Q: How’s that? A: Very poorly.
They’re stealing our jobs, not. The loss of employment is due to automation, the same as with manufacturing in general.
The Truth About Steel Tariffs
Trump’s first term steel tariffs hurt consumers and manufacturers. But Trump is doubling down despite objections from the UAW.
Please consider the Wall Street Journal report The Truth About Trump’s Steel Tariffs
President Trump gave the economy another jolt of uncertainty on Monday when he signed executive orders imposing 25% tariffs on all steel and aluminum imports. His advisers say these tariffs are economically “strategic” rather than a bargaining chip for some other goal. Is the strategy to harm U.S. manufacturers and workers?
That’s what his first-term tariffs did, and it’s worth revisiting the damage of that blunder as he threatens to repeat it. In March 2018, Mr. Trump announced 25% tariffs on steel and 10% on aluminum under the pretext of protecting national security. Then, as now, most U.S. metal imports came from allies including Canada, Mexico, Europe, South Korea and Japan.
Mr. Trump said tariffs were needed to boost domestic steel and aluminum production. But U.S. production was already increasing amid a surge in capital investment unleashed by his deregulation and 2017 tax reform. U.S. steel capacity utilization climbed to 78.5% in March 2018 from 72.4% in December 2016.
The real goal of U.S. steel and aluminum companies that wanted the tariffs was to boost their bottom lines. Raising prices on foreign imports allowed them to charge more. The price was paid by U.S. secondary metal producers and downstream manufacturers.
Consider Mid-Continent Steel and Wire, which produced roughly half of the nails made in the U.S. After the steel tariffs took effect, its sales plunged by more than half, causing it to lay off 80 workers. Another 120 quit because they worried its Missouri factory might close. After this damage, the Commerce Department granted the company a tariff exemption.
Auto makers were another casualty. Ford Motor said tariffs subtracted $750 million from its bottom line in 2018, which reduced profit-sharing bonuses for each of its workers by $750. GM said the tariffs dented its profits by some $1 billion, equal to the pay of more than 10,000 employees.
The tariffs also made U.S. manufacturers less globally competitive and prompted retaliation that hurt American businesses. Canada imposed tariffs on $12.8 billion in U.S. products, including 25% on steel and 10% on aluminum. Harley-Davidson shifted some production to Thailand to avoid Europe’s retaliatory tariffs on U.S. motorbikes.
Retaliation caused Mr. Trump to exempt Canada and Mexico as part of the renegotiated Nafta deal. His Administration also struck deals with some countries that exempted a certain amount of their steel and aluminum exports.
Even so, the tariffs created uncertainty for U.S. manufacturers and boomeranged on steel and aluminum companies. Employment in durable goods manufacturing began to decline in early 2019, which reduced demand for steel and aluminum. Employment in fabricated metals manufacturing that used steel and aluminum plunged and is still some 35,000 lower than when the tariffs took effect.
This is political rent-seeking at its most brazen, and it benefits the few at the expense of the many. None of this matters to Mr. Trump, whose dogmatic views on tariffs can’t be turned by evidence. But we thought our readers would like to know the rest of the story.
The Rest of the Story
I already knew the rest of the story.
Steel tariffs were a disaster and we are headed for a repeat performance.
I have written a about steel a dozen times. Here are some of them.
March 18, 2018: Pandora’s Box: Another Look at Steel Tariffs
Trump’s “national security” angle is an obvious lie. Most US steel imports come from allies, including Canada. Most aluminum imports come from Canada.
Not only do the steel tariffs harm US manufacturers that consume steel, they also open the door to other countries imposing tariffs on the US in the name of “national security”.
Cascading Pain
February 4, 2020: Trump’s Steel Tariffs Start Cascade of Downstream Pain
Tweet Thread by Chad P. Bown.
