Unfortunately, a blanket 25% duty on all steel belies Mr. Bivens argument. Canada has a very balances steel trading relationship w the US. No one, not even Trump has accused the Canadians of dumping steel or aluminium. So why hit them with the tariff? Unfortunately, the only consistent explanation for Trump's actions are that he intends to leave the US ungovernable at home and impotent abroad and preferably broke.
4
Interesting point of view. What the author doesn't deal with is the fact that a lot more American manufacturing companies use steel &/or aluminum than produce it. So it seems to me that more workers would lose than gain as a result of Trump's tariffs.
4
If Republicans win the midterms this will be why.
A remarkably thoughtful piece for a trashy tabloid like NYT.
2
Mr Bivens does not show an understanding of economics. Yes, the steel industry may benefit some, but it is a tiny industry in the US. The car manufacturing, construction, beverages and multiple other industries are huge and will be hurt by this tariffs. If you raise the cost of producing american goods such as cars or cans you will pass those costs to consumers which may result in lower consumption of more expensive products, or making them less competitive and motivating them to buy imported.
In addition, as others have said, manufacturing is unlikely to grow in the US.
Services and technology are growing, film industry, many others that are more typical of developed countries where hand labor cannot compete with lower costs of poorer countries.
We are also at full employment, even if somewhat distorted after the last crisis. There are jobs now.
We should focus on training kids for more sophisticated job opportunities and invest in education.
2
“Is it good for the bottom 90 percent of American workers and the families they help support?” And on this latter question, criticism of last week’s tariffs largely misses the mark.'
A faulty conclusion by Mr. Bivens and President Trump.
As for Mr. Bivens, it is not good for the bottom 90% because prices for numerous metal-based consumer goods would increase, and tier 2 & 3 manufacturers in the steel & aluminum sectors of the American economy would see net job losses due reduced demand.
As for Mr. Trump, it hits his base in MI, IN, PA, OH, and WI hard as that is where the tier 2 & 3 manufacturers are located.
The good news is that perhaps Trump's base will now realize they were conned.
2
I think the tariffs are a great idea. Maybe there should be tariffs on everything that comes from another country. I think we should support American made as much as possible. I always thought it was a security risk that most American products are made in other countries. Other countries have all of America's designs. We should have a thriving industry in America. Now, most businesses import from China. China does not have Americas laws. What policies does this support? The tariffs only make it slightly harder for other countries to sell in the USA. If they really want to, and they have an original product, they can make it work. It encourages American manufacturing.
And ip protection is important. People deserve to profit from their invention. I think the patent should be longer than 20 years, actually. People can lose their income when the patent ends and competitors copy their product. That hurts innovation. That's why drug companies arent researching many new drugs recently, I read, because they lose the patent and their profits dwindle to almost nothing. There becomes little benefit to innovation, I think.
2
I don't like trump he making to much changes in the United States.
Starting wars is what dictators do, isn't it?
1
I don't have any objection to tariffs in response to dumping and/or government subsidies. And I can definitely see the appeal of swift unilateral action, as opposed to the years-long complaint process to the WTO, which is subject to appeals used as a delaying tactic. Even if successful, the ruling often comes too late, and we turn around to find we've just lost another industry. But if you're going to do tariffs, make them targeted at the specific industries in the specific countries engaged in these practices, instead of across the board at all imports. No point in punishing the countries who are playing by the rules.
2
"...policy failures that have decimated American manufacturing employment for almost two decades."??? Seems the author and most of his contemporaries still see...GLOBALIZATION.. and the resulting downturn in American manufacturing as a creation of somewhere other than the USA (let alone acknowledge the term anymore).
2
How should I interpret the fact that there's an op-ed in the NYT from one person at the Economic Policy Institute and an op-ed from another person at the Economic Policy Institute in US News & World Report? Maybe the interpretation is that no one else thinks that imposing tariffs this way is a good idea.
1
Did I miss the part where the author explains why our trading partners will take this all lying down and not retaliate with trade sanctions of their own? Or the part where he talks about how calmly Trump will take those retaliatory tariffs and how he won't blow it up into an all-out trade war, threatening NAFTA and every other major trade partnership we have? Guess I'll need to read more carefully next time.
2
These trade tariffs are mainly targeting Canada. Why did Canada deserve this treatment?
2
As I understand Mr. Bivens' essay, we should not worry about Trump starting a trade war because American workers will not be further disadvantaged than the uberwealthy, as they have regularly, and deliberately, been by decades of government/private policy. Since Regan, it's been: "Scroo 'em; if they loved God, they'd be rich like me." And of course, American workers fell for it , and got just what they wished.
However, at this moment, down in the powder magazine, the Orange Underwear stain is playing with matches, and out of some regard for the ill done American workers and their families, you want us to look for some bright side? Say what!
The world recoils from 'trade wars' just as from chemical or biological weapons, not because we're all good and decent people. Not just that these monstrous weapons are only used by pariahs, but that, unleashed, there may be no recall, no mechanism for truce or redress. Trump poses an existential threat not to America, but to the world. There are many routes to Armageddon, but certainly one is marked "Trade War."
"Don't worry..."
1
The 'free trade' cabal and its public mouthpieces like the NYT has NO IDEA how economics work if they claim this will cost American jobs.
Here's how it work, idiots:
The US is a powerful economy, and it has an institutionalized goal of reaching and maintaining full employment. Over the long term, no tariff is going to force higher unemployment, nor does it demand a trade war. If the cabal is so stupid as to make ultimatums and so evil as to lie about it, that the US is at the mercy of every trade partner in terms of economic policy, then they are treasonous in favor of foreign workers and fascism.
This newspaper and its blind support of the cabal is treasonous. Down with the NYT! You are the problem, NYT! New York is a huge problem for this country, and thank god we have an electoral system and a Senate that prioritizes fairness across states.
Those who support the cabal should be investigated.
1
"... the US is at the mercy of every trade partner in terms of economic policy ..."
Your ranting obscures whatever point you are trying to make, but that is false:
1. The US is a member of the WTO and can file complaints with it.*
2. The US can negotiate or renegotiate trade deals.
* United States files WTO complaint against Chinese aluminium subsidies
13 January 2017
https://www.wto.org/english/news_e/news17_e/ds519rfc_13jan17_e.htm
1
The problem with this piece is that it attempts to apply an economic argument to a politically motivated policy initiative. Trump made a bunch of foolish campaign promises about resurrecting dying industries, and now he's trying to make good on them, logic and good sense (and the counsel of his own advisers) be damned. Mr. Bivens's thin thesis notwithstanding, the overwhelming consensus is that the tariffs will do more harm than good, and much of it will fall on those whom Trump is purporting to help. We can only hope they'll figure out they've been conned and withdraw their fanatical support for this fraud by the time he comes up for re-election.
3
Mr. Givens is wrong. First, he forgets about American greed. Less competition leads to higher prices. I’m not an economist but I know that. Second, America can’t bully Canada around; China was an also ran country when NAFTA wa signed. Now it’s poised to become the largest economy and biggest importer in the world. Sure we won’t export much more steel to them but we can export lumber, oil, minerals, and agricultural products that we currently export to the US. I’m glad Trump has done this. We will have short term pain but in the end we will stick a finger in the eye of the US and tell this ungrateful country to go to hell. And next time the,es another 9/11 and your planes need to land so where, and when your embassy employees need to esc,ape from a foreign land, don’t count on our help. We help friends; we don’t help ihostile ingrates.
Why are we allowing this moron to run our country?
2
Trump is a parasite. He won't be satisfied until he feeds his festering ego off everyone that even indirectly makes him feel smaller. It's like a ponzi scheme for his ego.
2
Bivens is awfully optimistic about a policy proposal that has all the nuance of a two year old's temper tantrum. Realistically, Trump's proposed sanctions are the equivalent of taking a hammer and pounding on a piece of concrete in your neighbor's backyard when you really want to use a screwdriver to tighten a wood screw holding your house number to the side of your home.
1
So here's Trump, and here are the Republicans, picking winners and losers.
Here they are using government money to subsidize private industry.
It's clear evidence that Trump and Bannon and Fox are right, we are victims of a nefarious Dark State, seeking to surreptitiously implement Democrat Agendas. Damn that Obama.
It's odd though, because in this case the Dark State is Donald Trump and his Liberal tendencies, it's McConnell and Ryan and their devotion to welfare. I hate them.
Worst of all, they're rewarding industries justly notorious for flaccid and greedy management. Industries that wouldn't know innovation or efficiency if they waylaid them on the to the club.
If these good old industrial boys want more money they should do their jobs. Upgrade facilities, learn the real meaning behind mini-mill success, take care of their workforce and, for God's sake, have an idea every once in a while.
Tariffs, especially illegitimate ones like these, are rarely a good idea. But neither is providing government subsidies to a management and investor core who want only to grab everything they can, damn the consequences.
Trump is not trusted by anyone outside of this country. He is often considered as stupid or someone that can be taken advantage of. He does not talk with our allies or enemies, but merely bloviates. He merely throws out ideas willy nilly and will not discuss them with anyone before doing so. So is it wonder that countries around the world consider these ideas and Trump himself a threat to world order which is important to us as well for our home order can not be separated from order around the world.
When I look at a picture of Trump I see someone consumed with mistrust and anger and that anger seems to negate any reasoning or discussion and it is what I fear the most. If his policies had any sense of rhyme or reason I perhaps could see beyond the anger, but as it is I sense only chaos in this man's actions.
I have not mentioned tariffs as yet and I may seem off point, but tariffs, an idea I consider generally as a bad idea, are to an extent beside the point. that Trump is a bull(y) in a China shop who will not talk with anyone who does not say yes to him and that the rest of the world sees him as a dupe and only out for himself taints any idea that he tries to shove down our throats. Trump and his authoritarian leanings are not new in this world and others see him more clearly than we do.
This article represents the moral bankruptcy of the economic left in the United States. In advocating for a small section of the US workers, they are demonizing workers all over the world (as an earlier comment mentioned what of the Canadian workers?) and workers in other industries and customers in the US. This is the same xenophobia that is reflected in all of this administrations policies and the left is feeding into this.
Yes there is global excess capacity but it is not only coming solely from countries where governments heavily subsidize steel. The latter is of course is just an excuse for blaming China. But consider that a majority of the US imports come from Canada then these so called unnamed "foreign" governments is merely a red herring. Global excess capacity requires a global cooperative solution and not a unilateral trade war escalating measure from the US government.
2
Bivens's article does not represent the Left.
The majority of economists on the Left disagree with his optimism.
1
I wish I could agree with you but many are following into Bernie's lead of anti trade policies that are as antiquated as Trump's are, from a bygone era. Most mainstream economists are Democrats, mostly center liberal, and most oppose this anti trade policies.
There are a few in the Democratic "tea party" that likely agree with Bivens
It is pretty insulting for the author to claim anyone who thinks this bit of trade policy is economically unwise is simply anti-Trump and either incapable of or unwilling to analyze the policy and its consequences. As the writer noted, tariffs are supposed to be used to maintain fair trade. I have heard no evidence that Canada, Brazil or Mexico, the principal sources of U.S. steel imports, are engaging in unfair practices. China does, but they are a rather minor player in the U.S. market.
The reason for these tariffs are obviously political. The president wants to look like he is protecting blue collar jobs. One can say that is a proper use of tariffs, protecting and propping up a domestic sector that is having trouble competing in a global market, but call it just that, a government jobs program.
2
Well said, it is insulting. If you are not with him you just do it to be anti Trump. No analytical thinking other than his.
Mr Bivens is absolutely right that those who do not support President Trump should nevertheless not reflexively criticize everything the administration
says and does. Indeed, as cited by the author, the Fact Sheet issued by the Obama administration on the 2016 G-20 Summit notes that "excessive capacity in steel and other industries is a global issue." Even so, the Fact Sheet does not recommend as a solution the imposition of new tariffs--which history teaches us can be a dangerous remedy--but rather the enforcement of 160 already existing anti-dumping regulations and other measures, including most importantly collective action.
I think the vehemence expressed against Trump's new tariffs arises at least in part from the ad hoc and impulsive way in which they were announced, without prior consultation with those affected--or even his own staff, and the likelihood that they will not reach the real target, China, but rather hurt our allies, notably Canada. As an instructive contrast to President Trump's knee jerk reaction to...just about everything, interested readers might want to read the 2016 Fact Sheet which represents a comprehensive, thoughtful and collaorative approach to issues of foreign trade.
1
The problem of American steel-producers is chronic underinvest during the last 30 years, long before the raise of China. Except for a few modern mini-mills, American mills look like from the 1930s. Unions certainly have a large part of blame for that.
It will reduce trade volume, good for the climate, less transport of stuff.
Also it will be a compensation for the tax cut.
Next some tariffs on bullets, guns, opioid, junk food, mobile phones, oil, gas and we will quickly reduce the federal deficit.
And the average age of Americans will start to rise again.
Now I come to think of it, let’s stop trading, build walls with wood from local trees, pretend we have never discovered other continents. Good for world peace as a side effect.
In a next comment I will share more of my economic and political ideas.
It was going good until you mentioned the walls...
There are an estimated 150,000 US workers involved in the manufacture of steel and their average annual wage is around $50,000+. US steel manufacturers are profitable, but Canada, where a majority of steel imports originate, has a natural price advantage through an abundance of hydroelectric power generation.
Currently, around 125 million Americans have full time jobs - 150 million if you add in part time workers - which means that jobs in the manufacture of steel make up only 1/10th of 1% of America's total workforce. And, of course, steel manufacturing jobs make up an ever smaller percentage of total US population. Why then are the vast majority of Americans being asked to subsidize these jobs? Not only does this appear to be picking winners and losers, but at its most basic level is yet another form of corporate welfare that consumers are asked to bear.
There may well be a current oversupply of steel, but market forces have a way of balancing the scales over time. As for the argument that tariffs will protect a "strategic" industry - maybe, maybe not - but it seems less than rational to get into a trade fight with Canada - our next door neighbor and one of our largest trading partners, with whom we have a trade surplus.
Despite our president's assurances, trade wars are costly, messy and seldom won. If these tariffs are imposed, its hard to imagine that this time will produce any different results.
2
by no stretch of imagination is this a policy that helps american workers.
Cheaper and near-universal health insurance, lower-cost and lifelong education, better roads and transit near employment centers would help the american worker.
We wont be hearing about these issues under this administration.
2
The USA is the standard maker. The advantage is we're informally allowed to increase our debt because of our relatively strong currency aka dollar.
Oh yes, of course this bothers me
too.
Russia and China try to make their currencies stronger than the USD
We are considered as the RESERVE CURRENCY.
DJ T and the GOP freedom caucus committee don't believe It will always be So apparently by default.
That we indeed are considered the strongest and leading nation.
Cross fingers and knock on wood.
Psychological confidence is reality.
This IMHO drives the world.
Trump does not Accept our place as world leader.
Mr Bivens, I believe you are correct.
The chorus of "But, Trump!" seems to drown out any positive qualifications in his policies.
It seems to be that any change in trade policy that is meant to protect this country also gets a lot of noise from foreign countries and corporations - the anti-Trump complainers would be happier to support foreign interests if it meant they were doing so to oppose the Trump White House.
It's gotten boring, that.
4
But the thing that people still haven’t figured out: Trump is like the Vietnam War.
So clearly it was a wrong thing. Wrong for Vietnam, wrong for America.
And it brought all smart people together, in agreement.
We needed to do that again, as a nation of thinking people. And our dingbat President did that for us.
2
As a conservative, the problem I have with this move is that it is very Obama-esque in the way that the President is trying to bypass Congress rather than work with them to come up with something rational. The idea that this is a national security move does not hold water. The only reason for saying that it is a national security issue is that it allows the President to take action without Congress. It is a dishonest move. The constitution was designed to make these kinds of decisions slow and methodical rather than blurted out by the White House without any debate.
The article is wrong in the comparison to intellectual property. Someone who has written a song or invented a formula for drug have the right be be compensated for their creation. Nobody is stealing steel and aluminum and using it without compensating the producer.
Previously, when trump got irritated, he'd call into some talk show as John Barron and rant. Now as the so-called president, he can cause global markets to fall.....must be so exhilarating for him.
This is a fascinating article, but I think we are missing the main point here. First of all, the tariffs have not been implemented yet and given this administration, who knows if they ever will be??? I wonder if this is just another case of Trump's shooting his mouth to create a distraction from his about-face on gun control and DACA, the idea being "let's change the subject" so people will get exercised about something else in this ADDHD administration. And we are falling for it!!!
Without the intervention of the courts, DACA would have been gone today. Dreamers are by no means out of the woods and any movement on immigration "reform" does not seem to be happening. In the meantime, we have mass shootings every other week, it seems, and no one is making a move to strengthen gun reform. Trump had his reality TV show last week and met with the NRS and changed his mind the next day. I think that he never had any plans to strengthen gun laws or to save dreamers, no matter what came out of his mouth. He just changes the subject, makes an inflammatory statement on tariffs, and we all shift focus. Tariffs seem to have pluses and minuses, but they're not "real" yet and there are several pressing humanitarian issues that are dying on the vine. Can'e we keep our eyes on the prize here?
1
I thought "free trade" was a system of largely market based supply and demand dynamics. I seem to remember conservatives always believing in "free markets".
Markets that aren't free are generally propped up by the local government for many reasons. Not the least of which is Trump's claim that an unhealthy US steel industry is counter to a strategic imperative for defense purposes.
So the Republicans(?) propose US government intervention in the markets to "protect" our steel industry.
It seems obvious based on the referenced report that steel capacity exceeds demand, therefore global prices have fallen but there still seems to be interest in plant expansion?
So conservatives, why not let the market work and reduce supply through economic pressures? It's your dogma we're talking about here.
The answer to the disruption caused by trade and technology is not less of either. It doesn't work. Some of the highest labor rates are enjoyed by countries with the largest trade sectors. We know what to do. Helping workers become more productive -- continuous training, relocation assistance, health care, pension reform, etc. Investing in people starting in early childhood and infrastructure will make us more productive. Yes, taxes will go up but if spent productively so will our economic potential and global competitiveness.
It may be apropos to point out inconsistent application off protectionist policies but it evidently does no follow from that fact that protectionism is either benign or desirable.
For example, pharma is a paradigm case of a protected industry that is sorely in need of some deregulation, transparency and more competition from outside sources.
Far better to remove protectionism everywhere than condone it in cherry picked cases. The appropriate response to a foreign industrial policy that subsidizes a particular industry at the expense of foreign competition is to either file a complaint with the WTO or to invest in other industries that offer more in return. In recent times the US has in fact done a lot of the latter (as well as the former) - with much success.
Economic history is pretty unambiguous about the adverse effects of protectionism, after all. What good reason is there to expect this time to be any different?
“Is it good for the bottom 90 percent of American workers and the families they help support?”
Is a trade policy that helps workers in targeted industries worth the harm it will do to workers in the many other industries that depend on steel and aluminum?
Mr. Bivens presents a balanced view on a difficult topic. In principle, tariffs are bad for well-known reasons. But given the facts that (a) the world is full of trade cheaters and excess steel production; (b) steel production is important to the US for economic, strategic, and social reasons; and (c) the US government has unwisely followed a "strong dollar" policy for decades, tariffs may be a reasonable short-term remedy if (a) restricted to modest levels on a limited number of products and (b) accompanied by specific measures designed to bring the US dollar back to competitive levels.
It is not mere coincidence that the 25% protection suggested by Mr. Trump for steel is almost exactly the same as the dollar's current overvaluation with respect to the exchange rate needed to balance US trade.
Imagine the impact on US industry if the implicit 25 percent tax on all US products and the subsidy of like amount to all foreign producers created by the dollar's overvaluation were eliminated!
A Market Access Charge would moderate the inflows of foreign capital that have overvalued the dollar for the past 40 years, thereby restoring balanced trade.
The MAC legislation now being prepared would benefit all American workers, families, and businesses, and would sharply reduce federal deficits. With good bi-partisan support, it could be in place within months and, over the next few years, would eliminate the need for the modest, short-term tariffs now required.
2
A more targeted way to “provide a countervailing force against these foreign subsidies and protect American metal producers . . .” is via countervailing duties, which are imposed on specific countries/foreign manufacturers to counter foreign subsidies after a detailed investigation involving the Dept. of Commerce and the International Trade Commission. The U.S. currently has over 50 such countervailing duty orders in place on steel products from around the world. Countervailing duties are consistent with our WTO commitments and avoid unintended and distortionary consequences that a 25% across-the-board tariff could cause.
3
"if Trump is for it, I’m against it.”
Idiot alert: Anyone saying "don't worry" about tariffs and the resulting pain felt by consumer should NOT be heeded.
2
Not being an economist and with absolutely no expertise on this issue here are two quotes from the Curmudgeon of Baltimore, they seem apropos:
"Explanations exist; they have existed for all time; there is always a well-known solution to every human problem — neat, plausible, and wrong."
"The demagogue is one who preaches doctrines he knows to be untrue to men he knows to be idiots."
Tariffs support domestic production - by giving it a chance to charge as much as foreign production for lesser quality products. Because if the domestic products were as desired by Americans as foreign products, there would be no need for tariffs.
Free trade didn't "hollow out America's industrial base". Arbitrary incoherent production-damaging government regulations did. Putting tariffs on foreign products to make up for hyper-regulating of domestic production is childishly stupid - a genetic predisposition of all politicians, and numerous pundits such as the NYT's pet economist. It is the childishly stupid Government-Knows-Best hyper-regulations that should be destroyed.
Americans deserve to pay as little as they can for the highest-quality products and services they want. Why does Trump - and apparently, the NYT - think Americans should waste more of their money? Because that's childishly stupid.
1
The Trump base loses two ways with tariffs: jobs are lost and the cost of consumer products increase. Trump is relying on a federal statute which allow him to levy tariffs if there is a “threat to national security”.
But the move by the Moron-in-Chief to levy tariffs is difficult to understand. China is singled out for steel but only supplies 0.2% of the U.S. market. Canada is the largest supplier with 16% of the U.S. market.
Aluminum is even more difficult to understand. Canada supplies 60% of the U.S. market from nine refineries in Quebec and one in B.C.
Most Americans are not aware that Canada has been for decades, and remains, the largest trading partner of the U.S. While U.S. media and politicians condemn China (where there is a large trade deficit) and name the EU and the UK as offenders, slightly more than US$2 billion in goods and services crosses the world’s longest undefended border each day. In the past five years, the Canada/US trade deficit has alternated from US$12 billion in favour of either party, hardly a drop in the bucket where total trade tops US$800 billion annually.
Canada is the largest trading partner of 44 of the Lower 48. Financial and transportation integration has comparably high numbers.
People in Canada (i.e., the entire population) cannot comprehend the moves by Trump and Wilbur Ross to punish Canada. The again, Trump likely knows nothing about international trade and Ross is likely being bought off by US interests.
2
Trump, using a shotgun, aimed at China and hit Canada.
1
To be clear, Donald Trump is threatening to tax Americans for use of foreign steel and aluminum.
This is a tax increase on all Americans for the benefit of a few.
The bottom line is:
Donald Trump is raising taxes.
1
Congress donned their NRA hats and killed any serious talk of gun control. All they have to do here is put on their corporate sweatshirts and this stupid idea is toast. Who do you think runs this country?
From the article:
"“Is it good for the bottom 90 percent of American workers and the families they help support?"
Do you think any of us actually believe that? Trump makes one trade policy shift and it's the "beginning of a global trade war".......
Where was all of that indignation over the last 25 years?
