William McKinley, that became law on October 1, 1890. The tariff raised the average duty on imports to almost 50%, an increase designed to protect domestic industries and workers from foreign competition, as promised in the Republican platform. It represented protectionism, a policy supported by Republicans and denounced by Democrats. It was a major topic of fierce debate in the 1890 Congressional elections, which gave a Democratic landslide. Democrats replaced the McKinley Tariff with the Wilson–Gorman Tariff Act in 1894, which lowered tariff rates…..
The [McKinley] tariff was not well received by Americans who suffered a steep increase in prices. In the 1890 election, Republicans lost their majority in the House with the number of seats they won reduced by nearly half, from 171 to 88. In the 1892 presidential election, [Republican President Benjamin] Harrison was soundly defeated by Grover Cleveland, and the Senate, House, and Presidency were all under Democratic control. Lawmakers immediately started drafting new tariff legislation, and in 1894, the Wilson-Gorman Tariff passed, which lowered US tariff averages.
In response to Trump’s earlier tariffs of 10% on Chinese products in general, China has retaliated with a tariff of 15% on American coal and liquid natural gas, a tariff of 10% on crude oil, agricultural machinery, and large engine cars, and export controls on some rare earth metals.
