Entries Tagged 'Tariffs' ↓


March 12th , 2018
Nearly everyone and his or her brother and sister have come out against Trump’s tariffs on steel and aluminum this week! 25 percent on steel and 10 percent on aluminum.

I have read some things I didn’t know about tariffs on steel and aluminum. Most of these things came from an article in The Conversation titled “George W. Bush tried steel tariffs. It didn’t work” by William Hauk, Associate Professor of Economics at one of my alma maters, the University of South Carolina in Columbia.

Here are some facts I didn’t know:

Trade protection transfers money from a good’s consumers to its producers. I talked about this in February in my post, “Trump’s Trade and Infrastructure Weaknesses“. But what I didn’t know is it really matters who the consumers of the good being tariffed are!

Americans are the one’s who get taxed on imports we wish to buy when trade wars start.

If we mean consumers or investors like you and I, a tariff might have little impact because there are so many of us our that individual shares of the tariffs might be quite low.

On the other hand, if the consumers are giant auto companies and the construction industry, the concentration of wealth within these two sectors is so great, they have far more lobbying power in Congress than we individual investors or the steel industry do.

Thus, happpened when George W. Bush imposed tariffs of up to 30% on imports of steel to the US. back in 2002 the auto and construction industries convinced the National Association of Manufacturers to come out against the tariffs. Lawsuits were threatened.

By the time President Bush backed off of those tariffs in 2003, 200,000 employees of other US manufacturing companies had lost their jobs, while the entire steel industry consisted of 197,00 workers. All that resulted was a huge displacement of American workers from one location to another, a topic I’ll cover in my next post.

So now it’s even worse. According to the Council on Foreign Relations, there are roughly 140,000 people employed in the steel industry.

A TV news commenter I watched this weekend pointed to technological advances as the cause for the 25% loss of steel industry jobs over the past 15 years. This has a ring of truth to it. Others have blamed the industry for itself profits on dividend payouts and buyouts rather than making use of it’s excess capacity to output more steel.

Whatever the cause, it is likely that President Trump’s steel tariffs will meet an even worse fate than Bush’s and will perhaps far more enmity among our trade partners—causing them to retaliate by slapping export taxes on goods we sell them.

This is particularly true because Canada provides the U.S. President Trump’s willingness to let Canada off the hook for steel tariffs.

According to Professor Hauk we now import a fifth of the US with 63% of the aluminum we use. Our own aluminum industry is now largely defunct with only a handful of plants in Washington State, Kentucky and New York State remaining open.

A reason I hadn’t heard before

So why would the President impose a one-sided deal that is so likely to backfire and cause a huge trade war along with even more dislocation of workers within the other manufacturing industries within our economy?

Lots of news commentators have been claiming it is because Donald Trump wants to create any distraction he can from the current investigations of collusion with Russia and other crimes by his campaign team and possibly himself.

Is President Trump that desperate and ignorant of economics? Perhaps not. 

Professor Hauk suggests that Trump’s tariffs were imposed because of steel’s “political advantages”.

Steel producers are mostly located in Pennsylvania and Ohio. Like Florida, with its heavy protective tariffs on sugar, these states are the most important “swing states” in our Presidential elections.

Given President Trump’s campaigning this weekend in Pennsylvania for a Republican candidate in the 2018 Congressional elections where Trump mostly bragged about himself, that idea doesn’t seem quite so far fetched to me.

After all Trump beat Clinton in the 2016 Presidential election in Pennsylvania by only 44,294 votes and in Ohio by 446,841 votes. Will Trump’s tariffs enable him to swing the vote his way again in 2020? or even 2024?


Back in the  Spring 2019 issue of my alumni magazine from the University of Wisconsin-Madison printed a brief article titled, “What’s the Tiff About Tariffs?

At the same time a British BBC headline on March 6th 2019 alleged that Trump Dealt Blow as US deficit Jumps Higher.

U.W. Economics professor, Menzie Chinn, alleged that Trump’s tariffs are failing to protect domestic U.S. industries from foreign competition.

My previous posts on Brucenomics, were the earliest on December 2016, “The Emperor Has No Clothes,” and later on in February 2018 “Trumps’ Trade and Infrastructure Weaknesses”.

Previously in the spring of 2018, when I first read about President Trump’s tariffs on Canadian aluminum and steel, I worried his actions might well drive the U.S. into the arms of oligarch-owned companies in Russia. Formerly, the US had bought the bulk of those two raw materials from Canada.

U.W.’s alumni magazine, On Wisconsin that year 2019 confirmed my fears.

Professor Chinn and other experts note that unintended consequences have negatively affected companies which depend upon the pricing of aluminum and steel, particularly companies in the U.S. construction industry.

Professor Chinn’s sentiments about these two raw materials are echoed in a recent article from the Council on Foreign Relations on January 28, 2019, “Trump’s Tariffs are Killing American Steel”

Professor Chinn anticipates that there will be negative outcomes for U.S. workers from President Trump’s actions, a concern I brought up in 2016 after Trump won the election.

That’s because after President Trump imposed tariffs on their goods, and it made other countries retaliate against the U.S.

Trump’s reliance on rarely-used trade laws have created short- and long-term uncertainty in several markets. This has created a reluctance for lenders to lend and US domestic companies to expand.

Also because long supply chains are common in manufacturing industries (like the auto industry, for example).

In On Wisconsin, UW’s alumni magazine, Professor Chinn is quoted as saying he thinks there is a “misunderstanding”in Trump’s mind about what tariff protection does”.

That’s putting things nicely! I don’t think Trump deserves such kindness. I’m still worried about who we are going to buy our steel and aluminum from!

Will Russian oligarchs, Oleg Deripaska, primary investor in the world’s largest aluminum producer, RUSAL, and Alexander Abramov, head of Russia’s largest steel company, Everaz, ultimately be the beneficiaries of Trump’s tariff wars—while American farmers, manufacturers and consumers continue to bear the brunt of Trump’s disastrous economic policies in the future?

And it isn’t just American steel, aluminum, construction and auto industries that are being so severely damaged either! I worry that American farmers and consumers are also beginning to find themselves in dire straits.

This week, where I live, we’ve already seen a $1 increase in the price for a single avocado after Trump merely threatened to close the U.S. Border with Mexico.

While he has stood down for now, Donald Trump is still holding the “sword of Damocles” over our heads— threatening to shut down billions of dollars in trade at our Southern border right before the 2020 election.

Our President’s penchant for regaling his followers with his “poor me” and “poor us” stories of persecution of himself and our country by scores of  “bad guy” enemies both here and abroad is leading our country straight into big, big trouble—way before 2020!


If you saw the Trump/Biden Debate you heard Donald J. Trump say he’d bring back tariffs.

Or you may have heard this at one of his rallies and thought he was going to make money on tariffs


The only things Trump’s tariffs brought about while the former President was in office

in the last few centuries were massive losses while the US created higher and higher deficits.

Trump’s tariff taxes in 2018 and 2019 led to massive losses of American jobs and inflation.

Here are three stories that I posted on in Brucenomics in those centuries.

Back then China and the US  largely taxed each other as we exchanged tariffs

Others before Donald had failed as well. And the expert Economists showed  reasons why.

Trump’s trade tariff wars led to the US becoming a debtor nation. Americans had to pay the tariffs

And Donald Trump lost money because Donald spent more than the former President made from his tariffs.