The people acting like Trump is a moron are the same people who were driving the boat that got us to "where's my job" island. If any of you think the people who sent our jobs to 3rd world $hitholes to begin with wondered if it was "good for the bottom 90%" then your $tupid and deserve the government we've had.
2
We give subsidies to farmers for corn, wheat, soybeans, rice. Does this not harm farmers in other countries too? Not sure why we do this anymore as 85% of that money goes to mega farms.
1
Mr. Bivens, please read Veronique de Rugy's OP-ED in this same edition and you will recognize how unscientific and biased your own piece of opinion is.
3
Judging from the comments, Bivens has struck some nerves.
1
Mr. Bivens, come back when you have your Nobel in Economics. In the meantime, I'll stick with Krugman.
Tariffs do not work. History proves it. The world will retaliate with their own tariffs; everything for Americans will be more expensive. The winner; Trump and his rich old white buddies. The losers;everyone else. Vote out GOP/ Trump . Ray
1
Want a mulligan Josh? President's latest tweet claims this is all about NAFTA negotiations. Hard to keep up with his thinking, isn't it?
The amount of coastal elitist on here that have obvious disdain for any man that works with his hands instead of his mind is palpable.
Don't be "shocked" all over again, I won't be.
Utter nonsense. There are roughly 140,000 Aluminum and Steel workers in the United States. A trade war, n the other hand, affects everyone. And Trump is doing this for one reason only - to further enrich his already very rich compatriots as in- the owners of the steel and aluminum factories.
Trump is easy to resist as you say. However, that's the beginning and the end. This are not normal times. Trump is a sick man at the head of a sick and greedy "Republican" Party. Nothing and I mean nothing this man suggests is worthy of respect. He has zero integrity on any level.
1
Wilbur Ross.
what's he up to?
foxes in the henhouse?
Obviously this article was written by someone who is blind to the reality that if Canada and Mexico were to decide to close the borders the entire auto making and trucking making industry would scream to a halt. Trump is an idiot as are his minions.
2
A tariff wall is artificial, imposed by regulations that can change in short order, and accordingly fragile, especially in a weathervane Trump Administration. No domestic steel or aluminum producer is going to plan a costly and lengthy expansion viable only behind a transient tariff wall.
So the only sure result of the tariff is a price increase and higher profits for domestic producers. No job increases. No benefits to any but via managers’ bonuses and, secondarily, increased stock prices.
1
We now have Oreo cookies made in Mexico to no Americans' benefit. The Oreo cookie package is now smaller and more expensive than it was previously, even with lower employment costs. And, without benefit of any tariff.
Prices fluctuate and the average American gets the pain no matter what.
At least this president is addressing that pain in some way.
3
Wrong. When Mexican wages increase, when the Mexican economy flourishes, Mexicans buy American products and AMERICANS BENEFIT.
Sorry to shout, but our loudmouth in chief needs to be balanced at every opportunity.
I wish Bivens had used something concrete to make his point. There doesn’t seem to be any there there
1
This is insulting. Mr. Bivens, yes, about 60 million people were stupid enough to vote for Trump. The rest of us, for the most part, are smart not to base our political beliefs on "if Trump is for it, I'm against it." I, for one, am perfectly capable of evaluating Trump's "policy" proposals outside of that paradigm.
1
So maintaining the status quo is the best way to handle the "problem" that really does not exist to about of these commenters? Correct?
1
The 'Star Wars initiative' was supposed to be foolish also. How did that work out, in your opinion?
They haven't gone through yet. I'm wondering if it's primarily his temporary response to the Pennsylvania congressional special election in mid March to get voters in southwestern PAto vote for Saccone.
1
I find it hard to believe or accept any proclamations based on unenlightened a man who regularly falls asleep during cabinet meetings
Hmmm, so tariffs are relatively benign and harmless. I guess my college economic classes about the Smoot-Hawley Tariff Act lengthening and deepening the the Great Depression doesn't apply. And I guess we can disregard Professor Paul Krugman's analysis in this newspaper and the entire basis behind GATT.
1
It is UNBELIEVABLE to see all these deranged anti-Donald Trump people attack tariffs. Do they attack 15$ for a pack of smokes in NYC? Do they attack property taxes old people pay to support lousy schools? Property taxes and lousy schools were one of the reasons Detroit lost 1 million people. Do the anti-Donald Trump people care???? No, they definitely don't. I guess the Econ 101 book everybody keeps talking (you know, the Econ 101 book Donald Trump supposedly didn't read and/or understand) about doesn't care about older property tax payers or smokers.
1
If steel and aluminum are so important for national security, and other countries are subsidizing their producers, wouldn't it be LESS EXPENSIVE to subsidize our steel and aluminum producers temporarily?
Oh, wait! We are! Didn't we just pass permanent subsidies to ALL American industry with a generous and unpaid for massive tax cut? Wasn't that enough? Tariffs are a disguised tax on consumers?
As Tornado-Trump draws his immovable lines in the sand that blow away after he passes, the damage is done. Europe can also play stupid, as the European Commission chief said. The problem is NO ONE can out-stupid trump.
Unpredictable - that is how he explains his clueless, reckless incompetence. He'll carve out an exception to steel tariffs whenever he or the in-laws build a new building.
1
On the other hand, maybe we change a few things around to properly subsidize these critical industries. Starting with a national single payer health insurance scheme that can be used by any legal resident as an alternative to private insurance. That would reduce labor costs, maybe not to slave-wages paid in China, but a start.
Then, improved and enhanced social services. And followed up with increased focus on infrastructure renovation/improvement.
All if the above would cost money paid for by taxes.
Happy?
To make it fair, do we insist the Chinese worker get parity in pay or the American workers get parity in government support? (maybe I mean Canada instead of China here...)
1
“Just the facts, ma’am”, said Detective Sergeant Joe Friday.
This is one of very few articles that attempts to take the misery of Trump out of the analysis of tariff possibilities.
If we don’t have enough steel and aluminum production capacity to supply national defense needs, then that’s a problem that needs to be fixed. Is there a better solution for solving this problem than tariffs?
Let’s assume retaliation, for example tariffs on our agricultural exports. That will increase prices abroad and increase supply in the U.S., which likely means lower prices for food in the U.S., prices so low perhaps that there is an offset of whatever price increases we experience in products with steel or aluminum components.
There will be U.S. winners and losers for sure, but it’s not at all clear what the magnitude of the wins and losses will be.
It’s complicated, maybe too complicated to predict all outcomes, but, if national defense is a major consideration here, maybe it’s time to try steel and aluminum tariffs.
Discounting every Trump pronouncement because most are idiocy, doesn’t mean they’re all idiotic.
1
Canada subsidizes steel and aluminum production? Who knew? Apparently the author has unique sources.
This was probably the most telegraphed strongarm move in the history of international trade.
Someone should do a political cartoon of Trump holding a gun to the head of a child labeled "national economy" and telling Justin Trudeau, "Give me what I want on NAFTA or the kid gets it." A nonplussed Trudeau is shrugging and saying, "But it's your kid!"
Republicans know it and are freaking out. Democrats are looking clueless on strategy, as usual.
1
Isn't all about the election in Pennsylvania?
1
Keep drinking now because your bourbon's price will be rising!
How so? Bourbon is made in the US.
1
Mr. Bivens writes, "(Trump's) anti-trade stance is of a piece with an agenda rooted in xenophobia and bigotry that has favored the rich over low- and moderate-wage workers".
Can this guy really be serious? Trump campaigned on saving American jobs--and bringing back jobs that have fled this country. What has he done about it?
--reduced regulations so that American companies can operate more freely, thus becoming more internationally competitive.
--lowered corporate tax rates, so that our companies can be more internationally competitive.
--wants to punish countries who cheat at trade, in order to make U.S. companies more competitive.
All of this is about creating jobs--by allowing our companies to be more competitive. There is nothing bigoted, racist or xenophobic about any of this. And to suggest such, is pure idiocy and ignorance.
3
Even when admitting Trump is probably right, the Times can't resist the snarky comments and back-handed insults. It's a wonder that the Times can't see that Trump's M.O. is to troll the media while implementing things which, more often than not, actually work. On trade, this move is overdue...and he needs to move on to China's massive and illegal theft of American intellectual property before it's too late.
2
Giving American workers a certain degree of job security is a good idea. Seeking that end by imposing tariffs has to be among the most counterproductive methods possible.
If US steel and aluminum are being hurt by unfair trade practices (government subsidized industries in foreign countries) shouldn't the resolution be to seek relief in a ruling from World Trade Organization? If my neighbor throws grass clippings onto my lawn, should I retaliate and throw garbage on his? Is that how disagreements should be resolved?
Tariffs are very shortsighted and invite retaliation which goes tit for tat, ramping up until everyone is hurt. Everyone except the bully, who always tries to get in the last punch, then walks away claiming victory.
Trump's use of tariffs is not to help the steel and aluminum industries, it is to satisfy a promise that was stupid to begin with. If we need healthy steel and aluminum industries in the US, for national security reasons, then the government should advocate for fair practices at the WTO and if that fails then support the industries with government subsidies.
The use of tariffs always end up with unintended consequences, hurting people who have nothing to do with the immediate trade issue. But we've come to understand that Trump doesn't consider consequences because he has never been held fully accountable for his life of fraud, lies, stupidity.
3
We need to protect the US steel industry for national security purposes, bottom line.
2
Agreed. The idea that loyal Americans should be responsible for critical industry is important.
1
Lol! I've noticed a pattern lately with "journalists" when they spew these op-eds. They are desperately walking the proverbial tightrope between bashing Trump and acknowledging that, despite their personal hatred of the man, he is in fact doing a pretty good job. It's really humorous watching them try to keep up the whole "Trump is the worst President ever" routine going while simultaneously trying to salvage some shred of their own credibility by giving a grudging nod to the good things that are happening under his watch. Many of these "news" people, apparently, have come to the conclusion that actual American voters are starting to see their lot in life improving (significantly). I mean, after all.... who should we believe? The New York Times or our own lying eyes?
1
A perfectly Trumpian op-ed.
Trump surprised everyone in his own party, including WH staff, with his steel and aluminum tariff announcement. Who wouldn't be worried about a president who sets off an international trade war with as much forethought as he gives his menu selections at MacDonald's?
A few minutes ago, Trump Tweeted "Why did the Obama Administration start an investigation into the Trump Campaign (with zero proof of wrongdoing) long before the Election in November? Wanted to discredit so Crooked H would win. Unprecedented. Bigger than Watergate!"
That's a fascinating view of recent history, considering neither Obama nor the FBI revealed said investigation prior to the election, while the FBI (Comey) did reveal they were reopening the Clinton E-mail file just days before the election.
Your president is out of control, appears delusional, and is a danger to the stability of the entire world. Thanks, Republican voters.
1
A trade war could trigger a worldwide depression, as it has done in the past. Don't worry, Josh Bivens tells us. Reminds me of people ecstatic when Trump was running - "he can't be bought, he's NOT a politician!". Sorry Josh, like the Trump crowd, you give me zero confidence.
3
Well, on the populist right it's steel tariffs designed to save jobs in the American heartland. On the left it's Oscar night. Details matter, but then, so do optics.
1
The average price of beer in the US is 80 cents according to Thrillist. The Brewers Association estimates the total annual sale of beer to be 107.6 billion dollars. At .80 per beer that's about 134.5 billion beers sold. If the price of beer increases 1 cent per beer to pay for this tariff that would amount to the US consumer paying the federal government 1.3 billion dollars.
And that's cost a quick and dirty look at beer... what about the costs of cars?
for all the Republican yammering about the losers like the NEA and PBS - which get about 150 million and 450 million per year respectively - why is this expense now trivial?
2
I'm amazed that the NYT would publish such poppycock. Firstly, the whole rationale for these tariffs - national security - is a fable based on ignorance and deceit. There is no national security issue. These tariffs are about jobs for the Trump Base. Pure and simple protectionism. Secondly, that protectionism is a violation of NAFTA. Whether Trump, Ross and Navarro like it or not, that agreement is still in place and it does not allow these tariffs to be imposed except through a process which determines whether they are legitimate based on the terms of the Agreement. Thirdly, Canadian steel and aluminum production does not conform with the kind of conditions that would justify imposing tariffs. It's time people stop making excuses for the ideological foolishness that has overtaken good governance and call reckless incompetence for what it is: reckless incompetence.
1
You'd think an economist would understand that the most important consequences of Trump's tariff proposal will come not from its primary impact, but rather, from knockoff effects from the trade war it will most certainly incite.
Trade wars are dangerous because like all wars, their costs and consequences are unpredictable. Although we're getting some hints about possible retaliation from our trading partners, the truth is that nobody knows what price we'll pay for this misguided action and who among us will bear the burden.
1
This piece is complete nonsense. Someone this morning critical of the tariffs said "You need to use a scalpel not a chainsaw in applying such tariffs". If China is the problem, place tariffs on China for dumping steel, not every steel-producing country. As mentioned in the NYT, Canada imports more steel from the US than it exports to the US. The US enjoys a trade surplus with Canada. So why punch your neighbor and ally in the face? Using these tariffs as blackmail to get concessions on Nafta may be the reason. The real cost to the US in the future is TRUST. We can't depend on you anymore. You are not our friends. We will retaliate and personally, I'll buy non-US fruits and vegetables and other products from now on.
2
Bivens has got to be kidding. This is a disastrous policy that not only threatens the economic health of the US and a number of countries, primarily Canada. Talk about kicking sand in the face of the US’s primary ally, neighbour and former friend. Tying tarrif exceptions to NAFTA is egregious.
1
At least the New York Times has given us one article which is less than 100% opposed to Teump’s tariffs.Trump campaigned for President on the issue of restoring American manufacturing and jobs, an issue which the Democrats bafflingly have ignored ever since Clinton supported NAFTA. I do not support Trump or the Republican Party at all, but I have to give him some credit here for following through on what he said he would do.
2
The tariffs were justified with a national security paragraph. That's shady enough in itself, but then not exempting Canada, which is part of the US national security base, is ludicrous. Not even pretending to take rules seriously is a big problem. And when Trump says "trade wars are good" that makes it that much worse. Trying to find a bright spot in something so flawed is a meaningless exercise.
1
You can call Bivens' assessment right or wrong; but please give him credit for looking past the ideological scrum toward an unbiased policy assessment. It's so rare these days, so enjoy it.
1
Trump is no more than that old schoolyard bully who never did well in class, slipped through the cracks, graduated and now occupies the Oval Office where he can bully some more. When he can't have his way, he threatens and shoves.
It's too bad unions have been destroyed and workers have no coherent message. Workers have so much power if only they'd get together and make their statement. Tariffs might affect trade and cost a few jobs, but a nationwide strike of a few days or weeks would decimate all of Trump's ill-conceived plans and send the old bully a taste of his own medicine.
On the bright side, the nation that will suffer the most from this is the nation that elected the guy.
1
Protection for other industries is no argument for protection of steel and aluminum. This article decries generalizations while offering nothing but generalizations and deflections. Worthless.
This is a poorly thought-out article. Mr. Biven's premise does not account whatsoever for any retaliatory action will almost assuredly occur as a result of the tariffs (per the indications of Canadian Government and the EU).
This is the fundamental flaw of protectionist policies. They may have some 'merit' in specific instances, such as protecting an unfairly beleaguered industry, but they invariably incur reprisal from their targets, which inevitably eliminates any realized benefits. Nevermind that the repercussions will likely extend beyond economic policy, and could have serious repercussions for the America's political alliances.
1
Does Canada heavily subsidize its steel, dairy, and lumbar industries?
Does gambling go on in Casinos?
2
While points made in this article relating to the economic effects of these tariffs may be well taken, nothing is said relating to the global security strategy behind freer trade and trade agreements which seem not to be economically advantageous the U.S..
This past week, China enabled the reestablishment of a dictatorship, (with admiring comments from Trump) justifying this on the basis of unrevealed important battles to come. Russia has already reestablished its dictatorship, and Putin, days ago, lamented the lost empire of the Soviet Union, which in various ways (starting with an uncontested invasion of the Crimea and continuing into meddling in affairs of former pieces of that empire and further continuing into meddling into our own affairs) the point of our international agreements is lost on politicians who would like to curry favor with workers, rightly disgruntled, in affected industries (Bernie, Jill and Trump all rode in that hot air balloon). The global security point of these trade agreements and sacrifices we have made in them is that they are designed to bind to us those countries that we need as allies if we are to counter the evil designs of and threats to us arising out of these dictatorships. Point is "it's not the economy, stupid", it's our existential security. This is what is threatened by Trump isolationism.
It may be that each Trump policy should be discreetly judged on its merits or deficiencies but the breakup of our alliances is disastrous.
While the details in your article are good Mr. Bivens, you fail to look at the fact that what will Trump do tomorrow that will effect the world economy just like the tariff announcement and you can say that nobody knows what he will do but that is just the point. He opens his mouth and it effects the economy, security, health or status of this nation.
Don’t protect these industries unless you invest in them. BIG!
"Slippery slope to autarky"? Were you hoping your readers don't know the word and would confuse it with autocracy? Globalism is a response to cheaper commodities abroad. Who in this country wouldn't favor manufacturing everything in the US if the price was cheaper?
What's the duty in Germany and China .. how about Japan. What barriers do they erect to stop imports from the USA.
Never mentioned ... We play by the rules and the rest of the world goes about getting around the numbers.
My family has been in the manufacturing, import/ export business since before the turn of the last century. We have seen it all .. try shipping steel to Germany .. How about a car to Japan ... or start a business in China. How can Mexico make all that steel .. guess (they don't) .... it's from China and gets labeled "From Mexico" ... in it comes under NAFTA.
This is no "end of the world" people ... we have forgotten what matters. The Democratic party at one time stood for workers ... now it's controlled by money wealthy managers and public service workers ... Both only care about cheap products .. and pension returns.
1
You know, I found Mr. Bevins article compelling and persuasive. The premise is that well thought out policy and reasonable tariffs could support American jobs and industry.
The failure in his assumption, which he reluctantly admits, is that nothing about this tariff is thought out, reasonable or makes for good policy As we all know, this was shoot from the hip, impulsive, emotional reaction to a bad day he had on Thursday, where the actual tariff numbers he threw out were a pure SWAG with an emphasis on A.
So, while tariffs might have had a potential to do some good, badly applied and communicated, they are doing way more harm than good.
So you think that making things more expensive for the consumer in the United States while damaging relationships with key allies where you already enjoy a trade surplus, including in steel (Canada) is going to do some good? How far will any meagre gains--if there are ANY--in the income of American workers go after everything they buy, from toasters to automobiles, clothing to soup in cans, goes up more. This is a recipe for inflation at home and anger abroad...and eventually at home. Its a stupid idea brought to you by people whose economic knowledge can be summed up by real estate development and predatory banking. Good Luck on all that.
2
There is a youtube interview 20 or 30 years ago with Trump in which he pointed out how the US was being taken advantage of by other countries in trade. Nothing has changed.
Of course the group that doesn't really believe in capitalism or borders and believes the US is the source of all evil doesn't want us to expect fairness in trade.
2
Josh Bivens starts off his article by saying that tariffs have been imposed before without consequence, so that we should not worry about them now.
Well, tariffs on imported steel were put in place under Bush II and were removed shortly afterward due to their cost to the US economy.
There is little to support these proposed tariffs other than Donald Trump’s anger at the scrutiny of Jared Kushner and his anger at AG Jeff Sessions.
Mr. Bivens’ “don’t worry, be happy” refrain in attempting to justify this latest bit of impetuous stupidity from the Trump administration, simply belies his qualification for the position he holds at the Economic Policy Institute.
1
One of the reasons that there is trade imbalance between us and China is that Chinese workers and “middle class”,( such as there may be),cannot afford products which have American labor built into pricing. There is no incentive for a Chinese buyer to purchase a set of imported Snap-On socket wrenches when they can purchase a reasonable facsimile, domestically produced, for a fraction of the cost.
1
This is nothing but more Trump phony baloney. Off of the top of his head he shoots his mouth off, with not thought of following up, and his propagandists come up with something for him to claim is a product of his bather having being remarkable accomplishment. So, on his tariff threat he says he will reconsider when a better NAFTA is agreed to, accomplish nothing with those words either, but will claim he has as everything stays the same and he goes on and on shooting off his mouth about how great he is.
1
So here is Bivens' argument:" Some countries subsidize their steel industries, thereby contributing to global overcapacity and driving down steel prices. So we'll put tariffs on steel for every country, even those that are not part of the problem, and we shouldn't worry." Even the United Steelworkers claim that Trump's tariff wasn't what they had in mind since it doesn't target the right offenders. Canada, after all, is the main exporter of steel to the US but also buys about as much steel from the US under NAFTA as it sells, and maybe even more.
I wonder whether there is a broader context to the steel tariff, beyond a Pennsylvania election. As part of their attempt to pressure (bully) Canada in NAFTA trade renegotiations, Trump and Ross levied a ludicrous 300% tariff on a Canadian airplane---300% is something out of Daffy Duck or Yosemite Sam cartoon. Canada appealed, and won. It is also appealing through the WTO various other special US tariffs, much to the express annoyance of the Trump administration. So Trump and Ross, miffed that anyone would appeal to a rules based adjudication system to thwart them, have responded with the steel and aluminum tariff. "national security" as a justification means it applies more broadly to many countries, but also makes it a presidential prerogative immune to WTO appeal or congressional interference, though not to countervailing duties from other countries.
1
If the intent of imposing tariffs are about temporary relief to domestic producers then Trump is breaking the law. The law that Trump is employing applies to strategic defense issues and clearly from Trump's own communications strategic defense considerations not his intent. By ignoring the legal aspects of these tariffs this op-ed aids and abets another Trump lie.
Moreover, if the intent of these tariffs is to motivate our allies to aid our economic issues then using a stick seems an ill advised strategy more likely to fail than succeed.
1
So why didn't it work for Bush??? What brilliant thing is Trump doing differently other than rolling it out in a more sloppy chaotic way ??
Trump can't think past step one, which is tariffs. Then he says he loves trade wars, because they are easy to win. All nonsense. The beer industry already estimated 20,000 job loses and the stock market is taking away everything the tax scam gave to the wealthy. Everybody loses big time. Not good.
Since Trump knows everything and the spineless GOP won't stand up for anything,once again we are allowing a isolated individual destroy everything that has been built over decades. Just like we have allowed these spineless politicians slaughter our children with there never ending support of the NRA.
These jobs aren't coming back it is a new industrial era, and we are on the road to a horrific outcome for the American people.
Since America is a net exporter, our workers would benefit from a "trade war." The amount of jobs that would be lost in industries that produce for the international market would be less than the number of jobs that we would gain in domestic industries that currently are being negatively impacted by cheap imports.
It is condescending to push the notion that opposition to these tarriffs is based on "if Trump is for it, I'm against it." The only good use of tarriffs is to compensate for artificially large differences in production costs (e.g. due to subsidies, lack of environmental care, or exploitation of workers). Do we really think that any of those apply to our largest steel import source (Canada?).
Conversely, tarriffs raise costs for other industries and for consumers. They contribute to inflation, allow industries to continue being inefficient, and in the long term spread the cost of those inefficiencies across the rest of our economy.
The Economic Policy Institute should take off its blinders about the few thousand jobs in the steel industry that MIGHT be positively affected, and look at the tens of thousands of jobs in steel consuming industries that MIGHT be negatively affected combined with the millions of Americans who WILL pay more for all sorts of products due to these ill-conceived tarriffs.
