Steel tariffs to save a few jobs doesn't work if steel tariffs cost more jobs elsewhere
The Obama Administration has decided to impost steel tariffs over in the US. This is because, horrors, foreign companies were willing to sell steel to US consumers at prices they wanted to pay. The argument is that this will save jobs in the steel industry. And quite possibly it will: On Friday the Commerce Department imposed duties on hundreds of millions of dollars in annual trade with South Korea and eight other countries, including India, Vietnam, Turkey and Taiwan. As punishment for allegedly dumping steel into the U.S. market at unfair low prices, South Korea's exporters will face tariffs of about 10% to 16%, while smaller players from other countries face rates up to 118%.
As we all know, if some foreign wallah turns up offering you a deal, even if that deal has been funded by gouging foreign taxpayers, the correct answer is to say "Thank you , may I have some more?" But such is the power of the steel unions in the US that the authorities have caved and made steel more expensive for all Americans to please that one interest group.
If only people remembered a bit more of history, eh? Bush also imposed steel tariffs and the effects were:
The Consuming Industries Trade Action Coalition (CITAC) Foundation requested a formal examination of the impact of higher steel costs on American steel-consuming industries,1 and in particular, a quantification of employment losses at those companies. This study employed straight-forward and widelyaccepted regression analysis using a variety of price and employment data to maximize the reliability of the results.2 We found that: • 200,000 Americans lost their jobs to higher steel prices during 2002. These lost jobs represent approximately $4 billion in lost wages from February to November 2002.3 • One out of four (50,000) of these job losses occurred in the metal manufacturing, machinery and equipment and transportation equipment and parts sectors. • Job losses escalated steadily over 2002, peaking in November (at 202,000 jobs), and slightly declining to 197,000 jobs in December.4 • More American workers lost their jobs in 2002 to higher steel prices than the total number employed by the U.S. steel industry itself (187,500 Americans were employed by U.S. steel producers in December 2002).
That's not exactly an impartial report, this is true. But losing more jobs as a result of tariffs than there are in the entire industry you're supposedly protecting doesn't sound like a very good idea really.
Probably better to have let the steel industry shed a few jobs, offer retraining to those affected and allow the rest of the economy to expand off that cheap steel being subsidised, if subsidies there really were, by Johnny Foreigner.