Trump’s Declaration of Independence by Tariffs
Now that Trump has sort of imposed his 25% tariff on steel, and 10% on aluminum, world-wide, we have to update our analysis.
Trump stepped back from the absoluteness stated by Peter Navarro, and said that he would consider exceptions. He also held back two weeks on the imposition, although he could have held back 6 weeks before the deadlines. He held back on Canada and Mexico, because he can put the tariffs into the NAFTA talks.
In 2017, we imported $29.1 billion in steel. Canada contributed $5.12 billion (17.6%), and Mexico $2.50 billion (8.6%), to total $7.62 billion or 26.2% from North America. In terms of the required justification of the tariff method used in Section 232 being national security, they are the most secure friends, so why put them in the tariff?
I had assumed that Trump wanted to replace the the entire 30% of our steel that came from imports. But the justification from the Department of Commerce only states that a 24% tariff would increase our manufacturing share 73% to 80%, or a 10% increase in US manufacturing, that would reduce imports from $29.1% by about $3 billion. This seems a small increase in our $17,419 billion GDP. It is only a 1/6,000 increase in our economy for steel, but a similar decrease for steel using industries and consumers. It also seems a small amount on all sides to start a worldwide trade war, and to take us out of comprehensive, worldwide free trade associations.
Since there are 100,000 jobs in steel manufacturing and iron mining, increasing our share 10% could provide up to 10,000 more jobs, depending on how much the slack is taken up by automation. The US added 2.1 million jobs last year, so this would add a half of a percent to jobs for a year.
I don’t mean to minimize the importance of these jobs to the steel workers and their families, in either the US, or the importing countries, or in the industries that use steel and will have to raise prices. It is embarrassing to our Presidency that exactly two days after instituting the tariff, supposedly on national security grounds, Donald Trump appears at a rally in Moon Township, just Northeast of Pittsburgh Pennsylvania, for Republican congressional candidate Rick Saccone, to take political credit for reviving the Pennsylvania steel industry.