1
"Generally, excess capacity pushes down prices, ..."
Bivens doesn't cite any data, but the iron and steel PPI has RISEN in the last two years.
Source: https://data.bls.gov/timeseries/WPU101?data_tool=XGtable
I can see Mr. Bivens' point--the problem being, of course, that he grossly understates Trump and Congress' ability to do anything useful with this "breathing room." Their willingness to do anything, for that matter.
What Trump's done, yet again, is to pull a half-baked set of tweets out of his proverbial, in response to feeling picked on, and then run around shouting that It All Makes Sense.
Moreover, breathing room or no, what this does is to shift taxes onto the working people who just got their big, big tax pseudo-cut. And trash any remaining feeble hope of anything getting done on infrastructure except for toll roads.
But surely, corporations will immediately invest in new steel plants, for the good of workers and the Nation.
Right.
1
Regarding the cost of pharmaceuticals- yes there is a drive to import from Canada. Protecting pharmaceutical workers? Profits go into executive pockets. The tax break to bring stashed offshore money? Buying back stock? Trickle down to the workers in an industry that has decimated research? Dream on. What exactly are your qualifications? Your Institute looks like an out of date blog site.
Why do the corporate media ignore the fact that other countries subsidize their industries, which is clearly not permitted by the rules of “free trade?” How can American companies compete if our government blindly follows the rules of “free trade” while other countries blatantly cheat. We are corporate “free traders,” for instance, while the Chinese are mercantilists.
11
How is the imposition of across the board tariffs on steel and aluminum in any way following the rules of free trade? Other countries may simply happen to have a natural advantage in some industries, for example, softwood lumber and aluminum from Canada. But it seems that folks like you won't accept that reality, and instead want to blame imaginary government subsidies.
Meanwhile, in the agricultural sector, you willfully ignore the huge subsidies that funnel into American farms, yet you treat Canadian supply management as though it's the most toxic thing since the Politburo's last Five-year Plan.
So, from north of the border, those tariff proposals simply smack of more sour grapes, and we're about fed up.
1
Imposing tariffs is obviously a deviation from “free trade.” You seem to be hung up on Ricardo’s theory of comparative advantage, which I think is outdated and inapplicable to the modern world. What we’re experiencing is simply wage arbitrage, under which corporations seek the lowest common denominator regarding wages and regulations. The US can never win that competition and most of us wouldn’t want us to win such a race to the bottom.
1
You are assuming that the US is guilt free in this matter. This article shows that the US also subsidises exports. It argues against doing so.Australia has for years been arguing against the US subsidies for agricultural products which compete with our own in the world marketplace.
Please don't blame other countries for doing what every country, including the US does
https://www.downsizinggovernment.org/agriculture/subsidies
Reading this op-ed and some of the comments makes me wonder whether we need a broader view of what the Economic Policy Institute is about in order to make sense of the op-ed.
Does the column’s hyperlink to an article regarding the far higher levels of effective protection for sectors such as pharmaceuticals and software provide the key to the author’s broader views?
The point, I’m guessing, isn’t that intellectual property protections are a bad thing. The point of the linked article seems to be that the way we provide IP protection is by granting a patent monopoly. But normally when lawmakers grant a monopoly for reasons of policy those same reasons impel the lawmakers to regulate the monopoly to ensure the policy is fairly accomplished. Yet we grant patent monopolies without concurrent effective regulation.
Extrapolating, I wonder if the Institute tackles issues such as the extent to which covenants not to compete, agreements to not poach employees, and the previous inability to obtain health insurance that covers preexisting conditions distort labor markets and hold down wages?
Because I’m for Teddy Roosevelt style well-regulated capitalism.
Is that what these guys are about, or is that wishful thinking on my part?
This author is correct when he says don't worry about Trump's tariffs, because it's almost too late and too little to rectify what has happened to this country in the past 30 years. Remember when the US was the greatest manufacturing country in the world? We were almost self sufficient and we were blessed with many natural resources. Somehow the powers that be in America - the new oligarch class, the big business round table and US Chamber of Commerce - decided to make the US a service economy, instead of a manufacturing one. The global economy was a perfect vehicle, because it is dangerously unregulated and is a free-market capitalist dream come true.
Now the US is no longer a manufacturing powerhouse and that has decimated millions of middle class workers economically. We have lost thousands of manufacturing sites all over the country. However, as a result of the switch from manufacturing to service, one percent of the population has captured more than 50% of the income and an even larger percentage of its wealth.
Tariffs should have been established 20 years ago to save our middle class workers. I hope it's not too late to rectify this great imbalance of trade brought about by multinational corporations. The tariffs are now our only option and you can bet the one percent and corporations will do everything they can to defeat tariffs.
One quibble and one affirmation/specification.
Quibble: Yes, their are pharmaceutical and software IP protections in NAFTA and TPP but they were mutually agreed to in the negotiation stages of those agreements. This tariff is a unilateral move.
Affirmation/specification: Yes, there is a large amount of steel and aluminum smelting overcapacity out there but Mr. Bivens is being a bit coy about where exactly the overwhelming majority of it resides. Namely, China.
China's entry into the WTO in 2000 severely undercut Mexico as an investment destination, even under NAFTA.
TPP adheres to International Labor Org.'s minimum standards, WTO purposely didn't.
The problem wasn't/isn't NAFTA or the TPP but a recalcitrant China tolerated in the WTO.
2
I may not agree with Trump on almost any issue, but fair is fair. Can American car companies sell their vehicles in China without a Chinese partner, or without surrendering patents and trade secrets? Is American beef sold in Korea without restriction? Ag products in Japan? European governments heavily subsidize their aerospace and tech industries, and retaliate against successful American companies all the time.
Considering everything we buy comes from China these days, the Chinese argument that protectionism is needed to help grow the manufacturing sector of a 3rd world country no longer holds water. Furthermore, we no longer can look idly by while Chinese companies dump products at below market rates in order eliminate American competitors. China traditionally has manipulated its currency to keep exports dirt cheap. Good for American consumers, bad for American manufacturing jobs.
Either we compete fairly in the market, or we retaliate until it is made fair. Hate to give Trump credit, but he actually may have a point here.
17
Temporary Trumps said they will be i place for a long time. Long Time is not temporary. Sorry Unilateral tariff are pre ww2 modern tariff are usually place in a specific country. Tariffs are a regressive tax they hurt lower income people more than rich people.
1
The idea behind the tariffs is to increase the number of jobs in the steel and aluminum industries. It could happen if increasing the price of steel and aluminum from abroad caused domestic producers to increase their market share in the US, expanding their capacity and opening the job market.
However, job increases are an improbable outcome because Trump is so mercurial and so unpopular that managers of these plants will be hesitant to invest in expanding. The tariff might disappear in the next few years leaving them with useless excess capacity as foreign imports return.
So, the more probable result of tariffs is to allow domestic producers raise their prices to the level made possible by the tariffs, and leave the industry in much the same position as now exists. The extra profit made domestically will go into off-shore tax havens, not into expansion and job creation.
3
A better policy would be to pay individuals and businesses to recycle steel and aluminum products. Many localities have recycling statutes but I don't believe they're vigorously enforced.
New t Gingrich should love this policy as young children could be put to work gathering small aluminum and steel items for recylcing.
1
So a lobbyist for the industry involved has extolled that industry's virtues. And that's supposed to assuage me. Did I get that right?
3
If excess steel making capacity is the actual problem, why not negotiate to lose the least productive steel mills and those that cause the most pollution - instead of ginning up a trade war.
Further, US steel employment is steady, imports are only 25% of consumption and big steel made billions last year. Trump's portrayal of this is another lie, and another unneeded disruption that will only complicate and degrade bot the economy and environment.
Tarrifs are the worst remedy and smacks of a diversion from Mueller.
2
Clearly, so many of these articles that espouse an opinion on an event that has yet to happen, as usual, misses the bigger picture. The fact remains, that around the world, America has become a totally untustworthy entity with an administration and President whom few wish to interact and is politically toxic to any leader of any consequence. The ludicrous and laughable idea the tariffs are based largely on security concerns, especially when Canada is the biggest exporter of steel while having been an integral part of NORAD for decades, just confirms how out of touch Trump and his cronies are about the whole subject. Multiply that by many times and the further irony is as other countries around the world shut the door on helping America with the intelligence on potential terrorist attacks, security is weakened, not strengthened by steel and aluminum tariffs.
As usual, in order to appease his uninformed supporters, Trump searches for problems to use as leverage where no actual problem exists. Now that Trump wants to link NAFTA to the Tariff issue, it is now pretty clear that Canada and perhaps Mexico are thinking that maybe it is just better to walk away because it is no longer worth the aggravation trying to deal with an administration that has little knowledge in the way the world works.
Negotiations take at least two and it is clear the Trump administration is not interested in negotiating, only dictating.
3
Ironically, tariffs on Canadian steel coming into USA will HELP CANADA and reduce carbon footprint: Canada dumps steel on US markets and then imports billions of dollars of steel from China, Japan, and South Korea.
Canada SHIPS across the Pacific Iron ore to China, have it produce steel, and ship the value added product BACK to Canada (Canada thinks producing steel from ore is bad for the environment if it does it on its shores), all adding to a lot of carbon footprint.
One of its steel producers in Hamilton filed for bankruptcy not too long aog.
If Canada cannot export to USA, it can stop importing from China and Japan its steel.
If Trump exempts Canada from tariffs on its steel, it will cause more import of cheap steel from China and other countries into Canada.
So, bring on the Tariffs, and DO CANADA GOOD, Donald.
3
Nova Scotia versus Maine.
A Canadian paper mill in Nova Scotia was dying until the provincial government stepped in to prop it up.
That mill was a direct competitor to a paper mill (Madison Paper Industries) in Madison, Maine that was partly owned by the NYTimes, Co.
In 2015 the owners of the Madison mill appealed to the U.S. Dept. of Commerce citing unfair competition and got a 20% tariff imposed on that one Canadian paper mill.
Today that Canadian mill is still making paper and Madison closed in May, 2016.
Can't help but wonder if the U.S. Government shouldn't be subsidizing the steel industry directly (horrors!) if it thinks in a vital national resource rather than imposing tariffs.
1
I'm definitely NOT an economist, but aren't the "protections" on pharma and software more involved with protecting IP (Intellectual Property) rights, rather than protecting "the profits"?
Anything this president presents has to be looked at with a cautious eye. Nothing about his administration is normal.
3
Comparison of US and Canadian energy costs might reveal the extent of the US steel production problems. Why impose only 25 per cent tariff on imported steel; why not 100 per cent or just ban all foreign steel? Maybe US steel profits making losses due to under-investment like US car industry?
What is the existing US tariff on Chinese steel? Yet China has about 5 percent of US steel market. If US tariffs deter tons of steel imports US steel will need to triple production rapidly? The key question: China dumping steel below cost (making actual losses) to preserve their market share? That is against WTO rules surely? Mr.President Why not sue China?
U.S. aluminum and steel may be short-term beneficiaries of Trump's new tariffs, but there will be more losers than winners in the deal. As history shows, agriculture will be an early casualty. China has already threatened U.S soybean, wheat and sorghum producers (getting them from other countries). Beef, chicken, apple and other producers are also at risk of losing market share.
While I'm no trade expert, the Federal government DOES have many qualified veterans, particularly in USDA's Foreign Agricultural Service. During my 40+ year career, much of it trade-related, I had the opportunity to talk to many FAS experts.
Mr. Bivin does make a point, however: If Trump is for it, I'm likely going to be against it. Trump is a reality-TV "personality" and a real estate hustler with little experience outside of TV and real estate.
If he had taken just a few minutes to tap into the rank & file staff at Agriculture & Commerce, he may have been able to make a more convincing case for himself, but we all know (most of us, anyway) that's not his style.
3
I read of complaints about quality and consistency problems with cheap imported steel. Why not just set a high bar for best quality steel in US infrastructure projects and encourage bids by US companies to supply that demand?
The 2017 NYT story about the shutdown of a high quality US steel bearing company and its removal to Mexico shows the problem and can lead to the solution.
Why do we need tariffs? Why self destruct over this?
2
Ironically there is a picture of the decaying United States Steel plant. US Steel were beneficiaries of the Reagan tax break in the early 80's. The tax cuts to companies was intended to have the money from the tax breaks would encourage the companies to reinvest in themselves so as to reinvigorate the industries. US Steel had another plan. The world's largest steelmaker took the tax cuts, purchased Marathon Oil, didn't reinvest in steel manufacturing, continued to close plans, laid off more workers and took the word "steel" out of their company name which is to this day called USX. So much for corporate consciousness to anyone but their investors.
4
OMG, I read this article trying to keep an open mind and expected that I'd be rewarded by a real economic analysis of why trade tariffs won't be bad. Instead we get an argument that they're a poor fix for the failures of the last two decades. (I contend that the first decade was Bush wrecking the economy culminating in the crash and the second was the Republicans limiting Obama's ability to use deficit spending when we really needed it - unlike now when the Republicans have totally hypocritically decided to run deficits like there's no tomorrow when it's totally unnecessary. It's like giving extremely expensive coffee to someone who's already wide awake. But I digress)
Anyway, I am not a professional economist but when I compare statements like "Is it good for the bottom 90" without even saying WHY it isn't, to an economist (Paul Krugman) who (in addition to winning a Nobel prize) actually makes an analysis (you know, with numbers) in these pages, I'll tell you who I'm more likely to believe.
(By the way, it appears that the job losses to imported goods made with cheaper overseas steel/aluminum will vastly outweigh the minor
gains in the domestic industry.)
So while Mr. Bivens may be right in saying that other CRITICISMS don't FOCUS on the bottom 90, he's wrong in the big picture because the tariffs will definitely hurt the bottom 90. And that's even before any retaliation from our trading "partners" who are often close allies. (Great way to keep friends, Mr. Trump).
2
Trump has constantly claimed he preferred bilateral trade deals. With the exception of the UK, which is desperate after Brexit, name one other country who would want to negotiate with Trump.
1
Criticism of the tariff actually was very much on the mark. It will increase steel prices which domestically will raise manufacturer costs and consequently prices for consumers. It will put American goods at a price disadvantage--both exports but also compared with imports of manufactured goods. If indeed it results in a trade war it will hurt American exports across the board and damage longstanding alliances. And this will cost jobs and hurt growth.
It is also relevant that the administration's arguments did not mention the bottom 90% of America. That is certainly not driving their tariff policy. Rather it is ideological drivel linked to their toxic approach to trade and a bogus national security concern. Had they focused on China (and Russia) then maybe. But this is going to hit our closest allies and provoke reactions that can only benefit the aforementioned.
Yes, we should be concerned about the tariff. Really concerned. And we should be concerned by the rationale espoused by the President and opposed by his closest advisers including Mattis and Cohn. We should also be concerned by anyone using his institutional standing (read EPI) to defend such a policy without even attempting to lay out the the administration's flawed rationale and the economic and diplomatic risks of such a terrible decision.
1
Once again, our president has unilaterally initiated an action that disproportionately harms our allies and further weakens the inter connectivity of the free world that has been the cornerstone of an unprecedented decline in poverty worldwide over the last 25 years.
The only predictable outcome of this action is that it will redirect the narrative away from the stolen election, and provide the Russians with more opportunities to manipulate the fractured political environments in Europe and the US.
Tariffs are the economic weapons. Trump is at war with everyone and everything that represents the institutions and trade agreements which have allowed our companies to trade around the world. This cannot be seen in isolation; either as a singular industry tariff, or as a general economic tendency. It all fits a disturbing pattern of disruption which Trump displays.
The horrifying thing about targeted tariffs is that they too can be expanded and used on a broader 'economic battlefield'. Today's steel tariffs can become tomorrow's agricultural tariffs; to next week's elimination of trade agreements.
This cannot be seen in isolation as Mr. Biven's suggest. It is a much more expansive statement of Trump's overall approach to the world; attack on every front. This time it will cost us real dollars and possibly much more; real trading partners.
One can be for "free trade" as long as both sides of a trade agreement are fairly compensated. Why is a trade agreement "free trade" when it prohibits the USA from charging a tariff on a competitive product while our trading partner gets to impose a tariff or other penalty on a product made here that competes with their domestic product? We should have the same right to impose a tariff to protect our competitive product if the other country insists upon doing so for its competitive product.
The problem has been that while we address "free trade" to allow all competitive products free access to the US market, our trading partner does not. So, it's not really "free trade" at all & we are being taken advantage of by many of our trading partners. The point is to make "free trade" fair trade for all, including us.
1
In old corporations there is a tendency away from innovation. Internal strivers who lack real capability collude with their fellow inepts and rise within the corporation and the sheer number of inepts overwhelms the talented people. Thus, as corporations age they become risk averse and stagnate at a specific technology level. The bean counters then convince everyone that the research budget is too big and the next quarters bottom line would look really good with a big cut in research. Although it hardly matters because even if they did see some advancement in technology they would not spend the money to bring it to market when that additional cost makes the near term quarterly outlooks less profitable. They take the short term view and don't plan to be sustainable in the long term. The last thing they can do is seek favoritism and protection from the government, except that would simply be propping up an inefficient organization that is controlled by short term oriented inept leaders.
If US steel were important to US corporations they would have invested in technology and looked a little more at the long term. The failure is with the management of these firms.
If foreign producers of steel and aluminum are, in fact, being insulated from competitive winnowing by governmental industrial policy that props them up, the WHY doesn't Trump just adopt the same insulations?
Tariffs are a blunt tool that offends allies and risks escalating tit-for-tat trade wars. If there is a more nuanced industrial policy that protects the domestic steel and aluminum industries (which we need to maintain, for national defense purposes if no other), then let's hear about them.
Why is it that the Left is perfectly fine with steel and other manufacturing being done overseas with the pollution and poor working conditions they would never tolerate here in the U.S.?
"But the blowback is overblown, and seems to constitute reflexive anti-Trump sentiment rather than careful economic reasoning."
Do you think the originator of this did any careful economic reasoning?
Maybe he did, in the 80's!
I am glad that Mr. Bivens rejects the tendency of so many to evaluate policies not on their merits, but based on who offers them. As I have watched our manufacturing outsourced to foreign countries over the years, I have felt some concern about our national security. If, hypothetically, we were to go to war with, say China, do we want to be relying on China for our military hardware? President Trump has invoked national security as a basis for his unilateral imposition of the tariffs, and that basis has validity. Maybe we need to rejuvenate our steel industry to a limited extent. There is an article today supporting this idea on the progressive website ourfuture.org:
https://ourfuture.org/20180305/endangered-species-american-aluminum-and-...?
12
ch -- There's an even better article, that includes data to support it's positions, in today's NYT: https://www.nytimes.com/2018/03/05/opinion/trump-tariff-americans-jobs.h...®ion=EndOfArticle&pgtype=article
Enjoy.
"...protection for the profits of pharma and software companies agitates business writers and some economic policy experts far less than protection for manufacturing sectors heavy with blue-collar jobs."
I'm not used to reading such revealing truths in the Times. When the US trade reps refuse to allow India to produce generic pharmaceutical formulations for $200/dose because they want to defend US big pharma who sell the same drug for $8,000, the .1% changes the definition of "free trade".
Obama's TPP proposed huge profits for big pharma via extensions of the already inordinately long patent periods it was ready to force on poor countries like Vietnam and Malaysia.
It turns out Washington policy makers have no more concerns for US citizens than they do for poor workers of other countries. They made the rules to benefit the wealthy, and even the Democratic party now protects their interests, as they did last year when many Democrats voted against a bill that would have allowed the import of less expensive Canadian pharmaceuticals into the US - again changing the definition of "free trade".
OK so there is an overcapacity of steel in the world brought on partly by the Chinese government subsidizing the manufacture of the product and not allowing capacity to shrink. All true.
So our answer to this global overcapacity problem is to.....increase world capacity by building it further in the US to create more US jobs?
While some of this “don’t worry the tariff increase will be fine” Op Ed brings up some good points in defining the problem which is real, the solution totally ignores any possibility of unintended consequences.
The problem with the solution that Mr Trump is offering is in the same vein as the mistakes many businesses make when tackling strategic issues. “I will do this to solve this problem and NONE OF MY COMPETITORS WILL RESPOND IN ANY WAY TO THAT CHALLENGE”. Ill advised thinking I know, but it happens all the time!
I don’t know whether this is willful ignorance on the President’s part, hubris or both but it is a simplistic solution to a difficult problem that has not been thought through.
I wold respect the author’s opinion more if he incorporated some acknowledgement that the cure may in fact kill the patient, or at least acknowledge that as a possibility and explain why that is not a valid concern in this case.
But if he ignores that fact that we may lose more jobs then are saved by these tariffs or does not explain why this won’t happen, then this his argument is not a serious defense of an ill thought out government policy.
2
so now when Ford or GM or Toyota or BMW is deciding where to put their next auto plant (0r which one to close), they will have to take into account that steel and aluminum cost a lot more in the United States than elsewhere. Or do we not care as much about the 6.5 million American workers in industries that make products of steel or aluminum as we do about the 150,000 steelworkers?
TARIFFS offer only to increase consumer prices MR Josh Bivens.
The CHINESE government subsidizing their goods including steel and aluminum reduces the cost to make anything when using that material made here OR there. There is no level playing field. We must go where the lowest price is.
1) From an economics viewpoint, excess capacity in the steel industry means that Chinese firms with the lowest average total costs, attained via large economies-of-scale, have the most to gain by dumping products below full costing in international markets. With very low average cost curves but very high total costs, especially since fixed manufacturing costs comprise a disproportionate amount of total costs for these largest producers, prices for these firms could fall in a range between just covering unit variable costs with little fixed cost coverage, a de minimis output price for production; to higher prices; with greater partial contributions toward meeting these fixed costs.
2) In comparision to Chinese steel producers, most US steel firms produce more specialized steel products, and have higher total average cost curves. It is the US specialty-steel sector, not the commodity sector, that will be impacted by any change in tariff policy.
3) Low-ball pricing penetration strategies have often been used in the tech sector to maximize market share. Later, as the technology evolves, these initial low prices are supported by tech innovations which can drive production costs down to lower levels. This application of tech industry strategies to China's steel pricing tactics may reflect current pricing in international steel markets.
4) With annual GDP growth in excess of 6%, China has much at risk with its huge capital expenditures in steel.
[M 3/5 11:40a Greenville NC]
"The real problem with last week’s tariffs is that they’re an ad hoc and insufficient ameliorative fix for continuing policy failures that have decimated American manufacturing employment for almost two decades."
And this ad hoc and insufficient "fix" will generate penalties against other industries that have managed to thrive in the 25 years after NAFTA. If it were an investment it would be throwing good money after bad. To say that it is targeted or won't hurt too many people makes you sound like every other economist who has waved away concerns over the impact of trade policy on these very industries, i.e., steel and aluminum. When it's your own job the consequences are life changing not minor. Economists have failed over and over again to factor in the human capacity to adjust to rapid economic change. You are doing the same thing.
The only "good" thing about the ham-fisted manner in which Trump is executing these tariffs is the European Union has concocted a set of retaliatory tariffs to target specifically red state districts such as Kentucky Bourbon to pressure Mitch McConnell and Harly Davidson in Paul Ryan's Wisconsin. My understanding is that crops from the American Heartland will also become tariff targets. After Trump and the GOP spending a year singling out the Blue States for punishment for not being Republican, it's about time that the pro-Trump states and districts who have supported this unhinged individual should also start to feel some pain.
