Southbound - Spring 2021

Why are former President Donald Trump’s tariffs still in place?

By Michael Randle, EDITOR

Since assuming office in January, President Joe Biden nor Congress has struck down specific tariffs with our allies in Europe, Asia and North America. Trump’s foolish trade restrictions are still in place as of mid-June.

The former president began a slew of trade wars and tariffs three years ago. He didn’t stop with economic adversaries such as China. He laid down tariffs on economic and military allies in the European Union, Japan and Canada.

One of the worst decisions Trump made (remember, the tariffs were initiated by him, through an executive order, not by Congress) was to levy tariffs on $50 billion worth of imported steel and aluminum and several billion more on lumber. These tariffs have had a dramatic effect on inflation in the U.S., especially in the building industry, specifically housing.

The tariffs on steel and aluminum were designed to punish the Chinese when they flood the U.S. with their cheap metals. But, when Trump expanded the tariffs, he had already levied the restrictions on 90 percent of Chinese imported steel and aluminum. When he furthered the tariffs, he also slapped them on Canada, Mexico, Japan and countries in the EU in the midst of howls by almost all economists.

Project activity in the South in metals increased shortly after Trump’s tariffs were put in place in 2018 and 2019. The domestic metals original equipment manufacturer industry saw a spark as the prices for imported steel and aluminum rose. Steel and aluminum mills expanded and there were several new greenfield announcements by metals plants here in the South. In fact, in calendar year 2018, there were 37 large projects announced in the region meeting or exceeding $30 million and/or 200 jobs. . .the 28-year record of metals projects making our SB&D 100.

However, the expansion of the domestic metals industry as a result of Trump’s tariffs was short-lived. After the 37 large projects in 2018, the number dropped to 19 in 2019 and just 12 in 2020, a collapse of almost 70 percent since the tariffs on metals were put in place.

Short term gains by steel and aluminum plants in the U.S. were smothered by long term losses by smaller companies that use cheaper foreign metals to make things here in the U.S. The higher costs of foreign metals, used by manufacturers of all kinds of things from screws to fenders to dishwashers, were passed along to us, the consumer. I know of one metal fabricator in Alabama who has seen 15 price increases in six months.

In May 2019, the Peterson Institute for International Economics calculated that U.S. consumers and businesses have paid more than $900,000 a year for every job saved or created by Trump’s steel tariffs. The cost is more than 13 times the average salary of a steelworker.

After all, the data does not lie. Those downstream domestic manufacturers/fabricators that make things from foreign metals employ more than 80 times more workers in the U.S. than OEM steel plants employ. So, any data that supported those tariffs was incredibly wrong.

Worse yet, the Trump administration said the tariffs were necessary to safeguard “national security”. . .a slap in the face to our military allies such as the U.K., France, Canada and Japan.

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