The obvious problem with
import tariffs is that other companies can impose them, too. In cases where we
need the imports more than they need our exports, their tariffs can be more effective
than ours, and the overall effect on our economy will wipe out whatever
advantages our import tariffs might have given the “protected” industries. That’s
not easy to determine in advance, either. In the case of the oil wars in the
1970s and 1980s, for example, many people assumed that the US could retaliate
for the (seemingly) arbitrary price increases for petroleum with similarly
punitive raises in the price of food products. Unfortunately, it turned out
that we did need oil as much as the OPEC countries needed food – given that we
were using petroleum-based fertilizers, petroleum-fueled farm equipment and
delivery trucks, and oil-burning ships to export the crops in the first place…
In the current iteration of
trade tariffs, it is harder than usual to see these measures as anything other
than political, due as much to the fact that there have been no major changes
in those industries or pricing structures in recent years as to the countries
being targeted by the tariffs. There have been occasional cases of Chinese and
Russian companies dumping cheap steel imports on the US market over the last
decade, but our domestic steel industry has been declining for much longer than
that, and even if those imports were a factor it’s hard to see how erecting
tariffs against Canada or any of the other G7 countries would help. Even if
those countries weren’t going to retaliate for our random imposition of
tariffs, and they’re already doing so, there would still be negative effects
within the US to explain away…
Consider, if you will, the
case reported in March of this year by Reuters, about the impact of the steel
tariff on a company called Novolipetsk Steel PAO, in Mercer County,
Pennsylvania. Novolipetsk Steel imports large amounts of bulk steel from the
company’s mills in Russia, which it then rolls and processes in plants in the
US. The steel tariffs are expected to have a positive effect in the vestigial American
steel industry, with a few idle steel mills being put back into operation, but
it will have a much larger negative impact on companies like Novolipetsk’s US
subsidiaries, wiping out as many as three times the number of jobs created. And
that doesn’t even consider the jobs that will be lost in the American
industries that actually still export goods…
It would be nice to think
that these tariffs were really intended to protect American workers in general,
or even that the effects would be a net positive for the country. As noted
above, trade protectionism is generally not a viable long-term strategy, but if
applied carefully and limited to cases where unfair competition (low-cost
product dumping, for example) really is occurring, it can have some positive
effects. In most cases, however, actual trade negotiations between countries
involved will be more effective and generally more mutually beneficial. In
cases where there are no such trade wars in effect, where the country
attempting to erect the tariffs can’t begin to supply its own needs for the
relevant commodity regardless of import price, or where the administration in
power owes significant favors to people who own companies in the relevant
industry, however, it’s difficult to see these actions as protecting anything
in the public interest…
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