Trump postures (performs?) that he will protect steel and aluminum workers right before the special election in PA’s 18th. Whether he will follow through is questionable.
More important are the widely held misconceptions about our economy which are have been undermining our economic/political system since 1972 and have brought us to the point where the public elected a Trump out of frustration.
The best measure of the financial health of working families is not the Dow Jones or the unemployment rate but rather total wages as a percentage of GDP which has fallen from 50% during our win-win economy from 1948 - 1972 to 43% today. As a result, today over 50% of school children qualify for lunch subsidies and over 30% of families here in “wealthy” Sarasota County miss one or more meals a month in order to make ends meet. This erosion of working family purchasing power has occurred despite the fact that women have increased their penetration of the workforce from 35% to 70% and their pay has risen from 35% of men’s to 85%. For today’s families to match the 1972 families’ share of the economy each full-time worker would require a pay increase of $1,000/month. Reduced wages maps directly into reduced purchasing power with many of our large corporations capitulate on growth and begin buying back massive quantities of their stock in order to prop up its price.
The primary causes for this decline in working family purchasing power are monopolies, automation and The Internet.
1
Umm. The purpose of the tariffs IS supposed to be autarky in steel for defense industries. Not sure what a "slippery slope" to self sufficiency means in this context. However, trumpsky's actions are indeed on a slope to autocracy.
1
The comparison with IP protection is absurd. We enforce IP protection between corporations in the US, not just with other countries, because we want to encourage invention and innovation. Protectionist tariffs do the opposite.
Tariffs are of very little protective value in a floating rate exchange regime.
If the standard suggested by the question "Is it good for the bottom 90 percent of American workers and the families they help support?" is applied, it works only if we assume that that bottom 90% is primarily comprised by steel and aluminum workers. It is not.
Aside from the substance of the policy, the process that spawned it is chaotically Trumpian, catching all stakeholders, including leaders in his own Party, completely off-guard, accompanied by the angrily tweeted rhetoric of American victimhood that wins nobody's good will.
Global trade needs trust in order to flourish. President Trump inspires no trust anywhere, anytime, at home or abroad. Taken in context his mercurially half-baked protectionism will lead nowhere good.
1
Unless and until we can see Donald Trump's personal and family income tax returns and business records we should be outraged, angered and terrified by Trump's tariff trade war scheme. America imports most of it's steel and aluminum from it's allies Canada, Mexico, Brazil, Germany and South Korea.
China sends a mere 4% of America's steel. Anyone visiting China could presume that the construction crane was the Chinese national bird and the steel framed skyscraper frame the new great wall. The Chinese invented steel 1400 years before the Europeans.
Moreover, economics is not a science. There are too many variables and unknowns to utilize the double-blind controls that provide predictable repeatable results. A Director of Research at the Economic Policy Institute is akin to the Oracle at Delphi in Classical Ancient Greece.
2
"The real problem with last week’s tariffs is that they’re an ad hoc and insufficient ameliorative fix for continuing policy failures that have decimated American manufacturing employment for almost two decades"
In this single sentence, the author has written more thoughtfully and taken more care than Trump seems to have EVER done on this subject. Musing that such ill-conceived tariffs might not be a total disaster does not obviate the obvious: Trump doesn't know what he's doing and doesn't seem to care.
People are concerned about these tariffs because there has been zero thought put into them, nobody actually knows what knock-on effects they will have at this precise moment, and Trump has zero capacity to explain himself in a reasonable way.
Why does everyone seem to want to talk about these tariffs as if they are a reasonable proposal? As if there was any heft behind the policy besides the weight of the proposer's office? They were blurted out in an ad hoc meeting by a frustrated and ego driven narcissist. We should be talking this loon off his ledge instead of post-hoc justification for his impulsive behavior.
1
This is all show. Trump is trying to influence an upcoming congressional election in PA. He will then abandon this issue and move on to his next deception.
1
Like coal, I believe Trumps tariff talk is just to score political points. Do we still have a lot of unemployed coal workers? Steel is as American as Apple pie! (aluminum not so much).
Since we import more steel from Canada and this tariff was directed mainly at China- there is a disconnect between the tariff targets and the actual countries that are most affected. So, China will not feel much effect from this move.
However, the US consumer will feel negative effects from increased prices when other countries retaliate and just pass the price hikes onto the consumer.
1
If this decision was the result of a careful analysis of the industries targeted by the tariffs by experienced, knowledgeable international trade specialists, perhaps the reaction may have been different.
Unfortunately, it was just another knee-jerk reaction to a complex and ever-changing dynamic known as the global economy.
When all you have is a hammer, you begin to see everything as a nail.......
17
I worked in a steel mill in the 1970s, and my evaluation from first hand observation is that the US steel industry suffered and failed from a lack of reinvestment in new technology and physical plant. When the industry was making big money in the 1950s and 1960s, they did not reinvest in their core businesses.
1
With your logic we never change ?
1
Perfectly ridiculous, as the ill-fated tariffs imposed on steel imports by George Bush proved as the industry continued to decline and workers were displaced. Everything is wrong about these tariff increases including the national security rationale which means they cannot be challenged by Congress of the World Trade Organization.
If you think that the US needs to maintain and/or increase its military capacity, steel and aluminum from raw materials we own is important. The government could also purchase and mothball unprofitable onshore plants or create alliances with offshore countries we trust would support us if we were at war.
If you don't think that the independent military scenario is realistic or valuable then you will see no value and only risks in these tariffs.
1
The proposed tariffs combined with the new tax cuts will have some predictable effects. Increased business investment will accelerate automation in the domestic steel industry while higher tariffs here and lower taxes elsewhere will accelerate plant relocations to free trade zones like the TPP countries, where demand growth is higher.
Mnuchin and Trump are making the mistake, at least publicly, of overestimating global corporate interest in the demographically aging US market with its shrinking middle class. The talk in corporate boardrooms is about the fast growing, high consumption middle class around the world.
2
As I see it, the only clear winners of these trade tariffs are the NRA and other opponents of sensible gun control. Have you noticed how quickly the media attention on the Parkland shootings has dropped off since Trump's announcement on the tariffs?
I do not suggest for a minute that the two issues are related in any way (of course they are not) or that Trump used the tariffs as a way to deflate the burgeoning momentum for gun control observed last week (possibly but not likely). However, the fear from many quarters that Trump's resolve and attention span regarding gun control so encouragingly displayed last week would only last a few days sadly appears to have been well founded.
4
Subsidy wars are far better than tariff wars, but here in the US, subsidies are "socialism," while tariffs are "protectionism." So American workers lose their work by the millions, accepted casualties of this academic/corporate driven do-nothing policy that no one else in the world is following.
The middle ground is called industrial policy, or what we used to call the "mixed economy." For those who say that this is outmoded, please explain to me why Germany has one third of our population, and their autoworkers make literally twice what our autoworkers make, and yet Germany consistently makes 2-3 times the number of cars that we do. Germany dominates in what they call "high road" industries, and one 2014 Harvard Business Review article says something like, all those imports from China? They are manufactured using equipment made in Germany.
But that is due to German industrial policy, while in America, the best industrial policy is no industrial policy. Let the market decide and all of that--and how's that working out?
9
Fact is the tariffs will allow US companies to raise prices, increase profits and reward executives and shareholders. Who thinks because they have more cash they’ll add jobs or raise wages?
7
Corporation are richer than ever and wages have stagnated. Data shows their is no correlation. Profits go to owners and shareholders not workers.
Exactly. The more so when expansion behind a tariff wall is problematic when the tariff is unlikely to survive in the changeable atmosphere of a Trump Administration, and will probably disappear as soon as increased prices create a domestic backlash, or following the 2020 election.
2
This brouhaha about the tariffs will quickly subside as soon as the special election in Pennsylvania is over. The timing of Trump's announcement is far too coincidental to be for any other purpose than to influence that election, which is running too close for comfort for Republicans.
On or after March 14th, there will be exceptions, reductions, and other deals made - if not a complete withdrawal. Wait and see.
9
Business writers who believe that global warming is real surely must understand that ocean going freighters produce between 20% and 22% of greenhouse gas emissions. This means that we want to return to local production whether we like it or not.
Moving millions of tons of steel by boat (or anything else) 9,000 miles across the ocean is incredibly outdated and dangerous nowadays in light of the crisis that is slowly coming upon us.
7
Yes.
And air pollution from factories is a big problem in China. Half the world oversupply of steel comes from Chinese factories. Some of China's steel is directly imported by the U.S.; a larger share comes into our country through Korea and other countries.
In and of themselves the tariffs might not be terrible, but if they start a trade war the consequences could trigger an economic downturn.
2
Mr. Bivens makes many good points, however most are not relevant to the question of whether these particular tariffs are a good or bad idea.
Some things he might consider: Are the domestic steel and aluminum industries productive in comparison to their foreign competitors, even when government support is stripped away? How much metal per hour worked is produced in the US, elsewhere?
World steel production in 2015 was 1.5 billion metric tons. The U.S. share of that was 96 million tons. If a significant share of world production has state support, could such support simply be necessary for any steel company to compete in the world market?
According to another guest columnist in today's Times, the Defense Department consumes but 3% of U.S. steel production. How much of a domestic industry is necessary for our national security?
Finally, as has been pointed out elsewhere, how does protecting the 185,000 U.S. steel jobs effect the tens of millions of jobs dependent on low tariff metal for domestic consumption and manufacturing for export?
1
As was mentioned in the commerce department report, there isn't enough national security-related demand to keep the steel and aluminum industries afloat. Further production decreases would result in additional plant closures and the inability to ramp up defense-related production if needed. One may disagree with this assessment, but that is the core of the argument.
2
Trying to level the playing field with China is one thing, but to initiate a trade war with Canada and Mexico makes no sense. While a few jobs may be added in steel and aluminum, think of what we may lose if Mexico decides to purchase commodities from other countries. Mexico currently buys eighteen billion dollars worth of commodities from the U.S.
Trump, in his usual manner, doesn't think things through. He has no one in his Administration who remotely understands how the global markets work. A better approach would have been to enact tariffs only on those countries that impose tariffs on American produced goods.
5
Perhaps a tariff makes sense. However, I would feel better about it if it was part of a broader economic policy that had some systemic reasoning, that we are informed of, rather than having donald, after a particularly difficult week, blurting it out to shift the discussion away from the turmoil of his administration. And that is exactly what it was. Things get tough and he starts looking for change in his pockets to throw on the table for distraction. It works for a few days and then...Monday rolls around and where is he?
1
The real problem is that the loss of jobs in the manufacturing sector is not really due to trade at all, but to automation, by a huge factor. The tariffs will do nothing to change that-- except to encourage more American firms to speed up the process of automation because there will be more profits to be had.
7
Unfortunately, Trump has continued to "flog this dead horse" to his supporters with the continual (and fruitless)hope of bringing back these mythical manufacturing jobs that no longer exist and never will. The statistics have confirmed time and again that well over 80% of the manufacturing jobs that have disappeared in the last thirty years resulted because of automation, not primarily because of some far away country whose workers are earning $1.00/hr.
The problem is, while replacing these workers with machines, neither American industry nor the government made an effort to spend any money on the re-training of the workers displaced, hence, leaving them out in the cold for any future meaningful employment. Trump made a hollow promise to this group whom he ultimately, would not have a hope of ever fulfilling.
"It seems clear that protection for the profits of pharma and software companies agitates business writers and some economic policy experts far less than protection for manufacturing sectors heavy with blue-collar jobs. Is it any real shock that many believe that the rules of the game governing globalization have been rigged against typical American workers?"
According to BLS, as of Jan 2018, here are the relevant primary production facility employment statistics for the US:
- 85,700 workers in iron and steel mills
- 59,500 workers in aluminum production
(https://www.bls.gov/web/empsit/ceseeb1a.htm#ce_ee_table1a.f.1)
As of 2018, the US economy employs a total of 148 million workers. I am not an economist, but correct me if I'm wrong: in our economy today, steel and aluminum workers are hardly "typical" of American workers. The number of steel workers in the US has been in slow steady decline for decades; in 2000, there were 135,000 steel refinery workers.
BLS statistics also show that there are 1.6 million US software developers. (https://www.bls.gov/oes/current/oes_nat.htm) Other publications suggest that there may be as many as 2.75 million software engineers in the US, taking into account in-house programming support.
So maybe the reason that "business writers and some economic policy experts" are more concerned about protecting 21st century industries like pharma and software development is that they employ far more Americans than steel mills?
2
I think those "business writers" are equally concerned about the loss of tech jobs as well. I, for one, am discouraged trying to get tech , software, or call center help from an overseas entity. As you state, the losses are not yet felt strongly enough in those industries simply due to the magnitude of the overall employment. On the other hand, when you work in the metals industries and one in four of your colleagues has lost their job, the urgency is more pressing.
An interesting juxtaposition of Bivens's op-ed about us now worrying about tariffs, adjacent to another editorial on how Trtump's tariffs will cost American jobs.
"An interesting juxtaposition"......
Yes. And, between the two, the truth lies.
I worry about tariffs, not because of the content necessarily, but the process. Your President, in his wisdom, is making it clear that any deal is reversible on his terms, including his whim. Why would any country choose to deal with him, in those uncertain procedural circumstances?
His style of dealing requires the other party, after shaking hands on the deal, to count their fingers. Might happen once,, but not twice.
70
History repeats itself, first as tragedy, then as farce.
This commentary makes no sense. Tariffs are poison and always have unintended, occasional disastrous consequences. Why would propping up a steel industry that lost its competitive edge do any good? Like the paper and the textile industry in the past, nothing will prevent its demise. And that’s good, that is exactly what free trade does: weed out the old industries and replace it by new ones. Steel was once the pinnacle of industrial production, now its a low tech raw material. The US will prosper only by innovation, not by preserving rotten and old industries. We will turn ourselves into a living museum. In twenty years Chinese tourists will be our major source of income if we continue letting Trump have his way. The past will be our future and tariffs pave our path of reverse time travel.
6
Trump does not know what a tariff is, let alone how to spell the word. A tariff has serious implications, none of which trump has intellectually processed. Maybe I am a cynic, but the real reason trump brought up a tariff was to change the subject from AR-15's to steel and aluminum. Wait, are those guns going to cost more now, with tariffs?? Inadvertent gun control, perhaps.
6
False equivalence is the tool of misdirection used by many conservatives to advance their agendas. Protection for intellectual property on software and pharmaceuticals protects US company’s from having their investment in research and product development from being copied by foreign companies without paying a royalty for that investment. It’s protection against having an invention, design, or formulation stolen and copied. That is far different than a tariff on imported goods to protect a favored domestic industry often at the expense of other industries and consumers.
8
Mr. Bivens apparently does not expect retaliation nor expansion of the industries protected. However, what would prevent either or both? History tells us that retribution is equal to honor.
2
Excellent to see the link between free trade and the concentration of wealth and power in a handful of sectors at all of our expense.
Free trade is the best idea ever as long as everyone plays by the same rules. Instead, it just seems to be another vehicle for siphoning off the lifeblood of the economy.
2
Does anyone really believe the progressives care if Steel and Aluminum producers simply disappear ? No skin off Silicon Valley or Wall Streets nose. The digital world, and buying import's, works for them.
1
Actually the survival of the fittest concept is more at home with conservatives. This is government intervention into the marketplace.
Equating "Intellectual property protection" with tariffs is dishonest....
6
"Am I confident that the Trump administration will back a smart and efficient solution to the larger problem? Not really — but this doesn’t mean we shouldn’t be happy to have some breathing room to find one."
And the recent tax giveaway to corporations at the expense of most of us, just like the relaxation of Dodd-Frank may turn out to do some good for somebody, so don't worry, be happy. Nothing to see here folks, especially with our heads in the sand.
2
It sure was good for Carl Icahn!
He sold off a million shares of Manitowoc Co. of Wisconsin between Feb 12 & 23rd at between $32 and $34 / share.
The Commerce Dept didn't make public its recommendation for steel tariffs till 16 Feb, and Trump didn't announce imposing them till last Thurday, at which point the stock tumbled to just under $27 on Friday.
Icahn, a long-time friend of Trump's, of course claims he had NO inside knowledge...
Right.
6
I wish I could comment on the aftermath of the recent Nor’Easter - going into the fourth day without power now here in Westchester and no sign of it being back today and maybe even by midweek when we face a new snowstorm. If those tax cuts for the rich had been plowed into infrastructure renewal they would create many good blue collar jobs and first class infrastructure instead of the third world situation we have now.
3
OK, fair points but how about the next steps? What will the US have to retaliate against when "they" retaliate against us?
1
The tariffs are a good idea. The problem is that they're not widespread enough and probably not high enough. Without tariffs, American labor is at an overwhelming disadvantage when competing with <$2/hour overseas workers.
2
So you think that a tariff will make the $2/hour overseas worker disappear? You either decide to live in the real world or decide to live in the world of make believe.
1
The reality is that the tariffs are directed primarily against your neighbours and allies that have a high standard of living and well paid workers, not like China. Canada imports billions of dollars more steel than it sells to the US. So, why is Canadian steel subject to tariffs? And if the US makes only 10% of the aluminum it needs, why would you apply tariffs on your Canadian neighbour who sells you more aluminum than anyone else? Suppose that aluminum goes elsewhere?
And when Canada puts in retaliatory tariffs against American steel, just who is going to win? Nobody.
You did not respond to my point at all. I am not trying to make the $2/hour worker disappear. I am supporting policies that will make life a little better for American workers. Why aren't you?
1
“if Trump is for it, I’m against it.”
“Is it good for the bottom 90 percent of American workers and the families they help support?”
These are the two most important parts of this well written story AND THEY ARE DIAMETRICALLY OPPOSING THOUGHTS, last week when the proposed tariffs were discussed I commented on the importance of protecting our metal working industries. The replies were primarily from Troglodytes who believe the cavemen worked with metal but they are too high falutin for that in their concrete fortresses.
Look around you at all the metal in your life, do you really want all of it made somewhere else ? The biggest export the US has is scrap metals. When it comes back it is an object or a piece of an object and it was all made overseas.
The USA needs a viable, healthy, well oiled metal industry, anyone saying anything other than that has no idea what they are talking about.
This is a NATIONAL EMERGENCY...WAKE UP...WE NEED THESE INDUSTRIES
5
The author could be correct that the prognostications of disaster may not happen, but he is sorely mistaken to suggest these tariffs are potentially effective policy.
Why might the negative effects be overstated by the pundit class / global markets right now?
1. Countries don't retaliate in-kind, which feels unlikely
2. Trump changes his mind and with less fanfare softens the tariffs or carves out the most important trading parties. This seems like the likely course of action. Remember drilling off all the coasts except Florida? Another big, apparently poorly thought out pander to a specific politically important industry that will probably never see much action in reality.
Good policy? Come on. It is ostensibly targeted at China and ends up hurting Canada and the American consumer. Trump realizes this after making the grand announcement and tries to save face and give himself both a new negotiating chip in the destined-to-be-a-nothingburger renegotiation of NAFTA.
The reality is that Trump has no track record of making thoughtful policy, so when something seems as random, venal and misguided on its face as this tariff, of course everyone is going to be outraged.
1
I confess confusion with this opinion piece. Mr. Biven's titles his essay "Don't worry," yet by his own estimation there is quite a bit to worry about how these tariff's will be implemented and how they were revealed. As far as I can tell, Mr. Biven's actual concern is that there is a knee-jerk reaction against the tariff's because they were proposed by Mr. Trump. This is not unreasonable - except for that fact that the discussion on the matter by the Times, the Post, the Journal, just about every country out there, and a large number of Republicans have derided this decision on the merits of the tariffs.
The reaction has not been "Trump bad, me good." The reaction has been a calculated examination of economic history as it relates to these - as Mr. Biven calls them - ad hoc policies. It seems as though Mr. Bivens has decided to spin this reaction in a different light to remind everyone there remains work to do in the global markets.
Point taken, I suppose.
Now help prevent these tariffs from taking effect before the bottom 90% do suffer.
1
If these tariffs are implemented to protect industries disadvantaged by trade, then they would appear to violate WTO rules. If someone's dumping steel on the US market, then make a case for it, don't just lazily slap tariffs on the whole world.
If, as your article failed to mention, the tariffs would be installed under the guise of "security", then 1) that's ridiculous (we have enough steel on hand to fight ISIS, and we don't seem to mind what Russia does), and 2) it sets a dreadful precedent by which our trading partners can justify almost anything - it's license to ignore WTO rules on a whim.
Running roughshod over the rules of a trading system that has benefited the USA yugely over the past 70 years is no way to run a country. If we care so much about steelworkers, then why not cut their taxes more than their bosses'; provide transferable, comprehensive health insurance; fund education and training programs; and extend unemployment payments across state lines. But our current political leaders have made it clear they only cater to rich folks.
4
Pretty much every thoughtful economist in the free world views tariffs as the amputation saw of the macro-operating room.
If we have a table full of scalpels - why would our friends at the EPI recommend a blunt, inaccurate and often misdirected tool?
Mr. Bivens does have a point, that sometimes we are against anything said by the guy in the White House, simply because he is who he is. I have that tendency--but then I think about the lying, bigotry, misogyny, general belligerence...the list goes on. Being opposed to what this man is, at his core, should come as no shock.
I am not an expert in tariffs, and do not have the ability to accurately predict what the hikes might do. I am reflexively inclined--like so many others--to believe those negative opinions coming from my own partisan, preferred news silos.
Having watched his past behaviors--towards gutting environmental laws, tax breaks mostly for the rich, his political stance on the events in Charlottesville, his obsequiousness to the NRA--one can argue that it is not a intrinsically wrong to suspect his policy "thoughts" are problematic at their core.
2
I believe in Free trade. But not when every country is looking out for its vested interests and expects US alone to be the free trade door mat. We went up the value chain based on all the theoretical economists saying that is the best way to counter manufacturing moving overseas. China outright has banned or kicked out Amazon, Google, Facebook, Uber, Netflix and constantly harasses Apple and Microsoft. So how can we benefit when all of our top value chain and services companies are prevented from doing business. E.U. also harasses Google and previously Microsoft and Boeing because their companies can’t compete. So what gives. Airbus lost $8Billion on the A380 boondoggle but keeps getting subsidized by E.U.
Everyone is complaining and found a new found gospel of free trade because they are hating to lose the advantages they have exploited to their advantage. One alternative that can shut up ev eryone is reciprocity. If you have 10% tariff on US cars, we can impose 10% tariff on a advantaged product that you export that is equivalent in $s. So if Google is banned then we ban auto components for instance.
We are not even talking about the advantage of the unfair spending on defense by E.U. that acts as another huge subsidy to them on the backs of American tax payers. Same thing with drugs. We pay for most of the R&D through our exorbitant drug prices while rets of the world gets them cheap due to price controls. Current situation is not sustainable.
3
This is really quite stunning in its wrong-headedness. The author equates negotiated trade pacts with a sudden punitive tariff, announced without consultation, and asks why the former is less controversial than the latter. And do I really have to point out that pharma and software are end products? Supporting their prices with intellectual property agreements does not raise the price of other goods. Higher aluminum and steel prices will raise the price of all sorts of other products.
5
The problem with these tariffs, in the case of Canada, is that there already is a Free Trade Agreement, since 1991.
Therefor supply chains are integrated and convoluted. You can’t reverse that overnight.
Not to mention, the trade is balanced.
Most importantly, commitments were made. That has to be respected.
Nations have long memories! For example, a lot steel assets came out of Canada in WW2.
Do we expect Trump to act honourably?...it’s not certain. Do we expect America to act honourably...I have no doubt.
