Friday, March 02, 2018
President Trump just raised the price of cars, beer, vacations, and apartment rentals. That's not what most headlines say. Those headlines say that Trump will raise tariffs on steel and aluminum. Higher tariffs mean higher prices for those inputs -- and therefore for the products ultimately made from those outputs. Automotive and construction top the largest users of steel in the United States. Aluminum is heavily used to make airplanes, cars and trucks, and beverage containers, and also in construction.
The last time the U.S. imposed steel tariffs, back in 2002, the project was abandoned after 20 months. A 2003 report commissioned by industries that consumed steel estimated that the Bush steel tariffs cost in excess of 200,000 jobs -- or more than the total number of people then employed in the entire steel industry at the time.
This time the cost-benefit ratio is likely to skew much worse. There are fewer steel jobs to protect this time. Auto sales growth has stalled. The first warnings of consumer price inflation are appearing.
Admin's note: Participants in this discussion must follow the site's moderation policy. Profanity will be filtered. Abusive conduct is not allowed.