Replies

1. Trade war is not a given - The most repeated statement in the collective analysis thus far asserts that an all out trade war will soon follow the implementation of the tariffs. Certainly in theory a nation that faces import tariffs to the United States could retaliate. But variables on a combination of factors would be a more probable cause for such. With steel we are looking specifically at China-whose steel industry is in part supported by government subsidies and a labor market that can be paid pennies on the dollar for the work necessary. This alone prevents the discussion of “free trade” being in any way “fair,” because China is cheating. China is also dependent for the USA to be a recipient of up to 20% of their total export volume. Our steel production suffers as they cheat. But they do not have the total upper hand.

2. Products may not cost more - The assumption that our products will go up significantly in price is a realistic concern. But it is not an absolute given. In the immediate period of implementation according to some of the best estimates the tariffs may raise the purchase price of a new car something close to $45, and a twenty-four pack of beer by .05 cents. But what happens if steel & aluminum production begins to match volume wise the amount we import from other world sources? Economics 101 teaches us that prices drop as inventory surges. If our steel production grows enough we could wipe out the gains mix-minused in our dependence on China.

3. The world doesn’t like it - Of all the pushback this reasoning is among some of the most inane. When the United States does what we have to do to shore up our markets, jobs, workers, and life we have less and less need to care what the world thinks about it. This isn’t hubris, this is independence. To be tied to China’s cheap steel, Saudi Arabia’s oil reserves, and the good graces of the global community fundamentally puts us at a more vulnerable position from an economic & national security standpoint. Like much of the rest of the Trump focus, America needs to shore up America’s capacity for whatever faces us, and being utterly dependent upon others doesn’t move us in that direction.

4. We shouldn’t pick winners & losers - This is an argument normally made when discussing competition between domestic companies here in the USA. Jonathan Hoenig, appearing on Neil Cavuto on Friday, repeatedly invoked this as some sort of determining factor as to why the tariffs should be prevented. But it’s an illegitimate argument. This isn’t picking one steel factory over another and using tax-payer incentives to cause one or the other to succeed. This is a fight for survival between a metal industry that has suffered enormous loss for the better part of multiple decades, and the slave labor of China. The winners in the near term are steel and aluminum workers.

5. The national security consideration - Those that have argued that a trade war is inevitable, seem to also forget the increasingly perilous hair trigger of real war that the globe is constantly on the edge of. If America were to find itself drawn into a conflict with North Korea or Iran, it is likely whatever degree of imports we get from China and Russia would immediately be frozen. Fifteen years ago more than a dozen aluminum smelters were in operation. Today there are only three and the entire capacity of one of those three is necessary just for the military and related technologies. We are more vulnerable than necessary, and increasing domestic production solves this vulnerability.

6. Had to be (as it was) done in the correct sequence - Because of the rapid growth of the economy by rolling back some 2000+ regulations coupled with the very real impact that Trump tax reform is having now is the absolute right time to push for this “leveling of the playing field.” Most Americans will be more likely to accept an increase in the price of their next car by $45 if they know that Americans are benefitting. They are even more so if they have on average $90 more per week appearing in their pay

I understand where you are coming from and I too believe Trumps tax cuts and (the start of) deregulation is welcome and will prove to be beneficial. However a lot of what you say is based on hope and not on proven economic facts and history.

Will a trade war erupt? Most likely it will because countries have in the past, retaliated against tariffs. There is a chance they may not this time but I wouldn't hold my breath. Besides, the major steel/aluminum exporters are Brazil, Canada & Mexico. Chinese steel is less that 3% of our imparts. Even with the Chinese "threat" our steel production was up last year as was profits for US Steel companies. As a side note- Should other countries have slapped additional tariffs on GM productions when Obama bailed them out in 2009? It is/was government subsidies that enabled them to sell their product at a price lower than Honda or Toyota?

Products will cost more - there is just no way around that. When you eliminate cheaper alternatives prices have to rise. That's just an empirical truth.

We definitely are picking winners and losers. Why steel? Why not cars? Computers? The point is, it's not the free market (i.e. the American consumer) that determines the winner and loser.

Speak for yourself when you say that Americans will pay more because it's made in America. The average American consumer sure doesn't feel that way based on the products that are being purchased. I'll speak for myself and say I go for the best value (doesn't necessarily mean the cheapest) and if that means buying from other countries then so be it. If you want my hard earned dollars, then make a better product.

The most disappointing thing to me is that this short sighted policy can very well undo all of President Trump's economic accomplishments.