1
This article conflates rules to protect intellectual property, which apply equally to all trading partners, to tariffs which penalize imports and favour US producers. These are completely different from one another. The article claims that these tarrifs respond to unfair subsidies by foreign governments, but it is Canada not China that is the main target and there are processes available under NAFTA to redress unfair subsidies. In fact, the Trump administration is not claiming that Canada unfairly subsidies steel and aluminum exports because it knows that Canada could take any such claim to an objective dispute resolution mechanism. Instead it is making a ludicrous national security argument. The article does not address the reality that these tarrifs are targeting an ally and undermining the relationship between the US and Canada.
5
The blowback is more about Trumps tendency to change his tune than whether or not economic benefits will accrue to the country. His unrelenting lying also adds to the blowback
The fact that even Wilbur Ross pretty much admitted yesterday that no one will really know if these tariffs are really going to happen. Even Trumps supporters in the Cabinet never really knows what he will do.
But you can be sure whatever the outcome Trump will be the biggest financial winner
1
I don't get it. Why don't we just subsidize industries--like our competitors do--to even the playing field, instead of making competitors angry and vindictive with a tax?
This is quite measured, if a bit snide. The snideness is in the comparison between intellectual property and metalwork, as if the protection of the former and the lack thereof of the latter is just a matter of elitism: A case of helping the educated, and ignoring blue collars. But appropriating another's property is bad in itself, we think, and we think this irrespective of the nationality of the appropriator. By contrast, hurting a competitor is, if unkind, part of capitalism. Why should the nationality of the competitor matter?
1
Here’s the rub:
“Am I confident that the Trump administration will back a smart and efficient solution to the larger problem? Not really”
Because Trump isn’t imposing tariffs because of the foreign subsidies propping up inefficient production and flooding the market. He is imposing them because of his simple minded view of the global economy and a dyspeptic personality aggravated by a hissy fit.
3
This sounds to me like an attempt to soothe the stock market with an unconvincing argument that "it won't be so bad" - ala the arguments that we should "wait and see" about Trump as president because he couldn't possibly be as bad as he seems. But it appears that there really is great cause for concern, simply because the proposed tariffs will primarily hurt Canada, our ally to the north, with which we generally have a positive trading relationship. Trump's tariffs seem to be driven by some unknown motive, perhaps related to Russia. I don't trust anything he does.
2
The quote, “Is it good for the bottom 90 percent of American workers and the families they help support?” assumes no retaliation for the tariffs. This is both false and naive. Assumptions that the United States can do what it wants without any blow back is far too pervasive in this administration. Like so many times before, the "smartest guys in the room" staunchly believed their own lies.
"First, let’s take them for what they are: temporary relief for specific sectors (steel and aluminum) facing a specific problem (global excess production capacity, propped up by foreign governmental subsidies). America has taken steps like this before, and did not slide down any slippery slope to autarky."
True, but when the president says, "Trade wars are good, and easy to win," it seems pretty foolish to analyze this proposal as a limited, technocratic market fix.
And nobody other than Big Pharma and its lobbyists thinks our protectionist regime for drug companies is helpful. It's just not often in the news, which is why we rarely get to talk or read about it.
1
The problem here is that we are propping up our own inefficiencies with tariffs. That’s what tariffs do. This has been tried before and it won’t last. The world will go through a round of “one-ups-man-ship” and then rediscover “free trade.”
If the Administration really wanted to protect and increase employment and wages, it could have triggered corporate tax cuts to increasing these economic components. But greed conquered all. And, this too can’t last. It’s an imbalance....
Bivins’ highlights the problem that several observers have anticipated—with dread. Trump’s fourteen months of unbroken irrational tweeted policies and suddenly a rational move? This isn’t just one of those anti-Obama executive orders meant to grab headlines; this is a move with major world-wide economic consequences.
We have watched a steady procession of Republicans, who once opposed Trump on traditional Republican values—including trade—march slowly into line behind his “new conservativism.”
According to all observers of economic policy, these proposed tariffs are a bad move; a move that could possibly set off a round of trade wars that could be more harmful than the benefits the steel and aluminum tariffs are supposed to bring.
EPI’s economic analyses are generally conservative to-moderate; never radical; but what seems to radicalize this EPI opinion is it is linked with benefits contained in the TPP which Trump destroyed—not a minor factor for EPI
1
There’s a rather large contingent of folks who are for the reduction of pharmaceutical protections by importing drugs from other countries.
1
"... no one is telling pharmaceutical companies and their workers that their protections need to be stripped away so that others can enjoy cheaper prices."
What? There are lots of calls for breaking the stranglehold on drugs so that others [like me] can get their drugs at reasonable prices.
2
First the premise that the administration set forth for the tariffs -"national security" was false. Canada where we receive a significant amount of steel is not a country where we would or do have a "security" issue. Second, I doubt that any American steel or aluminum manufacture is about to invest billions, yes billions of dollars to build new mills. Third, even if some companies can gear up production at current plants to meet-supposed demand- the amount of increased employment will pale in comparison to the jobs lost by increased steel costs. Although, it is possible that this tariff might not have much effect economically the way it was rolled out was to put it as nicely as possible DUMB
3
Trade policy that is based on the cost increase of a can of coke is not usually a good idea. BTW Wilburrrrrr, unless you wake up at 3 in the morning and have an uncontrollable desire for a bowl of Campbell Soup it's not in your economic interest to purchase your soup at a 711.
2
Here we have a unilateral, blindside declaration of trade war with our closest friends and neighbors. No doubt, Canada and Mexico will be hurt in the short term but probably the greater damage will be self-inflicted on America itself.
Our two neighbors will ultimately find other markets for their metals, sending them elsewhere when we need them. Whatever we asked for we're getting and we richly deserve.
4
Trump realized in his presidential bid that millions of Americans felt marginalized at best, left behind at worst, by the aggressive promulgation of Free Trade Agreements. I administer FTAs on behalf of the Federal agency I work for and can state first-hand that though they deliver cheap goods to the USA market, those who work to produce those goods are indeed peons and wage slaves. We are supporting exploitation of workers overseas on a massive scale by each FTA we ratify. Do we also want to consign millions of formerly gainfully-employed US workers to irrelevancy where they have few alternatives to replace the former union-scale wages once proudly earned? Perhaps a tariff or two applied like a bandage to our haemorrhaging economy could do some good.
2
Canada has about the same percentage of peons and wage slaves that the U.S. has despite NAFTA. I don't see that these tariff proposals will increase the percentage of union membership either, especially if your Supreme Court rules on union membership dues as it is expected to do..
1
As has become the new normal, a wildly impulsive and politically calculated policy change is taken seriously by a reputable person who tries to tease out some rational element contained therein.
A majority of the country believes that this President is out of control. His every action and statement defy analysis, since they are ever reversing themselves and self-contradictory. If it were, say, Mitt Romney or any Republican, such an action as this tariff would have been accompanied by a rationale and evidence for it’s institution. An overall analysis of our past and current trade practices, no matter how debatable would be offered.
Not so, with President Trump. Not ever. As with the Muslim travel-ban, DACA, and last week’s mumble-jumbo regarding guns—we’re either going to sieze guns from individuals with no due process or encourage pitched gun battles between outgunned pistol-packing teachers and rampaging lunatics with assault rifles, or whatever—none of it makes sense.
That’s a much bigger problem than our tariff policies.
1
This morning, Charles Blow describes the president as a man with absolutely no comprehension of reality, economics and history. As far as tariffs are concerned, perhaps we should remember that incident when some rebels threw tea into Boston harbor, or one million Irish immigrants came to America, or the passing and repeal of the Corn Laws.
Free trade makes the world go 'round. Money from free trade supports the world, provides much of it with the necessities of life, good health and happiness. Mr Trump might give that some thought.
2
You have convinced me -- please tell "pharmaceutical companies and their workers that their protections need to be stripped away so that others can enjoy cheaper prices." That piece of protectionism really needs to go.
All these steel and aluminum tariffs are going to do is damage the economy, which will accelerate the eventual Democratic takeover of Congress. Hurting the end users of steel and aluminum seem like a high price to pay, though. Now, Trump supporters will say that he is playing 12-d chess by incorporating tariffs into NAFTA negotiations (now in the 7th round!), but I think international players will just overturn the chess board by implementing tariffs of their own, hurting the global economy. As Trump likes to say, Sad!
1
The author is right: we are overreacting to the Trump's tariff proposal because they are his and because it is frustrating to see him wining with an electorate that will no doubt see them in a positive light. He has grabbed the moral high ground with an ad hoc proposal that will later be revised to a more reasonable policy. This is a consistent Trump tactic we have seen on the DACA and gun control issue. The tariffs of the lions roar will come forth as sheep to eventual slaughter. our real trade imbalance problem, high deficits causing a high dollar, will grow while we will be misled into thinking something was done about them.
The writer completely missed the National Security aspect of the policy. M-16s are made of steel and aluminum. Same for F18s. Submarines?
National Security is all that matters when our local manufacturers are victims of foreign subsidies.
National security aspect of the policy?
First, this isn't a 'policy'. It is just the latest utterance from your president following a meeting with American steel and aluminum interests.
If national security ever was an issue, you needn't worry. Your best friend in the world (Canada) supplies most of your imported steel and aluminum. You can sleep securely tonight knowing that there will always be lots of that stuff available to build whatever weapons you like.
The article overlooks entirely the integration of the US and Canadian steel and aluminum industries, which is an important element. Canada is the largest importer of US steel, and the largest exporter of steel to the US. How can this be? Because of strong bilateral flow and integration (I suspect particularly related to the automotive sector). Slapping tariffs willy-nilly is going to going to disrupt this. And more to the point, it will raise a question in Canadian minds about the wisdom of pursuing such a close degree of economic integration. The irony in all of this hyperbole is that Canada has a net trade deficit with the US overall, so if anyone should be complaining, it's us.
2
Trump may not have the answer but neither have the Democrats. Here's what's mind boggling. Liberals & progressives have idly stood by while Beijing has destroyed the livelihood of millions of American workers. Trade wars are destructive but we didn't start this one China did. Beijing is openly & explicitly waging an ideological global war against the “rules based” global economic order, the rule of law, everything. Even worse, you can look back over the past 40 years, & all of the shiny forecasts about trade with China, every premise of every policy, all of it, has been lies. Rising American dependence on Chinese products coupled with unfair Chinese trading practices have hollowed out the US manufacturing sector. Between 2001-15, around 3.4 million U.S. jobs, 75% of which were in the manufacturing sector, were lost as a result of the trade deficit with China. China violates every rule there is on normal trading relationships. We know that. We have a trading relationship that doesn't work. The U.S. trade deficit expanded from $83 billion to $367 billion since China joined the WTO. That resulted in China owning more than a $1 trillion of US debt. This level of debt could give Beijing leverage over the US economy. China knows its trade practices are unfair. The surprise is only that it has been able to get away with it for so long. Not responding & accepting the status quo isn't working. That policy has been a disaster. I find it unbelievable Democrats don't realize this.
1
You used the words 'China' and 'Chinese' exclusively in your comment.
Trump's little foray into the world of trade will not impact China.
Rather, it is going to damage America's relationship with its allies 'yugely'.
The problem with these tariffs is that they are more than just ad hoc. They are knee-jerk political ploys from an administration whose aversion to facts is almost as bad as its inability to produce a rational statement - let alone a tweet.
This kind of policy ping-pong gives the rest of the world no reason to believe in what we say or trust in what we do.
As for the bottom 90%... This tariff might possibly (if it works) provide temporary relief for 20,000 (in the steel and aluminum making business) at the risk of hurting 2,000,000 (in the consumption of steel and aluminum business). A such it is a "benefit" only in some think-tank la-la-land.
Like most of the random Trump ideas, this one will cost America - in jobs, allies and manufacturing. Look back at the early Bush years... W tried the same thing and it cost America thousands of jobs and did not solve any made up crisis. Before Trump gets done we will be in a depression or at least a recession to rival W's. He has no clue how things work and doesn't care to learn.
1
>> America has taken steps like this before, and did not slide down any slippery slope to autarky. This means that big-picture principles — like, “Free trade is good,” or, “Globalization decimated the American working class” — aren’t very helpful in assessing them.
The critiques I read rather than pointing to the apocalypse found a near, more modest reference point, President Bush's tariffs, which later analysis showed to have cost 200,000 US jobs.
1
If the policy had been developed by someone who knows rather than someone who is being whispered to by a former steel baron (Mr. Ross) and was articulated by sane respected spokespeople (unlike Mr. Navarro) and there was an underlying philosophy or plan behind the Trump economic strategy, this all light make sense. Instead it is pushed by the uninformed, the unobjective, and the philosophically zealous. A reservoir of bias and ignorance will not shower us with anything good.
Protectionism is the favored tool of crony capitalism to ensure the profits despite inefficiency and non-competitiveness.
1
Interesting how the writer gets through the entire column without mentioning retaliation. So, the assumption seems to be that other countries are bluffing when they huff and puff about this move. Maybe so. And maybe the tariffs won't drive up consumer prices to any noticeable degree.
The US has been running a trade deficit for the better part of 40 years. At the same time, we've been living under mostly Republican/conservative tax ideology, and our own companies have consistently looked to countries with lower wages for their manufacturing needs. I suppose the economic consensus is that a trade deficit is bad; but it seems to me that the cause of said deficit has less to do with other countries' internal subsidies and more to do with our country's own habit of subsidizing the greed of a small and fabulously wealthy sliver of our population.
Perhaps the overblown rhetoric, what-ifs on top of what-ifs, and corporate cries of poverty are starting to be put into proper perspective.
1
These tariffs have little to do with protecting American jobs and everything to do with giving the GOP an edge in the special House election in western Pennsylvania's 18th congressional district – an election that is too close for comfort for the republicans. And why is Trump so obsessed with keeping Congress in Republican hands? Simple – even more than Mueller, he fears a Democratic congress that will be a constant thorn in his side and might even – gasp! – subpoena his tax returns along the road to impeachment. Once the election has passed, expect these ridiculous, highly destructive tariffs to somehow be modified, especially if the stock market continues to slide.
1
Thea article is well thoughtful and well written but ubfortunately attempts to frame the meandering whims of a bully into considered policy.
This has absolutely not been the case for the current administration. The president does not share the same values or goals. He sees all things through his own perception of is he winning or not with no respect to others. He demands loyalty but never returns it. On that basis there is no point in other nations negotiating with the US at this time.
2
"Don’t Worry About Trump’s Tariffs"
Famous last words. Or would the last words be: "I never said that"?
America picking a fight with the ,whole, rest of the world is not the brightest thing a U.S. government has ever done. But it would be perfectly mirroring the reactionary (all over the place) intellect of its current Toddler in Chief -- who only picked this fight because he was a funk over something else. Yup, that's real clever forward thinking there, chaps.
1
How about this instead of tariffs - build the Koch Brother's precious pipelines with American steel. Build the Bay Bridge with American steel. The list goes on and on.
Let’s face it, this is optically terrible from the USA who has actively pursued free and fair access to everyone else’s domestic markets for decades. Apparently, “free and fair” access is now a subjective concept and selectively applied. That these tariffs were applied under the guise that steel imports represent a threat to “national security” is just plain corrupt - and that’s pretty clear to everyone too. No good will come of this.
2
Industry and politicians have been complaining for years about unfair trade practices used by foreign governments. They always bring it up during election years about how the average American worker is being cheated. All to get votes and keep gorging at the government trough. Now that the President actually plans to address these issues they are backing down like the wishy washy people they are. Spineless worms.
“Is it good for the bottom 90 percent of American workers and the families they help support?” Mr. Bivens asks. If he's referring to 90% of the families in the steel and aluminum producing sectors, then it helps. However, I don't see how it helps those families in manufacturing who are the end users of the steel.
Back in the day that would be the 1990s we had lots of tariffs. Think textiles and the factories in The South.
We made among the best textiles in the world.
Along with NAFTA Clinton removed the tariffs, Our market was flooded with cheap imports and the result was the collapse of the textile industry. An entire continent imports most of its clothes.
Think cars and China’s 25% or more tariff on American cars entering their market while GM brings in Chinese made cars tariff free.
Although Trump is a terrible vessel for any policy change, the fact is our trade policies have been uniquely suicidal. No other country has the open doors we do. We are paying a high price in economic instability that has led us to a dark political place.
4
I'm sorry but this position is the economic equivalent of conversing with 2A gun extremists who, when engaged in a conversation, distract from the substance by getting bogged down in terminology and semantics. Trade wars are bad and hurt the large populations of both sides. Military style weapons in the hands of civilians are bad and hurt the large population. To be tethered to semantics while ignoring principle and policy is an ineffective position.
2
Try this one: carbon fiber technology is more than in its infant stage of development. These tariffs will ACCELERATE ITS USE . Stronger and lighter than steel it will make present building techniques obsolete eliminating much of need of heavy lifting equipment. To demand a return of 19th century in the 20 th century is mad. Capital will be deployed now in these new structural techniques, eliminating the need in part for structural steel and weakening the demand substantially. It is the tariff struck nations that will be forced to adopt first and they will.Unintended consequences. Incentivize the bringing on the new, rather than deploying capital on the old. It is a losing game-even for Trump's.
1
How about an analysis of the size of the tariff - 10 to 15% hardly sounds like the end of the world. Would these percentages even be effective?
Isn't this just more Trump hot air?
7
On a million dollar sale it is a 150,000 the steel tariff is 25% so it is 250,000 per million dollars.
What a great idea! Protect a handful of aluminum workers so that the rest of the blue collar workforce will pay more for their beer in aluminum cans. Or maybe brewers will switch to glass and the aluminum workers will lose their jobs.
Either way, it's lose-lose.
It is a sad think that Trump is the only office holder who is speaking up for the workers.
13
These tariffs will not help the majority of American workers. They may help a few steel workers initially. The millions more workers that work in industries that use steel and aluminum to build finished products like cars and appliances will be hurt by these tariffs. Prices will likely go up as manufacturers try to cover the increase costs.
3
Trump is not speaking up for the worker. Too many believe his populist nonsense, which in reality is a smokescreen to hide the true benefactors of his generosity.
My accountant has already told me that despite the "breaks" that Trump has been so proud of, along with his destroying of the medical insurance, will cost me somewhere between five to six thousand dollars in extra tax and money to my medical insurance company.
Please tell me how Trump is speaking up for and helping me?
1
Wait until the Trump's worker policy impacts all the workers in industries that use steel and aluminum.
1
It’s tempting to evaluate economic policy these days with a rule of “if Trump is for it, I’m against it.”
This inherent bias exists because we have a President who waffles from one lie to another lie. If it were possible for this man to tell the truth and act from a position of serving the nation rather than himself the American people would not judge as harshly.
1
Trump is doing a great job. USA should definitely renegotiate its trade deals, but before we launch negotiations, partners should actually fear us, so we start with the most leverage. By throwing a wrench into global thinking with these minor steel tarriffs, Trump accomplishes this.
We tax German cars 2.5% when they come into the US. Germany taxes US cars 10% when they go into Germany. Totally unfair and no wonder you don't see any US cars in Germany.
China bans Facebook, Google, the Times, parts of Apple's services, and unfairly fines our chip companies like Qualcomm and steals our IP. Yet we let China export goods to us unrestrained.
Time for change. Glad Trump is in charge.
5
I work for a European steel producer. We export our product to the US.
Why ? Because US steel mills are incapable of making it themselves.
Why ? Because US steel mills are old and decrepit second rate installations.
Why ? Because owners of US steel companies are just like Trump. They only care about lining their own pockets and don't invest in their companies.
So good luck with your import tariffs which will only hurt yourselves.
7
Most of the world is disagreeing with our new trade war, including most economists and Trump's own advisors, who are now threatening to quit. Fact is, we elected a self-indulgent playboy to be president and that is what we have. Nothing more.
instead of tarrifs we subsidize lots of products... cotton, sugar and even cars and trucks (by building roads and neglecting rail lines) and giving tax breaks to industries that use fewer and fewer people (robots, probably built in asia)
So now we are adding more to consumer costs ???? makes sense to me
1
These tariffs are never going to bring back the manufacturing jobs. They are an illusion meant to convince the masses that Trump (and others including some Ds) is doing something about the wealth inequality in this country. This is NOT going to do it. We need to bring back the 94% tax rate of the past if we want to do something about this. CEOs might not be that interested in making their ridiculous salaries if they lost most of it to taxation.
50
Republican drivel!
The reason our American hinterland is being “hollowed out” is that the manufacturing jobs that once sustained the economy produced goods that have little economic value in the modern world. Widgets, textiles, and shirts are barely worth the cost of shipping; the value is created by the service jobs that handle, fashion, and market the items.
For example, a bolt of cloth woven by robots or third-world labor has negligible value until it is fashioned, cut, and sewn in Paris or Milan. Another example: I ordered a gas-powered hedge trimmer from Amazon. It wouldn’t start. Amazon shipped a replacement immediately and instructed me to donate or discard the defective machine. The cost of shipping, repair, and restocking exceeded the value of the manufactured item.
So, instead of whining about automation and cheap foreign labor, and demanding tariffs to re-introduce third-world labor in America, why not try the proverbial trick of making silk purses from sows’ ears?
Are third-world textiles free for the shipping in the world markets? Why don't communities in Kentucky buy cheap and sell high by fashioning gowns for the Oscars attendees?
Are steel and aluminum being dumped below cost on the world markets? Why not buy up the excess to erect magnificent buildings in our dreary towns, or repair our crumbling bridges, or modernize the New York subways to the standards of the European, Chinese, and Russian metros?
Low-end manufacturing is dead-end economics!
3
Trump’s motto is: get everything you want and not pay for it just and go bankrupt move on to the project. That’s his economic management style from the time he was sitting on his rich father’s lap.
2
Yes, indeed! Bad policy, built over decades on the back of the "free market." But as for acknowledging that some things done by Trump may actually make sense--no! Figs do not grow on thistles nor grapes on thorns! Let us have done with this monster. Stop normalizing him. Stop finding excuses for him.
1
Dollar too high against what??? The cost of a small computer has increased 33% 150 oe less to 200 -- in four months... no sale in sight. The dollar/euro ratio is going back to 1.35$ ... it was 1.10$ there now and again. Maybe we should all buy less but how much should a necessity more orless like a computer cost. And certainly pharmaceuticals as it has long been pointed out cost more in the USA than elsewhere.... as a result of protectionism?? you imply.
Gluts tend to be temporary... altho I cannot imagine why it is consdered to be great policy to use up earth's resources as quickly as possible. We are not inhabiting outer space yet.. an moderation in all things instead of a constantly growing economy would seem to be desirable. We need a movie about the day the oil stopped when there are 10 billion people on the planet... then what?/ who freezes to death.. Growth may not be all it's slated to be.
1
An update from Trump who just tweeted that Canada and Mexico could win exemptions to the tariffs if they agree to a " new and fair" NAFTA agreement. He stated that Mexico has to do" much more to stop drugs from pouring into the U.S." Canada has to " treat our farmers much better". Apparently Trump may not be interested in the benefits of tariffs as suggested by Mr. Bivens.
Mr. Bivens wants to argue that much of the outrage is focused on Trump. Gee, I wonder why?
9
Bivens sidesteps the alleged reason the tariffs were announced: To counter a threat to American national security. I guess this means we might run short of steel and/or aluminum and be unable to spend prodigious and wasteful amounts of money so defense contractors can swim in their money filled pools like Scrooge McDuck.
