He instituted a steel tarriff to protect American steel companies that were going bankrupt.
The alternative is to bring in cheap imports that run American companies out of business. The correct thinking was there - also if we put tarriff’s on Chinese goods, all things from China would be more expensive with the idea of putting American workers in manufacturing jobs. Yes, we’d have to pay higher prices for American goods but theoretically would raise wages all around. Who knows the answer?
“The temporary tariffs of 8–30% were originally scheduled to remain in effect until 2005. They were imposed to give U.S. steel makers protection from what a U.S. probe determined was a detrimental surge in steel imports. More than 30 steel makers had declared bankruptcy in recent years. Steel producers had originally sought up to a 40% tariff. Canada and Mexico were exempt from the tariffs because of penalties the United States would face under the North American Free Trade Agreement (NAFTA). Additionally, some developing countries such as Argentina, Thailand, and Turkey were also exempt. The typical steel tariff at the time was usually between zero and one percent, making the 8-30% rates seem exceptionally high. These rates, though, are comparable to the standard permanent U.S. tariff rates on many kinds of clothes and shoes.” This is rom Wikipedia 2002 United States Steel Tarriff
Yes,many mills were declaring bankruptcy,they had failed to upgrade their process to continuous-cast.The offshore mills also had much better quality,particularly cold rolled product.Their were/are many more employees working in steel parts production plants,than were employed in steel making(mills) plants.
Those that could (steel parts mfg) moved operations to Mexico.Those who couldn’t stayed here,and got the double whammy of higher steel prices and increased compition from parts Mfg in Mexico.Thank you very much,may I have another.
That’s fallacious economic thinking. Anytime you analyze an economic policy, you need to ask, And then what? For every policy, there are primary effects (which are “seen); but there are also secondary, and tertiary, and so on effects (which unfortunately are “unseen”).
A steel tariff protects steel jobs. Those saved steel jobs are *seen*; so you say, “Obviously, this policy saved jobs.”
But what is unseen? How about an American manufacturer, operating on paper-thin margins, for whom steel is a primary input? He now has to pay above-free-market prices for his inputs and then cover those costs by increasing his prices, putting him at a disadvantage to his international competitors, who can purchase steel for less. What happens to that American manufacturer?
That American manufacturer likely goes out of business, and jobs are lost. But because that company wasn’t an “industry,” you never read about those lost jobs the Wall Street Journal. You didn’t save any jobs; you simply affected which jobs would be lost.
Put it this way: I’m sure you’d agree that our 35% corporate tax rate puts U.S. manufacturers at a huge disadvantage to their foreign competitors, because those corporate taxes are costs they need to cover by increasing their prices. So why would you think that artificially increasing the cost of a U.S. manufacturer’s raw materials would not put him at an equal disadvantage?