As it turns out, my short comments on the Trump tariffs are evolving into a rather long essay that I must save for another day. But for now, let me say this. There are no easy answers, as one man’s lower prices are another man’s lost job.
I understand the frustration of those who feel that “our jobs” have been taken, because they can look around and see factories closed. It is easy to blame China, but China sends us less than 2% of our steel imports. And the Chinese are trying to shed 1.5 million jobs from their own steel industry.
Think about that figure in the context of 140,000 total jobs in the US steel industry. That’s 140,000 US steel jobs versus the 6 million jobs in companies that actually buy and process steel and aluminum, which will now cost more, with the price increases passed straight through to consumers.
(The single most important problem we need to solve with China – if we really want to do something significant – is to deal with the massive theft of US and European intellectual property. But that is a much more difficult issue than can addressed by simply imposing tariffs.)
If the US imposes the tariffs Trump has outlined, we will face potentially asymmetric effects as politicians in other countries feel the need to respond and to levy tariffs on our agricultural and technology products. You will be hard-pressed to find a serious economist of any stripe or persuasion that thinks a trade war is easy or winnable. But that doesn’t speak to the angst of the worker who lost his job. Look at this headline from Bloomberg this morning. We are going to be seeing lots more like this.
The amount of steel that China ships to the US means nothing to China. But the symbolism of the tariffs offers Chinese leaders an opportunity to posture in front of their own citizens. Ditto for European leaders. Will cooler heads prevail? Count me among those who are very concerned about the potential for massive overreaction on the part of politicians in a world where populism is burgeoning.