2
Like so much of the Trump administration, this is yet another example of reasonable people trying desperately, almost laughably to put a band-aid on a cancer. Maybe there is an argument for off-setting government subsidies on steel. But that's not what Trump rolled out and it's not what the policy has morphed into. China was the straw dog, but it suddenly became clear - and only by dint of the obvious silliness of the argument - that the real threat here is Canada (who no one seems to think is propping up its industry) and NAFTA. Let's be honest, these tariffs are only about one thing: Trump trying to shore up his brand image as a tough guy. All the rest of the arguments are sheer projection on the part of pundits.
5
This analysis is facile. Metal prices are artificially low because China is over supplying the market and will not stop. Trump should work with US allies to pressure Beijing. Instead, the universally applied tariff will hurt US allies leaving China virtually untouched and free to continue dumping.
Meanwhile, Russian and Chinese influence are rising, everywhere. That is not the world I want to live in. Would somebody in Washington, anybody, please WAKE UP!!!
5
Tariffs are the wrong tool for the job. The impacts will be regressive and workers will be the losers. Using taxes to benefit a specific sector is not good policy,The WTO is the vehicle for this issue.
40
Can we please get big government out of the role of "creating jobs?" by picking winners and losers. The Republicans once again demonstrate how fundamentally flawed their economic platform is, and how contrary it is to what used to be "conservative" philosophy. Of course, this is just part of the entire perverse agenda that is today's Republican party, and its carefully chosen leader, Trump.
3
US steel producers are hurting? People are okay with what pharma companies charge? What?
3
Trying to get sympathy for protectionism by referencing the pharma industry really does not work for me.
Big pharma is in several ways worse and more of a bunch of criminals than the NRA.
Contributions(bribes) to politicians and congress people from pharma are about 10 times that of the NRA. The ridiculous prices imposed on life saving drugs has likely caused more people to die early - as they could not afford them - than people getting killed by the ridiculously extreme gun stances of the NRA.
The claim of having to pay for research is also a scam -- some have have called for nationalization of pharma since they are *not* developing new drugs as needed and can be expected, and scientists working for them have been educated with very heavy investment of tax payer money in public schools and universities (and investment they are not ready to return).
So if Biven tries to gain sympathy by pointing to pharma he has lost me.
3
Mr. Biven’s “nothing to see here” analysis of your President’s trade policy, while facile, is at least illuminating.
The West has watched with confusion and horror as America appears to walk away from its hard won empire, leaving the post-war Washington Consensus to whither and die. Mr. Biven and his ilk make clear that this withdrawal from international leadership has broad domestic support. Hey, it’s just fractions of a penny on your next beer!
Never mind that vast sectors of the Canadian economy will be crushed. Remember us? We’re the biggest exporter of steel and aluminum into the US, part of the largest and most fairly balanced trade relationship you have with any nation on the planet. But that’s over. We get it. You’re just not in to us anymore.
But as America retreats into it’s new vision of “greatness”, your former allies are looking elsewhere. Since Mr. Trump’s election, Canada has signed trade deals with Europe and the Trans-Pacific Partnership. China is pushing hard for its own free trade relationship with us. Our pipeline, rail and shipping infrastructure are rapidly reorienting on an East/West axis as our industries eye more reliable overseas partners. This punitive and irresponsible tariff regime will only accelerate these trends. Mr. Biven makes clear that you just don’t care.
So be it. We love you, we’ll miss you and we wish you wouldn’t go. But we won’t be lonely.
180
You are correct. Canada should not be a target of this policy. The main culprit (by far) is China.
Good luck with your new East/West alignment. If you love the Alberta tar sands scalping of the environment, wait until China turns you into a vassalage as they are doing with much of the world (Aftica, eh?).
Does this mean you won't be flocking to the US every year when the snow starts flying? Or, that all of you Visa-nadians will look for work elsewhere.
Hear, hear! Are you Mich Lucas who grew up in Kanata, Ontario? If so, say hi to Suzanne for me.
You can properly argue against the economic merits of tariffs. But to state that this is rooted in xenophobia is utterly preposterous and disqualifying as an opinion letter. Quite the opposite.
2
You're blaming the decimation of steel jobs over the past few decades on poor policy. You miss the most important factor, which is that automation has driven the need for workers down significantly to compete with producers in low-wage countries.
This is an unstoppable force. And the problem isn't with policy towards the steel industry as much as it is with the idiocy of working-class Republican voters who think it's better to give money away to billionaires, rather than help train and assist them towards working in the industries of the future. It is beyond comprehension how enthusiastically this group of voters has supported a party that works so nakedly against their interests.
7
This is bunk. We are no longer talking about cheap and basic steel.
We are talking about specialty steel that requires sophisticated processes and employees. Even with regular steel automation only goes so far. If your claim was true US steel companies would be automated and thriving. The are automated just like the next guy and still beaten on price because the next guy (NOT Canada) is using cheap labor en masse instead of automation.
There is just no competition for cheap ore, no environmental rules, penny on the dollar labor costs and government support.
Since a fair portion of steel and 56% of aluminum is imported from Canada, which you note does not have cheap labor and I assure you has stricter environmental rules than the US, especially after Trump has rolled back a lot of them, how does it make sense that Canada is not excluded from these tariffs. By the way, Canada has lost a huge percentage of its steel making industry over the last 15 years.
The tariff is being debated as though it was a carefully considered policy decision. Pundits are trying to retroactively rationalize a knee jerk decision that was only intended to throw a special election and distract from WH chaos
7
I appreciate the author's willingness to consider Trump's policy and set aside his feelings about Trump. I wish the rest of NYT writers and readers could do the same.
3
Canada is threatening retaliatory tariffs, the EU is considering retaliatory tariffs as are other trading partners. trump's answer. Raise the price of EVERYTHING! Cars, computers, appliances, clothing. Wilbur Ross sarcastically holds up a can of soup claiming the price increase means nothing. Why isn't he using a washing machine to illustrate his point? A refrigerator? A boiler? A car? All of these items are already an expensive purchase for the average American consumer yet he cavalierly disregards the major impact these purchases with the accompanying increases will have on the American worker. Thank our lucky stars we got that $5-10 a week tax cut. Between the increases in health insurance, the loss of deductibility of state income tax, property tax and mortgage interest and the predicted increases in everyday purchases it will sure come in handy ;-) Once again the middle class and poor are negatively impacted by republican policies. Who could have EVER predicted the damage this inept, arrogant and narcissistic person would inflict on not only his ignorant, rabid supporters but the rest of us who didn't vote for ANY of this? trump is on his way to completely destroying our country yet Bivens pooh-poohs this destructive, dangerous proposal which will have a dramatic impact on not only American consumers but industries as well. Trade wars are never good. History has time and again taught us this. The GOP never learns from history and middle class/poor always pay the costs!
97
"Why isn't he using a washing machine to illustrate his point? A refrigerator? A boiler? A car?'
Maybe because he is smart enough to realize that most people might go years in between purchasing those items. They're not put a new boiler in their shopping carts at Home Depot every week.
The other thing that Wilbur Ross misses out on is that the increased cost to the manufacturer can be multiplied 5 or more times by the time it goes through all levels of distribution, i.e. wholesalers, retailers etc. So take that extra cost of soup can and now multiply it by 5 and then multiply it buy say 100 times a year you but it. And that's for only a can for one of numerous cans and items a consumer buys with steel in it. Not to mention larger items which admittedly are not bought daily but are still significant if bought, say every 5 years or less on average. Now it's not just a few pennies a year we're looking at. Not to mention the cost of American jobs when the countries whose industries have to pay these tariffs retaliate.
1
Us ignorant, rabid supporters know that the US has been in a losing Trade War with the rest of the world for decades, and we are big time losers. Us ignorant, rabid supporters know that a $566 Billion trade deficit is a result of criminally gross trade policies that are gutting our national treasure. Us ignorant, rabid supporters know that manufacturing employment in the US was surpassed by government employment in the early '90s. Us ignorant, rabid supporters have known that poor and middle class Americans have been devastated by trade policies for decades. Us ignorant, rabid supporters are ecstatic that somebody is finally pushing back against really stupid anti-American policies. Why can't y'all libbies ever learn from history? Is it because y'all have all of those government-jobs-for-life?
1
How did we get such an extreme excess world capacity to make steel?
It started with the Five Year Plans of Stalin. His Plan amounted to supply push instead of demand pull for the development of heavy industry. He forced his country into a new era, and it only survived WW2 because he did. In the narrowest viewpoint of one country, it worked (at huge cost).
Post-War, many other countries did the same, attempting to drag themselves into the modern industrial world by government fiat. It was not just communist countries. From Algeria to Japan and South Korea, "Western" governments did it too.
The result was capacity created on the "build it and they will come" theme. At some point, this crossed over into gross overcapacity. Then what to do?
Governments that had forced the pace in their own countries then protected what they'd done with subsidy, for the same reasons they'd forced the pace in the first place. They expected demand to catch up, and to find them ready with the supply.
Instead it has forced the closure of industry without subsidy, that has been guided only by the profit potential of the actual market demand. It gets undersold. Indirectly, the Plans win again. Stalin chuckles.
"Trade war" is not the solution, but neither is surrender to The Plan of other countries.
The EU has a system within its territory to allocate production capacity in industries with over capacity, like steel and in their case shipbuilding. That too is a bit more Plan than Americans like.
3
If nothing else, the tariffs will bring back the sight of people scavenging for cans along the highways and byways... It'll be just like the good old days, when we used to pick up soda bottles so we could buy candy, only these days, many people will be trying to buy dinner.
3
I'm neither an economist nor a Trump fan, but this article makes sense to me.
Trump critics need to take a lesson from Chicken Little and learn that their credibility is on the line every time they scream that the sky is falling. Just because crazy was elected in 2016, doesn't mean voters will tolerate crazy from the Democrats. If the tariffs actually end up helping American workers and don't unduly hurt consumers, critics of the tariffs are going to look like fools. Worse, if tariffs or other trade policies could actually help American workers but Democrats don't get on board, Dems are going to be (rightly) punished again in the mid-term elections.
5
Since I understand that a large part of steel imports come from Canada, we should ask ourselves what Canada has done to make their steel production more competitive than America's. It certainly can't be wage rates, or environmental controls on the industry's pollution that causes Canadian steel to be more competitive than America's. There is so much trade between the two countries, I can't believe that it is the exchange rate that factors into the US purchasing decision to buy Canadian steel. Could it be that the banks in Canada will finance technology improvements in Canadian steel producers' internal processes? Maybe in the USA, the financing for LONG term improvements required to make steel manufacturing competitive is not available?
3
Canada is so completely linked to the American economy that we should not see it in the same light as the rest of the world. In that, NAFTA was correct.
4
Both the exchange rate and Canada's geographical proximity do factor into American purchases of Canadian steel. Not to mention Free Trade Agreements that predate NAFTA by decades...
The argument here is that tariffs may protect domestic producers where the world production capacity is far in excess of needs. The crucial unstated assumption is that domestic production capacity can meet domestic needs with the help of tariffs. The author does not consider the truth of that assumption.
If the assumption is not true, the tariffs may not enable domestic products to replace imported products, they would just increase the costs of those products.
So do the tariffs enable domestic producers to satisfy domestic needs, or do the just increase costs for domestic customers?
5
The proposed tariffs on aluminum and steel make no sense. First, tariffs in general amount to a tax imposed on consumers. Second, we can expect retaliation tariffs on things the U.S. exports, particularly agricultural products; and because agricultural products are a high volume low margin business lots of farmers and suppliers are apt to go out of business. But more important, taxing raw materials like aluminum and steel is a bad idea, because it will make every product we make that uses those materials less competitive on the world stage. A better approach would be to put the tariff on finished goods from the offending countries. This would make the U.S. more competitive in producing those same finished goods, and the tariff money could be used to subsidize our aluminum and steel industries making them more competitive as well.
9
This author is from an organization, the head of which is also union president of the 12.5-million-member AFL-CIO.
This column is from the old Democratic base. It is a challenge to the new Democratic pandering to a donor elite. This is what Democrats look like, in comparison to Republican-Lite.
When some say "we" will be hurt by a "trade war," who is "we?" It isn't labor. It isn't regular folks. It is the investor class that would see its arrangements meddled with. It is those who arrogated all the profits to themselves who might lose some to domestic labor.
5
A trade war where our government invested in the skills of their people with better education, internships and broader access to capital formation might be a good idea. Protecting a certain worker class who will likely be replaced by AI and robots to allow US investors in steel plants raise their prices seems like a poor way to protect US workers at the expense of US consumers who also happen to be part of the work force.
5
HL -- A Lake Wobegon solution won't fit reality. All workers can't become above average by education and work-for-free internships. That is an elite solution, that misses the problem.
The author implies that intellectual property rights only benefits pharmaceutical and software companies is misguided and incorrect. The protection of intellectual property rights extends from such creative property as music, movies, books to patents for manufacturing and products. Thus the author's premise that a single worker class is being neglected at the expense of another is flawed.
8
With all due respect to Mr Biven, he's the director of research at a think tank largely funded by the labor unions so he's hardly going to espouse views at odds with the those of organized labor. So there are the ritual denunciations of Trumpism followed by an attempt to rationalize tariffs that labor unions generally favor because rightly or wrongly they see it as protecting American workers. Biven also subtly attempts to discredit critics of these tariffs by suggesting they are primarily driven by antipathy to Trump rather than the merits of the issue which of course is nonsense. They were just as opposed to the steel tariffs introduced by Bush which turned out to be counter productive.
Really, it's as transparent as plate glass.
11
I have a good working knowledge of the pharma industry. While we speak of patents as protecting research, far more is spent on marketing new products than is spent on their development. The pay of most people in marketing is far higher than the pay of the researchers who actually do the work that is the basis of intellectual property. Further, evergreening of patents allows the products to be protected from competition fo far longer than is warranted. Finally, I am a big believer that tariffs are almost never warranted, it at all, and I also think that the pharma industry benefits far more than is necessary to assure the continual source of needed, accent on needed, new products.
10
"Global steel and aluminum sectors have large amounts of excess productive capacity. " "But foreign producers of steel and aluminum, efficiently or not, have often been insulated from this competitive winnowing by government industrial policy that props them up."
"The proposed tariffs can provide a countervailing force against these foreign subsidies and protect American metal producers until a comprehensive solution is found."
Makes sense--for about second. The weight of blanket tariffs falls firstly on a country that also suffers from worldwide steel producing overcapacity: Canada. Yet its steel and aluminum are produced under working conditions and a governmental environment much like the US.
China is the only country worth talking about regarding overcapacity, and it exports a trivial proportion of its steel production to the US. So these tariffs will be little more than a nuisance to China. In Canada they are already polarizing a wide swath of the population in support of a strong governmental response against nakedly unfair treatment by the US.
Moreover, US steel producers of late have been doing very well.
23
I might add that even the US steelworkers union is against the application of these tariffs to Canadian imports.
1
Or to put it another way, the United Steelworkers union has been a driving force pushing for a trade remedy; the Commerce Department's option #2, targeted tariffs, fits the bill. It remains to be seen which option the administration will select.
1
With steel and aluminum, the dilemma is the same as with many other imports. American consumers have grown used to lower prices for products at big box stores and from the auto industry. And those lower prices are, to some degree, created by cheaper imports.
Will Americans be willing to pay more for those products if it means protecting American jobs? What in our experience tells us the answer is yes?
3
Those higher prices are only slightly higher, and they represent a re-balancing of economic benefits to pay our own, and ultimately create the demand we now lack.
Labor is only 10% of steel costs. Therefore a 10% increase in labor costs would be a 1% increase in raw steel costs, which in turn is a tiny fraction of the total value added cost of things like cars.
What happens if we pay a living wage? Burgers might cost $0.10 more, and in return those people could live. That restores a balance.
2
The argument that the Trump administration and Wilbur Ross specifically all by himself can fix overcapacity in a particular industry by coming up with a specific punitive tax to fix a global market seems highly unlikely.
We just cut corporate tax rates to spur demand. Global growth may well begin to reduce overcapacity to the point we may actually have shortages at some point. More likely a global trade war will lead to inflation, reduced demand and overcapacity in all kinds of manufactured goods.
Nobody was worried about the "Great Depression: in 1928. This is bad policy at the exact wrong time.
14
To the extent that economics still works one might expect the 2018 metal tariff increases to result in:
ONE: Greater U.S. recycling of steel, aluminum, and other affected metals.
TWO: Greater U.S. reclamation and scavenging of steel, aluminum, and other affected metals.
THREE: Greater use of materials not affected by the tariff increases.
FOUR: Lower purchases of products that include tariff increase materials.
FIVE: Lower factors of safety in products including steel, aluminum, and other affected metals.
3
Safety factors are not controlled by market pricing. They are controlled by regulation, building codes, industrial standards, and related engineering practices.
Use of other materials is a good thing, they are American products.
Recycling is a good too.
2
SIX: Increased inflation.
SEVEN: Therefore, increased mortgage rates
EIGHT: Decreased home construction and renovation
NINE: Disruption in economic sectors targets by retaliatory duties.
TEN: Therefore, disruption in the US steel industry as exports face reciprocal tariffs.
(etc.)
1
First, it would help if the writer justified his assertion that the impact of steel and aluminum tariffs is "fractions of a percent" to the end consumer. That doesn't make sense when considering a major purchase such as a car, or appliance, made from these materials.
Second, if the issue is that we're fighting foreign government subsidies that depress global steel and aluminum prices, then let's target the subsidies at those countries in particular. The proposed across-the-board tariffs are too broad and will, justifiably or not, cause retaliation from our trading partners.
10
Actually it does make sense. The labor component of the raw materials is a small fraction, 10% in the case of steel. The raw materials are a small fraction of the total value-added price of an industrial product, as shown in the value added tax schedules easily found in English for places like the EU and Canada.
This is like hunting Godzilla with a BB gun. This is not comprehensive change and the results are hard to calculate at this point. We will have to wait and see how other countries react. Ultimately, this adds 25% to the cost of steel and 10% to the cost of aluminum regardless of who the supplier is, that cost will have to be absorbed by some one, either the manufacturer of the consumer. It is definitely inflationary at the very least.
7
A 25% tariff on steel imports will not increase by 25%. Imports account for about one-third of consumption. The commerce department's three options - a global quota, a global tariff, or targeted tariffs - are designed to increase production to 80% of capacity, by decreasing imports by about 37%.
Correction: "A 25% tariff on steel imports will not increase prices by 25%."
This article is welcome addition to the discussion on the cost and the benefits of the Trump tariffs if any. What good or bad in economics and opinion is generally an empirical matter and cannot be reduced to true and obvious statements. When are tariff's and subsidizes effective if any time? When does Free trade benefit both sides. Generally weaker economies like France, Great Britian, now the US favor protectionism as it has done historically prior to WWII and stronger dominant economies like the Chinese favor Free Trade, While nice sounding economic laws like that of Comparative Advantage are logical, the results of protectionism are never fairly compared. The trade off I believe between the special and general interests here are never properly balanced. Historical study is in order. The U.S. is a good laboratory being protectionist for most of its history prior to WWII
4
Given the current state of conflicts of interest and lack of attention to ethics characteristic of the current administration one wonders whether Mr Trump and/or his family members have shares in steel companies and if so when did they buy them. That's the only way that this ad hoc economic policy makes sense especially since Canada buys a lot of US steel and will probably apply countervailing duties on same. Furthermore, such heavy handed Trumpian policies will make both Mexico and Canada even less receptive to renegotiating NAFTA, the purported Trumpian goal of these tariffs.
11
The comparison to pharmaceuticals and software companies is off-base because intellectual property laws apply to Americans too. No one would complain about a foreign company having to pay generally applicable sales taxes that Americans also have to pay—the problem with tariffs is that they are discriminatory and therefore let domestic producers get away with charging higher prices for inferior goods without foreign competition.
Also, the number of steel and aluminum workers is tiny. Even if the benefits go to them (as opposed to padding the industry’s multibillion dollar profits), a far larger number of working class people are employed in downstream industries that will be harmed, and a far larger number still are consumers who will be harmed by the decreased competition, along with the higher prices and lower quality that it implies.
11
NAFTA had created an integrated economy between partner countries. US Steel purchased Stelco, the primary steel manufacturer in Canada, and immediately mothballed most of its production capacity.
Integrating production of primary products across international borders enabled trans national corporations to direct the facilities on each side to produce specific products. For example, steel in myriad forms. Beam and girder shapes, coils, sheet steel to mention a few can be produced by focusing expertise on a subset that each factory then trades across the border.
Will tariffs see an end to this symbiotic manufacturing relationship?
Aluminum production is largely dependent on the price of electricity. Quebec has an abundance of hydroelectric capacity, ergo smelters locate in that province. Should coal, clean or otherwise power aluminum production?
NAFTA negotiations have drifted into some bizarre territory. Determining the origin of automobile components has even become so "granular" as to wonder about the provenance of sand used in the manufacture of car windows. The tariff debacle will be corrected, at what cost we can't yet tell. But please, do not allow to be distracted by trade tiffs from the general disfunction and dismantling underway.
19
Apparently you think other industrial economies like China, South Korea, Japan and Germany do not get involved with optimizing supply chains and where production occurs. They engage in industrial policy like this every day.
Instead of asking about the fallout of tariffs, perhaps a better question, is what are the underlying factors of foreign commodities that make it cheaper. Canada, the largest player in this group, has single payer health care, and other benefits for its workers on a national scale. There is no need to impose additional price hikes on consumers, but there is every reason to bring necessary services to all American workers at near the same cost. These social insurance programs are paid for by everyone at reduced present costs, and makes all manufacturers's bottom lines higher with higher wages to their workers. As usual macro economics barks up the wrong tree.
27
The Anti Dumping and Countervailing Duty laws, compliant with the WTO, is the method that should be used to offset dumped and subsidized imports into the United States. They are country specific and are implemented when there is actual damage. The data is actually analyzed to determine if imports are the cause of the problem. The one downside is that they are initiated by the harmed industry, not the federal government. The issue of protectionist treatment of pharma and software, while important is not relevant to the arbitrary implementation of tariffs with little underlying analysis.
22
Been there, done that. There are 167 tariffs in place against Chinese steel right now. The government owned overcapacity fills the world market and flows around the country specific tariffs. Trans shipping and moving production location to invade duties is a common tactic. That was the case with solar panel and clothes washer tariffs making the Obama era tariffs and effective and requiring measures against all imports. Additionally, the other industrial economies have taken measures to prevent being swamped by global overcapacity. We are merely catching up and having a silly debate about whether to do so.
1
Moving location of a Steel Plant is much more difficult than a Solar Plant. Switching products is also difficult as seamless pipe is different from cold rolled sheet and strip. Switching within product categories are possible, but AD/CVD complaints usually cover the range of sizes used in the United States, such as for automobile doors.
The Steel Industry is one of the main users of the AD/CVD laws, using it against virtually all our foreign competitors over many decades. Looking at U.S. Commerce Dept. data, U.S. capacity utilization has been fairly stable since May of 2010. The largest sources of imported steel are, starting with the largest, Canada, Brazil, Korea, and Mexico, accounting for nearly 50 percent of our imported steel in 2017.
1
The difference between the effective protections in NAFTA and the TPP and unilateral tariffs is that the protection in those treaties were part of a negotiated solution. Of course free trade treaties include tariffs as one variable in a complex equation. That doesn't mean they're not free trade treaties. Nor does it mean that unilateral tariffs are the same as those in in NAFTA and the TPP. I might invite a surgeon to cut into my liver, as part of a complex negotiation, including a medical examination, a contract for postsurgical care, and an exchange of money. That doesn't mean I'm equally happy for anyone who wants it to cut into my liver.
8
There have been years of negotiation over global steel overcapacity. Those negotiations failed because the culprits slow walk the talks and do nothing. Constructive unilateralism is necessary to achieve any later multilateral solution.
1
Mr. Bivens makes important points whether "free trade" pacts are really about neutral trade, or tend to the interests of certain economic sectors (and by extension their employees) more than others.
The bulwark of economists, including some NY Times columnists, who continue to argue for a return to the previous economic status quo, indicates they haven't truly acknowledged the symptoms displayed by recent social tumult.
Trump must go. However, we cannot forget the "free trade" era has - for whatever reason - resulted in one of the widest disparities of wealth in our history.
There are fixes to be made.
14
To the contrary, the free trade era has seen the greatest reduction in global inequality in history. Because international trade by definition involves more than one country, it is not a domestic policy and only its effect on global and not within-country inequality is relevant.
Within-country inequality has increased in some countries like the US and UK, but that is attributable to our domestic policies rather than trade, as many other countries that are equally or even more open to free trade like Germany or Canada have not experienced nearly the same increase in inequality.
6
Agreed
I can't help but notice that the Neo-Liberal age (post 1989, post Soviet threat) is closely co-incidental with a great increase in the amount of inequality, anger and unhappiness throughout the West. Of course co-incidence is not proof, but...
There are more middle class people in the world and less people going to bed hungry tonight than in any point in human history.
You can blame the free trade era, I blame the incredible amount of war and destruction that has been an ongoing feature across the globe with the US and Russia being the major weapons suppliers. The absolute waste of human capital, tax dollars and inflation is incalculable. Not to mention the ongoing refugee crisis around the globe that is threaten the liberal democratic movement that has been the single greatest wealth creator in the history of the world.
The author wants us to believe that tariffs are the equivalent of multilateral agreements to strengthen and enforce IP laws in our trading partners’ countries via NAFTA, which Trump threatens to pull out of if not renegotiated to his liking, and the TPP, which Trump did pull out of. The two are not the same in any form or substance.
17
I think you missed his point, entirely.
The opinion expressed assumes that all of these foreign countries are subsidizing their steel and aluminum industries. Canada and the US are the biggest trading partners of these two industries and Canada imports more steel from the US then it exports. Canada does not subsidize these industries. The obvious result of this trade war is that Canada will put on similar tariffs on imported steel from the US. This would just hurt everyone. Agriculture is much more complicated as both countries provide assistance to their farmers. We import in Canada a lot of beer and wine from the US yet very little that we create goes to the states. Tariffs on food and beverage products will cause significant harm to both countries. Lastly, the steel and aluminum companies that export to the US are generally owned by American companies. This does not seem logical.
46
Nearly hidden in the authors commentary is what he sees as the real problem facing manufacturing employment in the U.S. He believes that there has been insufficient government spending during the recovery from the 2008 recession and no aggressive response to currency manipulation by some countries. I guess his solution is to increase the government spending to increase demand and have the policy makers actively weaken the exchange rate to increase exports and reduce imports. One problem, among many, is that the spending increase would probably increase government deficits, raising interest rates and putting upward pressure on the dollar
4
You know it's interesting that when the Obama administration supported the US auto industry during the Great Recession the right howled "free markets", yet when Trump announces tariff protection for a mature industry in which there is, as you explain, global excess capacity we hear nothing but kudos. Clearly, maintenance of a viable domestic metals productive capacity is of strategic importance, but that should be the primary goal rather than what appears to be another ill-conceived political stunt to appease donors and the base. But of course we've long since recognized that, as you also state, this administration hasn't the word strategic in its lexicon. And that is a problem, one of many that are doing great damage to our country.
35
Since when did manipulating exchange rates to equalize manufacturing trade flows become a fundamental principle underlying international trade?
8
Countries have used exchange rate management for decades. The IMF produces reports on which countries are over and under valued in relation to their trade balance. The linkage between exchange rates and current account balance has existed in been and managed since the beginning of time. How do you think Japan grew, or South Korea, or China? Germany transform from being the sick man of Europe to being an economic powerhouse after a favorable swap from deutsche mark to euros.
It's actually quite brilliant. When the cost of everything goes up it's called inflation. Those that would benefit greatly from inflation are the money lenders. Unless you are sitting in your log cabin built with a stone axe, you will be affected by an increase in manufacturing costs.
6
Traditionally, inflation is not the friend of money lenders. It is the friend of money borrowers who get to pay back their loans with less valuable dollars. That all changes when you have variable interest rates pegged (supposedly) to the rate of inflation - designed to protect the money lenders. Amazingly, the "rate of inflation" used to compute the floating rates seems to always be much higher than the rate of inflation used to compute the COLA for Social Security, for example.
Either that must be due to the 'invisible hand of the market place", the fraudulent LIBOR process which produces the interest rates (despite the fact that they are well known to be fraudulent) or perhaps due to the maintenance of several different inflation calculations - each to serve a different purpose. One to keep the COLA down for Social Security allowances, another to keep interest rates as profitable as possible for the lenders, etc...
What a system.
3
Without jobs and production, we will all be sitting in our cabins with a stone axe. But we will have low consumer prices.
Of course, the bad actor here is China. But china’s share of the us steel market is small compared to other countries. How does it make sense to sanction the steel industries of Canada and Germany - whose labor costs are well above those of the US - to get to China? This is thinly disguised economic nationalism. What war is trump preparing for against Europe and other allies that trump needs to arm the US for?
31
Equating steel to pharma and software is a red herring. When is the last time a US steel company invested millions developing a new proprietary type of steel designed address a specific problem in the world of steel users, and then was undermined by foreign competitors copying it and selling it for less?
59
clearly, President Trump understands and gravitates more toward "masculine" old fashioned industrial might, over those sciencey, squishy things even girls could do that don't photograph as dramatically.
here we are in the 21st Century with a PT Barnum president who thinks it's the 19th.
no wonder we're also revisiting some of the worst aspect of his childhood, such as a renewed Cold War.
duck and cover, kids, the Reds are going to bomb us any second!
Exactly!
I was going to say you can’t forge a bar of steel like you can a patented drug, but then I got all confused.
"Critics warned of trade wars" claims this article.
Um, not exactly. The President of the United States exclaimed that trade wars are "good" and "easy to win". It wasn't this tariff in itself that was truly alarming, it was the way in which it was announced, and even more importantly, the political and, heavens, psychological context in which it was declared.
If Obama had announced these provisions on a sleepy afternoon, markets and everyone would have reacted differently. They're bad in themselves, but not a threat to the global trading system.
Donald Trump, on the other hand, very well could be. And that's scary.
29
If people appreciated the power of steel, the fossil energy concentration in its manufacture, its weight & toughness, what it takes to move, cut, form, machine, melt, forge--- they'd have much more of the respect for iron & steel they once had.
Iron & steel should not be this commodity to abuse, its more of a god, a force, born only of many supernovae, constituting the impenetrable core of the planet, & only accessible in deposits at the surface due to the vast efforts of living organisms who concentrated oxides into ore.
This newfangled idea that iron is a 'commodity' to have international trade games with, is a hubristic arrogance not in keeping with the profound nature of the element.
Iron should be used sparingly & respectfully, with attention paid first to the vast environmental cost in iron & steel manufacturing.
Forge a single iron strap-hinge for your barn on an anvil & you'll understand much more about iron & steel than all these robber-barons & macro-economists.
6
A tariff is a foreign tax and a domestic subsidy. You tax things you want less of, and subsidize those you want more of. So a steel tariff means we want less foreign steel and more domestic steel - which is precisely how Trump puts it.
Explain to me how substituting foreign steel with domestic steel does anything to address global overcapacity?
9
One really can’t view these protectionist measures outside the context of Trump’s America First nationalist policies. With regard to policy making, it should also be noted that this president tweeted the steel and aluminum edicts without consulting his economic advisors.
The result is chaos. Allies like Britain and Canada are screaming. countries are already sizing up American industries for retaliation such as motorcycles, bourbon and California wines among others.
This is how trade wars get started and with a mercurial president like Trump, the potential for economic instability increases.
17
I’d feel more confidence in the argument if the author had discussed the Bush tariffs and their repeal a year later after 100K job losses, and why this time it will be different.
63
This policy shows that Trump has personal touch with working class people which the elite lacks. In theory everything is glorious, but in practical terms globalization has hurt American workers. Trump understands that and want to help them by leveling the playing field.
8
globalization HAS hurt American workers, no question about that. But that jeanie is out of the bottle and has NOTHING to do with Trump, Democrats, GOP, etc. Its a function of technology. The US worker enjoyed advantages for decades due to the capital and technology advantage of their US companies. As technology was adapted around the world, along with a willingness of a foreign worker to work for far less than the US counterpart, the US lost market share and the US worker (and middle class) began feeling the angst it feels today. Our perch on the global totem pole has narrowed as the position of the worker in China, and other places has risen.
6
The concern over tariffs has nothing to do with elites. There is too much iron being produced, therefore, production must be curtailed and the workers must develop new skills and perhaps even become elites. Messing with markets by instituting tariffs is no different than a subsidy. In fact why not subsidize our steel industry, then perhaps other markets would remain open. It's a wash, in the end Americans will pay for the added costs
4
Alex, you (and many others) have a serious misunderstanding of what "globalization" is and what has driven it. "Globalization" of markets and the exchange of goods of all types, has been driven primarily by changes in technology and the ability of private corporations to locate and sell their goods virtually anywhere. It is neither an invention of government, nor driven by any government policy. It is how the world economy has developed naturally, regardless of what any government may or may not have wanted instead. Private corporations, and not governments (with some exceptions) are the primary economic actors. Government did not create good lives and jobs for American workers, and government takes neither of these away. Jobs from from businesses: if businesses fail or become unprofitable, they will look for cheaper labor or go out of business. You are looking for someone to blame, but economic forces don't have a face. Jobs have left the rust belt because the world has changed, and people need to look for new ways to survive and prosper. And maybe they need to relocate, too. Government cannot bring steel, coal, or most of the manufacturing industries back. You can't turn the clock back, and blaming government does nothing to change or improve the situation.
1
"we’re talking about fractions of a percent in prices, one way or the other."
The above may be so, "today". But what about next week, month, year? Countries will not stand by and let the U.S. impose tariffs without countering them. No good comes from trade wars.
If someone that knew something about tariffs had brought this up, like the person that won the popular vote, we would listen and consider. But the person currently in the White House has no idea what he's doing, so how can we judge any proposed action without thinking, what rabbit hole will this take us down.
5
NBC News online had the best take on this problem, which now is offline and can't be retrieved, at least not by this computer gaffer:
The gist: America could indeed benefit by a small number of targeted tariffs upon the jackanapes countries dumping their products here. Also, tariffs might help create a more level playing field with countries who support their industries, which allows them to sell products at a lower, basically unfair and uncompetitive price.
The article went on to say that Trump's blanket approach is ham-handed and will merely anger the good guys like Canada. So, the tariff idea has some merit if properly applied, which it isn't.
8
Massive worldwide surplus of labor is an enormous subsidy to production, the majority of benefits from which accrue to capital. International trade is a massive corporate bailout. It's "Wealth of Nations", not wealth of trade routes. People first; prices second. If you consume more than you produce, you will eventually need to ask your trading partners for terms. And China can't stomach a penniless monk in Tibet today. Good luck to our kids. America first.
2
" If you consume more than you produce, you will eventually need to ask your trading partners for terms".............
That's correct. We have a nation filled with that situation now. Credit card and loan debt, payday loan centers, sell your gold and jewelry stores, ads on TV to negotiate with the IRS or arrange a reverse mortgage, pawn shops, and all other manifestations of a nation and society in distress. Unfettered consumerism and cheap, cheap, cheap at any cost.
As a small business owner with employees in the construction industry. I am constantly looking for signs as to when the economy will imploded like it did in the fall of 2008.
I am now seeing those signs, I just hope we can make it longer than the fall of 2018. Costs are now skyrocketing in the construction industry, yes alot has to do with supply and demand. But the government has been placing high tariffs on Canadian lumber for the past year, now the cost of steel is going to go up, and the government is considering repealing the dodd frank act.
The market can only bear so much in costs increases before it implodes. So I now wait for the day to come when I tell all my employees we have no more work. Big government doesn't care about the average Joe. They just like the votes.
My question is? Where are these skilled workers going to come from to make American Steel? I am always in desperate need for skilled labor, and I'm more than willing to train. But this country has a very very limited supply of people willing to work hard with their hands, use their heads, and want to go home physically exhausted at the end of the day.
I am by far not the brightest mind out there, but I can see the writing on the wall. I am working on my exit plan, shutting my business down, and moving on in life. 7-11 will be hiring, at least I hope.
15
And just what, pray tell, happens when the foreign countries end the barriers faced by their own companies erected by our own "intellectual property" rights theories. These are, after all, only "theories" but they protect our software and pharmaceutical companies monopolies in foreign countries. They can be disregarded at any moment and there goes our most vibrant and well paid industries. Every action can have an equal reaction in ways we might very well regret. It is not "so easy" as our president would like to think.
5
American manufacturing employment in aluminum and steel is low because of automation - the US produces 70% of its steel domestically. With aluminum, that number is much lower - ~10%. The bauxite deposits we relied upon are now used for other purposes and refining bauxite is a very energy intensive process, meaning cheap hydroelectricity is a huge competitive advantage. Consequently, we need to import all bauxite used in the refining process. Or, we import the aluminum directly from Canada, the worlds #3 supplier of the stuff.
The issue with a trade war is that it A) basically kills all trade negotiations when you take unilateral punitive action (this final act of sabotage has killed the NAFTA talks), B) hurts exports C) trade deficits aren't bad since we're not on the gold standard anymore, and most importantly: D) it will disrupt transnational supply chains.
9
"— critics warned of trade wars, recession, global instability. But the blowback is overblown, and seems to constitute reflexive anti-Trump sentiment rather than careful economic reasoning."
So Trump tells the EU if they retaliate with tariffs on US exports he will up the ante by applying a tariff of 10% on auto imports. And the next step for the EU is what? Submit? Or perhaps applying other tariffs. We will see if the threat of a trade war is overblown. BTW-- Perhaps the column could focus on the positives of the US withdrawal from Nafta.
5
Why should other countries submit? Yes, a trade war is possible and protectionism is also on the table both for the US and other countries. America is a huge exporter and if foreign countries impose severe tariffs on those exports, American firms will suffer. Tariffs are not a one way street.
I'm just a simple country hyperchicken, but this article seems to work backwards from it's conclusion and follow the happy path to a conclusion.
"It seems clear that protection for the profits of pharma and software companies agitates business writers and some economic policy experts far less than protection for manufacturing sectors heavy with blue-collar jobs."
This should go without saying, but convincing everyone in an international agreement to follow the same rules is much less controversial than agreeing to rules that specifically benefit one country.
"...foreign producers of steel and aluminum, efficiently or not, have often been insulated from this competitive winnowing by government industrial policy that props them up."
So domestic producers should be insulated as well? Does this not exacerbate the problem being described? I can't really tell, seeing as I'm not familiar with the Two Wrongs Make a Right school of economics.
It has been pretty thoroughly documented that automation is the primary driver in declining jobs in the steel industry. At the same time, the overcapacity problem that you are describing can be traced almost exclusively back to a couple of countries that have been complicit in widespread dumping. Since these tariffs will do nothing to reverse the former, and will punish (and invite retaliation) from countries that do not do the latter, how can this possibly be of a benefit to anyone?!
12
Trump is using national security to get away with this trade war.
Economics is not a "chain" but a web of interdependent hydraulic forces, like ecology, which is another thing Trump is at war with. What Trump is doing is attempting to redefine how economics works, not leveling the economic playing field. He was handed an economy in recovery and is tossing salad with it.
7
I think you’re rather missing the point, Mr. Bigens. If these tariffs were thoughtful, deliberate policy, I’d be much more sanguine about the decision. But they are not thoughtful, and what they portend should worry all of us.
9
I agree our trade and budget deficits have weakened us considerably, in fact to the point where our national security and sovereignty are, increasingly, in jeopardy. However, while some is due to unfair trade practices, most is due to our addiction to cheap imported goods with their "too good to be true" prices. Our willingness to "throw our neighbors under the bus" and watch as the hidden costs (welfare, food stamps, crime, community blight, higher taxes, and drug addiction) of those cheap imports manifest themselves.
So yes, perhaps the threat of tariffs as a "shot across the bow" might cause others to "change course" rather than go to a trade war. In the end, though, only we and our wasteful spending and poor investing/savings habits can secure our economic future. Both trade wars and unfettered consumerism do not bode for a bright future.
The fact is, at some point, some balance (negotiated with our trade partners and established through our national budget) has to be reached that addresses our economic future and, importantly, our debt both public and private. But, yes, worry about tariffs remembering, though, that cheap is not always cheap.
3
This will cost far more manufacturing jobs than it will save, especially for small fabricators and other manufacturing users of steel. It was tried by GHB in early 2002, and economic research that estimated the job loss approx. 200k. Problem is that steel is a basic resource used by many manufacturers. Without tariff protection, american steel consuming manufacturers facing import competition (using lower price foreign steel) will have to absorb the cost increase. In export markets there is no tariff protection so an American steel consuming manufacturer will just have to absorb the cost. For manufacturers with high profit margins, it’s a small problem! But there’s not many high profit margin American based Steel consuming manufacturers left. If you’re on the edge you’re out. Of business.
For multinational steel consuming manufacturers there’s a simple solution - shift manufacturing from US based facilities, to those facilities that can use lower priced steel. Since that biggest targets are Canada and South Korea it’s easy to see the winners.
2
Does anyone really understand the impact of these tariffs? Is it possible for Trumps staff to do an actual analysis as to how this will impact the entire country and not some parochial subset(s) of the economy. Trumps business gut gives me no reassurance whatsoever that this is a good decision.
5
Global Trade driven by free market/free trade policies creates some dislocation. That is to be expected. Instead of blaming foreigners for the problem, what now almost seems a US tradition, we should focus on developing high tech products and dedicating resources to train/retrain workers in to give them every opportunity to compete in the global economy. That is what a progressive, socially responsible country would do.
3
The Economic Policy Institute appears to be virtually alone in its positive assessment of Trump's tariffs.
Other economists, business leaders, and foreign governments are almost universally negative.
I don't find Bivens's arguments particularly convincing against all the criticism. While it is possible that a full-scale trade war may not develop, and thousands of jobs may not be lost, the damage to the US among its allies will only worsen.
There is no quick fix to the US economy, and it's rather silly to applaud what is intended to be one, by a man who has no clue about the consequences of any of his actions.
It's bad policy to try to pick and choose among details about an administration whose overall aim is the enrichment of the plutocracy at the expense of working people, and which is criminally negligent about the fate of the country.
3
A stopped clock is right twice a day. And if the only effect of the Trump tariff were to protect what is left of the American steel and aluminum industries, it would be either neutral or beneficial.
But the rest of the world will probably not be passive, and will seek some form of retaliation, or will invoke the WTO to challenge these. The first scenario would cause a trade war. The second could cause the collapse of the current world trade framework if the United States were then to renounce its membership in the WTO (which probably was a mistake in the first instance).
The real problem is that there was no thought whatsoever given to the tariffs ... except, perhaps, that they would play well in the western Pennsylvania special congressional election on Tuesday.
6
I encourage Mr. Bivens to leave the beltway and actually come out here to blue collar country. Many of our industrial plants – including some steel mills – have been shut down for so long, and the workers unemployed for so long, that our capacity has essentially vanished. The industrial parks are rusted wrecks, with technology that has long been obsolete. And many of the workers have either aged out of the labor force or are too physically battered to be productive.
Rather than use tariffs to revive a dead industry, perhaps our money and attention should be spent on developing new 21st century markets.
36
The industry is not dead. New equipment and technology has come online in the past five years. Current steel production meets about 65% of demand. It is true that many plants have closed and towns have been decimated, but that is no reason to continue down that path. The United States is still an innovative country, with a huge economy and workforce. Some of us have much more faith in our abilities than you apparently have.
1
The significant feature of this policy is provocation: it is designed to invite retaliation and escalation. Some have suggested that only a war could save Trump’s presidency, perhaps this is his chosen battle ground.
4
Excellent analysis. The tariffs should be a start, not a finish. Government owned industries in China have a mandate to produce massive volumes to flood the world markets and displace workers in other countries. They are provided the public subsidy money to enable the plan without regard to price, supply or demand. Germany, Japan and South Korea already use formal and informal barriers to prevent being overrun by foreign oversupply. We do not.
We are the most open economy in a strategic trade (not free trade) world in which other major economies' use industrial policy to advantage their industries and create good-paying jobs by relying upon US consumers to fund their rise. We delude ourselves into thinking that absorbing the overproduction of other countries is good for us.
Jobs and production produce more benefit for the middle class than modest consumer price reductions from excessive imports. That is the core calculus our media and government leadership has gotten wrong.
These tariffs should be the start of a comprehensive plan to include exchange rate and industrial policy. The fact that the tariffs are insufficient is an insufficient reason to oppose them.
2
China doesn’t subsidize steel to “displace” workers in other countries. They subsidize to keep their population under control - to keep people working. It has been documented that they will overspend momentarily to keep social unrest at bay until hard times break. The one thing that could change this situation for the better is higher wages in China.
China is hardly affected by these tarrifs: Canada is the target.
Every day for most hours of the day I see 6 to 8 truckloads of logs headed up I 91 to Quebec going through central Massachusetts. In Maine 20 plus paper mills have closed in the last 15 years. But the logs from the back townships are going over the boarder to Quebec. Why? There is no incentive to invest in US Mills if the Canadians will subsidize them and the land-tree-owners can get paid a fee for them. We do not live in a world of perfect openness as some would like. In Africa farmers are being put out of business because we subsidies farm exports. One of the first duties of all governments is to protect its own people.
1
Globalisation has not been a benefit but instead a detriment to the average American worker.
America has outsourced too many industrial jobs and also white collar jobs. Many people besides Trump can see that this was detrimental. Ask those in WI, MI, PA, etc who flipped for Trump in 2016.
These limited tariffs are a small step in the right direction, but obviously more should be done to reverse the damage that globalization and the tremendous trade deficits have caused. Globalization has helped China tremendously, but it has not helped the US at all. It is time to de-globalize.
2
Philly
Let's be clear: "America" has outsourced exactly no jobs. Corporations have outsourced far too many.
This is bad corporate behavior; heedless disregard for the only country on the planet where they are free to operate purely in their own selfish interest.
This is American Capitalism at work. Nobody on top cares what happens to workers or towns or cities. In fact if they professed to care they would be run out of their boardrooms on a rail. Made of Chinese steel.
We could have avoided this whole mess. As the world industrialized around us, we could have refused to trade with countries that abused, underpaid, disregarded their workers. Desperate for our market they would have come to heel.
Instead our corner office geniuses thought it looked like a pretty good idea to beat your workers into submission, and keep them afraid and desperate.
Or, and this is a stretch I know, our steel wizards could have maintained and upgraded their facilities, maybe innovated here or there, taken better care of the workers who made them rich. Apparently not rich enough, as they chose to grab the cash they could carry, refuse reinvestment, and start a war with the people who made the place go.
If our steel industry is hurting, its because it hurt itself.
This is a problem they made, and now we're listening to the people who made it moan about the result.
1
Oh nuts! The primary source of subsidized steel is China. China sells to the world. We import very little steel from China. By imposing a tariff on all steel imports, we have now disadvantaged our allies that we do import steel from. The end result is that domestic manufacturers will now have greater costs to pass on to consumers, much greater. Typically, in the old brick and mortar store model, the store takes 40% of the sale. The manufacturer doubles their costs. Add in shipping and we get to 25%
Every dollar in production costs ends up costing the consumer about four dollars, at least. That $500 appliance you just bought probably costs $125 to make. These arguments made by Trump supporters that only quote the price of raw steel don't have a clue how manufacturing works. A 25% increase in the cost of steel in a steel heavy product, like a car, is huge.
Furthermore, this comparison with drugs is ridiculous. Drugs are proprietary, sole sourced products, steel is not. Steel is generic like corn, or soybeans.
Tariffs are horrible for business and economic growth. This one is so bad that it might even hurt the companies it is intended to help. How? Users may now import large quantities of cheap Chinese steel, which there is a glut of, because it may still be cheaper with the 25% tax than domestically produced steel.
A tariff is always a tax on the consumer. This one is horrible and will ripple through all over the world. Retaliation will occur.
77
@ Bruce
"We import very little steel from China."
Yes, but as the world's largest producer and user AND having an until now domestic-only metals futures market, China sets the global price.
Two quick questions for Mr. Givens...
If these tariffs will only change the price of steel by a fraction of one percent in price, how will this benefit domestic steel workers?
Whatever your answer is to the first question, why won't that also result in a relatively equal detriment to domestic manufacturing workers who produce a product with steel as a component?
I look forward to your acrobatic contortions...
33
Is what we really need a balanced-trade policy -- one that targets no trading partner or category of imports? Example: Grant US exporters $ trade credits that US importers must buy on a regulated exchange before releasing equivalent $ to pay for goods and services abroad for sale in the US. If others respond by doing the same, fine!
7
Have you ever wondered what happens to all those US dollars that get sent out of the US due to the trade imbalance? Nobody is sitting on a pile of US dollar bills. They are used to buy US stocks and to lend money to the US government.
If you move to balanced trade you can expect a decline in the stock market because of reduced foreign demand (and many other negative reasons) and a rise in interest rates as it becomes more difficult for the government to borrow.
1
Bivens is trying to devalue the argument against these tariffs by turning it into a matter of personalities. It's not. They're a dumb idea whether they came from Trump or anyone as many of his advisors know. So much so in fact that there is even confusion over whether they will actually happen.
And of course he essentially ignores the potential for overt and covert retaliation in the economic area not to mention a general depressant effect on US relations with key allies.
111
I'll underline John's last paragraph. Everything Trump touches invokes chaos. So it's a long term decline for the USA towards increasing irrelevancy. We cannot afford this foolishness - China and India are the big emerging economies today, not like post WWII. Down the slippery slope.
Where were you over the last 25 years? Watching as our entire manufacturing sector moved to 3rd world $hitholes where 4 dollars a day is a good job.
How can we compete with that? Why is it okay for almost every other country in the world to use tariffs, or a VAT or something like that except for us?
Tariffs, in a vacuum, can have any moral value you want to attribute them.
The problem with Trump's steel and aluminum tariffs is that:
1) Only 1% of all the steel the USA imports is from China. Canada leads with 16%; other countries that follow it down the list are also main American allies. So, these tariffs basically only will hurt allies, not China,
2) The amount of steel and aluminum extraction related jobs are very few: only 60,000. It will protect very few jobs, and
3) It is a purely defensive move. It will not take jobs overseas back, only protect the few jobs that already exist. The USA issues the standard fiat currency, which makes it a natural importer. Deindustrialization will continue to happen; capitalism is an internationalist system by definition: the USA isn't entitled to being both the industrial and financial superpower forever.
79
You're wrong. The NW Indiana Times reports primary metals manufacturing jobs at 400,000 in Lake County Indiana ALONE. US production facilities have been drowning in China's government subsidized overcapacity for over a decade, it's time to stop the bleeding.
"As many as 625,000 workers across the county made, smelted or refined metals such as iron and copper 14 years ago. That workforce has been gutted to about 400,000 today."
4
The NW Indiana Times reports 400,000 primary metal manufacturing jobs in Lake County alone?
"Employment in primary metals manufacturing – in Northwest Indiana, steel and, to a lesser extent, aluminum – has declined by 8,700 jobs since 2000.
The 33 percent plunge is the result of the domestic industry's struggles and an increasing amount of automation at the mills that ring Lake Michigan's southern shore."
Let's see, 8,700 / 0.33 = just over 26,000 - a far cry from 400,000 in Lake County, IN, alone.
So, who is really wrong here?
Except the 90% of the steel sold from Canada to the United States is made in China. NAFTA has become a workaround for China to trade tariff free with the United States with Canada and Mexico playing the middle man.
Regarding all things Trumpian we can be sure of three things. First, that any policy decision is not well thought out, does not have a consensus of his cabinet and does not take into consideration the advice of experts. As we have seen again and again, trump's grand design is whatever pops into his head and the main motive is an appeal to some part of his base constituents without regard to anyone else.
Second, any good that (might) come from it is/will be incidental and was certainly not part of the process. Trump's enables are good at devising justification after the fact, most of which fall apart upon examination.
And finally, like all things impulsive, there will be unintended consequences. We truly don't know how this is going to end. But if History is a guide, protective tariffs usually go awry and do more damage than good.
56
Drew, good analysis, but you omitted one of the major reasons that Trump does things like this: to divert attention away from issues that are going against him, such as Jared Kushner and DACA at the present moment. Like a good prestidigitator, he directs our attention to one hand so that we will not see what he's doing with the other.
4
thats the appeal... his base
Can everyone generally agree with this economic school book statement?
One measure of a country's economic health and stability is its balance of trade, which is the difference between the value of imports and the value of exports over a defined period. A positive balance is known as a trade surplus, which is characterized by exporting more (in terms of value) than is imported into the country. To the contrary, a negative balance, which is defined by importing more than is exported, is called a trade deficit or, colloquially, a trade gap.
In terms of economic health, a positive balance of trade or trade surplus is the favorable state as it indicates a net inflow of capital from foreign markets into the domestic economy. When a country has such a surplus, it also has control over the majority of its currency in the global economy, which reduces the risk of falling currency value.
Now what if every country on the planet assigned more gravity to this premise than we do?
We have the world's largest trade deficit.
What if that is not all our fault?
2
What book said that? Trade balances are neither here nor there for overall prosperity. A trade deficit means higher consumption means a higher standard of living. The imbalance to be more concerned about is the government's fiscal deficit, but we're (obviously) not concerned. No worries about the currency, as the dollar is the international reserve currency - that could change some day of course, but it would require pretty massive inflation, driven by things like tariffs, budget deficits, etc.
7
So what do you propose to do about the largest employer in America - Small Business?
And it is obviously not quite as rosey as most say it is.
If that were true, then there would be no Trump. More likely:
Since 2008, American businesses have been closing faster than they are being created. That is the first time that has happened since the Census Bureau began keeping records on small business. By 2011, the last year for which the Census Bureau has released statistics, there were 70,000 more business deaths than business births. In fact, the annual count of new businesses has fallen so drastically that the United States now ranks 12th among developed nations in terms of business startups.
Over 50% of the working population (120 million individuals) works in a small business.
You are completely wrong:capital flows out of a country with a trade surplus and into a country with a trade deficit (to finance the deficit).
Mr. Bivens, thank you for the intelligent discussion of tariffs and trade protection, which cannot resolved with slogans. Alexander Hamilton was in favor of protecting American industry - the desire to do so cannot be entirely mistaken. I live in Pennsylvania, and the impact of foreign steel on American jobs is a long-standing problem. The protection for pharma and software demonstrates the economic basis for a considerable part of the current political divisions in America - between places where pharmaceuticals and software thrive think one way about politics and economics, and places where steel and manufacturing used to thrive think another - and the debate is 'resolved' by everyone hurling slogans and insults. But having no trade protection at all is just a way of abandoning millions of American workers (or those who would want to be workers) who do not work in the favored industries that currently don't need much help. I am willing to accept higher prices on many products if that is a consequence of saving manufacturing jobs in industries like steel and aluminum.
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Alexander Hamilton? It's not the 1790s and the tiny U.S. isn't up against the juggernaut of the British Empire leading the Industrial Revolution. It's time to think of ways to educate the home weavers (steel workers) whose jobs are being lost to the machine driven looms (automation). Steel and aluminum tariffs will only protect the owners of the robots and circuit boards.
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I would rather see people working than dependent on government handouts. How much more I pay for goods depends on what I purchase. Will I pay more for goods than what it costs me to provide welfare benefits to laid off workers? I don't know but I feel better about the former knowing that a person is being helped in a way that gives him/her their dignity back.
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will the steel companies rebuild and MODERNIZE their plants ???
I very much doubt it... the current economic model is profits NOW
"The proposed tariffs can provide a countervailing force against these foreign subsidies and protect American metal producers until a comprehensive solution is found."
I did not hear anyone in the Administration making that linkage.
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And certainly the administration is not working on a comprehensive solution.
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We're assuming then, that affected nations won't retaliate, at all? And perhaps we've made similar mistakes in the past but their impact was blunted by the fact of our being the world's economically dominant hegemon , a situation vastly different from our current situation, where our rivals have been increasingly successful in undermining us, our government is broken, and our President has not only specifically ruled out comprehensive multilateral negotiations, but shows no competence in the art of mutually advantageous compromise?
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The United States has the lowest Tariffs in the world. How do you propose countries with already large existing Tariffs on US goods such as China retaliate.
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Tariffs will not bring back manufacturing jobs. And if they did it would only be because prices charged by domestic producers rose enough to offset higher costs in the U.S. There are two basic reasons for the loss of manufacturing jobs. first, technology allowing the replacement of labor by machines. Second, and related, high labor costs not fully offset by productivity advantages.
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That manufacturing sector which you wish to protect employs far more people in secondary manufacturing than in the steel production sector. If foreign steel gets more expensive across the board, domestic steel producers can raise prices, which in turn raises costs on those manufacturers which must purchase domestic steel.
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A tariff of 25% on foreign made steel essentially gives a domestic steel producer leeway to raise its prices by 24.999%. Goods made from steel then become more expensive all over, which reduces demand for domestic steel and goods made from it.
It would seem that military hardware would become more expensive, too. No one would propose that we go into battle wearing platinum and diamonds, but with the cost of military hardware, it is exactly what we do. If it could reduce demand for expensive military hardware, is there a silver lining to this tariff?
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Human, I can't imagine that you think higher prices would deter the military industrial bunch from their plans or our venal political bunch from paying for them at our expense.
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Comparing intellectual rights to tariffs on either commodities or manufactured good is comparing apples to oranges. Yes, IP rights are a form of protectionism, but the logic behind that form of protectionism is that the increase in prices is offset by the increased productivity of inventors who believe that they will be able to turn a profit on their inventions -- IP rights (theoretically) lead to more innovation.
Tariff on commodities and manufactured goods, on the other hand, reduce innovation by allowing inefficient market actors to stay in business without becoming more efficient.
Tariffs might be justified in certain circumstances, such as dumping, but saying that because NAFTA increased protections for intellectual property and is considered "free trade" then ipso facto tariffs are not anti-free trade is wrong.
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No one seriously argues that innovation is fostered by the extensive patent protection enshrined in our so-called free trade agreements. We have long since passed that threshold.
Patents explain why Americans pay the world's highest drug prices, despite also providing most of the publicly funded basic research that underwrites them. Copyright, far from encouraging innovation, squelches it by keeping Mickey Mouse and the Beatles out of the public domain in perpetuity.
As Bivens points out, not only are these forms of protectionism, but they have a sociological, and therefore political, aspect: patents and copyrights serve to protect the wages of the better educated and higher earners. Steel tariffs have a different constituency.
In signing on to these free trade agreements, the Democratic Party abandoned the working class in favor of "the elites", who benefit from the lowered cost of manufactured goods. Is it any wonder that part of Donald Trump's constituency feels betrayed by Democrats, feels no politician represents them and understands their lives? Feels Washington is run by plutocrats in both parties? After all, besides "job training", what did Hillary Clinton offer as a remedy to deindustrialization? What would she have done about the 12 million manufacturing jobs host in the last three decades? Nothing!
Bivens is right: Trump's tariffs are bad, but also small beer. The country needs a plan to deal with deindustrialization. So far, neither party has one.
US Steel and Nucor are hardly "inefficient". They just pay their workers more and don't receive govt subsidies like furnaces in China or Russia or Brazil do.
China was certainly dumping at least until late 2015 and despite headlines, have not cut production at all.
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Yeah turn a blue pill red and get another 12 year monopoly extension. Or change the size of the syringe. Same deal. Allow private firms to buy academic scientific breakthroughs at fire sale prices. The IP business is way out of whack. And when we impose our particular form of theft, what do we give in return. Why our manufacturing jobs, of course.
We can talk about tariff principles or we can talk about their practical consequences, or better yet we can realize how the two are connected.
Short-sighted reasoning misses the point. Mr. Bivens statement that tariffs are an "insufficient ameliorative fix for policy failures that have decimated American manufacturing employment for almost two decades," is short-term thinking that ignores our trading partners' view of things. And this is related to “free trade” treaties, mentioned here.
In short, Western European (British, mostly) and US policies around the world have been mostly based on unfair unequal treaties taking advantage of their economic and military power for the past 150 years more or less. We have come to dominate the world's finances and have controlled world trade up until recently.
We need to take into account the longer term view of those on the losing end of world trade (should we call it imperialism?) as well as the principles we all would like in the future. This is parallel to affirmative action notions which we are still coming to terms with.
Let's move forward with eyes wide open, taking into account how we got to this point, as well as where we want to go.
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Want to know what would reduce the global supply cap of steel? USS going out of business. Mr. Bivens is keen to keep the conversation on "typical American workers" while never mentioning that 87,000 people are employed by USS. No, I didn't miss any zeros, just eighty seven thousand workers.
Let's look at the largest jobs in the country then and see what these tariffs might do to those industries:
3 million truck drivers,
4 million fast-food cashiers plus another 3.5 million cashiers in other sales,
5.5 million construction workers,
9.5 million clerks (both financial and information),
4 million janitors and cleaners,
2.5 million cooks,
3.5 million nurses,
4.5 million non-university teachers plus another 2 million post-secondary,
and 2 million software developers as per the BLS.
Mr. Bivens, when the relative size of the increase in price - yes, fractions of a percent, but multiplied through by every employer and employee not in the steel or aluminium industries - caused by these tariffs gets passed on to the "typical american worker," do you think the millions above are somehow less in need of protection than eighty seven thousand steel workers?
So, is an increase in the price of steel good for the workers I listed above and the families they help support? Very simple answer: no.
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Matthew
You are viewing this incorrectly , these are strategic industries, the fact that USS employees so few people is unsettling, we need a viable metal working industry for our own security.
My numbers are less than 30,000 employed at USS. The fractional increase in steel and aluminum costs is not what is important, what is important is that we have some ability to supply our own manufacturing base and not be at the mercy of another industrial giant.
Look what happened when the US stopped exploring for oil, it went to a $120 a barre , in addition we transferred all that wealth to Middle Eastern countries who are less than reliablel, now the US is energy self sufficient thanks to Trump, he will also save our manufacturing base if we stop getting in his way.
Tom
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Outsourcing jobs reduces wages in sectors which are not directly affected - those displaced must find work in those other sectors and this puts downward pressure on wages. The "theory" that justifies this displacement is that better jobs will open up but this has simply not happened, partly because many of the other jobs listed are filled with low-wage immigrant labor.
Large employers are always looking to reduce the power of unions, which also has general effects beyond a specific industry. Wages had been increased and hours reduced in a long and painful process of labor organization and influence on legislation, but this has been turned around by putting American workers in competition with low-wage (non-union) foreign workers.
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When retribution is applied by our trading partners Trump will need to do some serious explaining to the the tens of millions of forgotten workers in agriculture, tech, transportation, etc. Somebody tell Trump we trade agreements to set up the rules. Maybes he's too lazy and incompetent to negotiate.
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One of the early news stories in the tariffs about the tariffs said that they were being applauded by unions, liberal economists, and others.
Since then, there has been little discussing their upside, anywhere. I'm glad to read something that addresses why thry might be a good idea.
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Don’t think that you read the article. He didn’t say they were a good idea. In fact he said they were a bad idea because they wouldn’t be a permanent solution that gets to the heart of the problem and solves it. In the U.S. we haven’t done enough to innovate our metal production to make it more efficient. Because of that we can’t compete with countries that use government subsidies to keep prices down.
The opinion piece says they won’t be as bad as people thought but something like TPP which our dear leader ended would have allowed us to control these sectors more closely and create a fairer market place. I will say this though, when trump was running and said people are laughing at us he was sorta right. They were mostly laughing at him and the fact we might elect him. Now they are laughing and rolling on the floor at us because we did actually elected him and they can now walk all over us.
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Maybe the steelworkers union, but other unions and liberal economist can see the downsides far outweigh the few steelworkers jobs it will protect. The benefit for U.S. steel companies will largely go to the owners of these companies in higher profits, not in the worker's paychecks.
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"And again, no one is telling pharmaceutical companies and their workers that their protections need to be stripped away so that others can enjoy cheaper prices."
Well, a lot of people are clamoring for competition from imported pharmaceuticals. When the identical medication, sometimes manufactured in the same plant, costs far more in the US than in other developed countries, we know there's something going on.
More to the writer's point, software and pharmaceutical products are valued mostly for their intellectual content, as opposed to their material content. Clearly pirated software is theft of intellectual property, but when a pharmaceutical company invests the resources in developing and testing a new drug, they should be allowed the patent protection to recoup that investment. A competitor doesn't have to make that investment, and once the patent is expired the medication (should) be subject to competition that drives prices closer to the cost of manufacturing.
For industries like steel and aluminum that use mature technology, that competition has already happened, so their margins are significantly less.
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Steel tariffs are more a sop to the base of voters, not unlike the coal policy, less likely to do a thing for American workers other than assure them that the Administration kept a campaign promise.
Are the number of jobs we supposedly want to protect worth the backlash? And if indeed the problem is excess capacity, how will tariffs drive investment? Is the US market big enough to prop up the US industry - because tariffs essentially cut off our products from export markets.
I am all for ideas which keep American laborers at work, which drive investment. Small time protection ism lis unlikely to do it, but is unlikely to create a backlash.
Give me real answers - how does our healthcare system depress labor rates? How does our tax system depress investment? How does our policy - tax, labor, education - advantage foreign workers?
But spare me the credo that workers will be largely helped by steel tariffs. Owners of capital - the plants are automated, yes? - will do OK, and we will see labor down stream as the users of steel - manufacturers, construction workers, transit workers impacted as the cost of their end work goes up.
It was an oversimplified campaign promise, not possible useful action.
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Part of the problem is that the Democrats disarmed unilaterally when Trump was blowing hard on this issue during the presidential campaign. i didn't hear one Democrat, certainly not the candidate, address the issue this forthrightly.
This is an interesting observation. Perhaps if the administration would explain its case and provide some evidence to support the validity of these tariffs then they would seem more reasonable. Just throwing up tariffs in an ad how manner will almost certainly lead to retaliatory tariffs which will not be good.
Also since the economy is strong and manufacturing output is at an all time high, I think looking backwards for a solution is a flawed strategy. Jobs have left manufacturing due to technology, not trade. Even so, the manufacturing institute estimates that 2 million manufacturing jobs will go unfilled over the next decade due to a lack of skills.
Perhaps instead of starting a trade war in an effort to jump start an industry of the past, we should solve the real problem of skills for the future?
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The steel and aluminum tariffs do not involve manufacturing, per se. They involve basic raw material commodities, which are used as inputs to manufacturing.
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2 million manufacturing jobs will go unfilled for a simple reason- the employers will not pay a premium for a skilled worker. In Germany, workers are trained by the company and can expect long term employment along with the respect due a skilled worker. Here, companies prefer a worker to gain skills on their own, and then poach those workers from competitors. Even so, they are not willing to pay up for these skills. Hence the unfilled jobs. It's not lazy workers, it's lazy employers.
In the industries of the future, as they are portrayed, the "gig" economy is the new way of using workers without making a commitment. Ask anyone in the video game industry about job security.
As for industries of the past, what could be more ancient and bloated than the business of capital ownership and rent seeking? Banking and the financial industries are ripe for disruption. It may just happen....
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Accounting practice is very poor regarding skilled or valued employees. Their skills, ability and loyalty to the firm are accounted for nowhere on the balance sheet. On the other hand, their salaries and benefits are expenses on the income statement.
If businesses had to take a write off of asset value every time a skilled employee leaves the firm, there would be more effort to retain them.
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"The real problem with last week’s tariffs is that they’re an ad hoc and insufficient ameliorative fix for continuing policy failures that have decimated American manufacturing employment" Your first concern should be no surprise when we have an Administration that has no capacity to consider or process complexity on any level. "Who ever knew that healthcare was so complicated?" The policy failure you lament has to address technological advancements and productivity gains that they have generated. My employer recently invested many millions of dollars in a Midwestern upgrade. Employment of $15-$22 an hour workers increased, but the truly significant pay increases went to those few who were software proficient and could manage and troubleshoot systems. Education and training, hardly priorities for Republican donor class and their congressional minions, is a very critical policy issue.
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It is over-simplistic to believe that foreign steel and aluminum producers will raise their prices by the amount of the tariff. Competitive conditions in the US market may require those producers to effectively lower their prices to absorb some or all of the tariff charge. But to the extent these imports continue, they provide the Treasury with a source of revenue.
Back in the 19th century, before a federal income tax, the US Treasury received the bulk of its revenue from tariffs and excise taxes. While we will never go back to those days, that era coincided with the industrialization of our economy. Our liberal trade policy stems from the post World War 2 era, when, but for ourselves, the world's productive capacity and economies were in ruins. Now, over 70 years later, we can no longer afford to be a sponge, absorbing every other country's excess capacity.
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At a time of rapid industrialization, rising employment, and more purchasing power for workers, tariffs made sense.
Those conditions do not exist today. Progress in industrialization is towards automation, which destroys jobs rather than creating them, and purchasing power in the working class is as stagnant as their wages.
Trump's tariffs are not protecting the US economy from foreign goods trying to undercut US prices. They are forcing manufacturers and end users to pay more than they have been paying for the same raw materials and products.
Higher prices will decrease demand, which could cost jobs. And what of retaliation by US trading partners?
Imposition is not protection.
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Rapid industrialization in the 19th century also coincided with the industrial revolution, not for nothing. Which do you think is more important: that, or tariffs?
We were never the sponge, and aren't now. If we buy more than we sell, that's because we want to, not as a service to the world economy.
The American promotion of free trade after WW II was in America's interest. First, it created markets for American goods at a time when, as you point out, America represented most of the world's manufacturing capacity. Second, free trade succeeded in engendering peace on a continent previously possessed of two gigantic wars.
The answer to today's challenges is not to be found in Mercantilism. Today's problem is income inequality from wage suppression, deindustrialization, and far too much patent and copyright protection. Bivens correctly suggests we should address the effects and contours of globalization, not try to dam the tide.
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Well Don is wrong most of the time
But in this case happens to be right?
There's no under current of slime
No reasoning, brazenly trite.
So hold your breath, it's under way,
It happens, Josh says, Don is right,
By chance he has made the right play,
If not, it's good night.
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