- On Friday night, Trump admitted that US companies whose costs he has raised – by imposing tariffs on the metals they need – are no longer competitive with foreign firms. Because of his policies, they too must now be shielded from trade…
- Trump announced he was expanding the product coverage of his national security tariffs on STEEL and ALUMINUM to include “derivative” goods that use steel and aluminum as an input – eg, steel nails or aluminum bumpers.
- Imports of those “derivative” products have increased, in part because US companies have had their COSTS go up because of Trump’s tariffs on steel and aluminum. In Econ 101 terms, the cost increase shifts the US supply curve (DS) to the LEFT. That makes imports INCREASE.
- Economists call this “cascading protection.” Trump’s tariffs on inputs lead to higher costs for US companies making the downstream products, and this results in a clamoring for ADDITIONAL trade protection for those products. This was all completely predictable.
Trump’s Steel Tariffs Failed Miserably, Biden Should Scrap Them
May 23, 2021: Trump’s Steel Tariffs Failed Miserably, Biden Should Scrap Them
Historic Shortages
Over 300 US manufacturers sent a Letter to Biden this month, protesting scarce metal materials and unsustainable prices.
Manufacturers in the United States currently face historic shortages of readily available and globally priced steel and aluminum products at a time when the country is relying on our sector to help drive the economy and overcome the unprecedented challenges caused by the COVID-19 pandemic.
The temporary increase of 4,800 steel industry jobs in the United States since 2018 recorded by the Bureau of Labor Statistics is not directly attributable to the Section 232 tariffs and is dwarfed by the 6.2 million American manufacturing jobs at risk in steel- and aluminum-using industries. On some products, American businesses pay 40 percent more for similar steel compared to their European counterparts — an unsustainable situation for any U.S. employer.
Mr. President, we support a strong and thriving steel and aluminum industry, but producers today simply cannot meet demand and the tariffs create a tax that only manufacturers in the U.S. must pay.
National Security Ruse
Trump labeled steel production a national security item. He said the same thing about Volkswagen car imports.
His National Security Tariff Ruse was so bad the Pentagon would not even go along.
In an undated memo released to the media, Defense Secretary Jim Mattis wrote that “imports of foreign steel and aluminum based on unfair trading practices impair the national security.” But he added that, “As noted in both Section 232 reports, however, the U.S. military requirements for steel and aluminum each only represent about three percent of U.S. production. Therefore, DoD does not believe that the findings in the reports impact the ability of DoD programs to acquire the steel or aluminum necessary to meet national defense requirements.”
Tariffs Kill High-Paying American Jobs
April 20, 2018: Fed Study: “Tariffs Kill High-Paying American Manufacturing Jobs and Businesses”
On occasion, Fed economists get things correct even if the voting members get things backward.
For example, New York Fed economists ask and answer the question: Will New Steel Tariffs Protect U.S. Jobs?
Firms that are dependent on steel and aluminum inputs—both importers and non-importers—will face higher prices. Downstream domestic producers will have to increase their prices or reduce markups, which makes them uncompetitive relative to competing imports. Similarly, U.S. exporters that need steel or steel-related inputs will face higher input costs and will have to either increase export prices or reduce their profit margins. These effects could lead to lower employment in these steel-intensive industries and possibly plant shut downs. Researchers estimate that the number of jobs in steel-intensive industries, which they define as industries with steel inputs of at least 5 percent of total, is around 2 million—for example, manufacturers of auto parts, motorcycles, and household appliances.
It is in steel-related industries where jobs are likely to be at risk. To get a sense of the magnitude of the employment effects, we can turn to a similar episode in 2002 when President Bush introduced steel tariffs of up to 30 percent, although under different legislation. Studies of these tariffs found evidence of higher steel prices and job losses of 200,000 across the United States. This number is higher than the total number of workers employed by U.S. steel producers (187,500) at the time.
My lead chart confirms the Fed analysis.
Trump to Impose 25 Percent Tariffs on Steel and Aluminum
On February 10, 2025 I commented Trump to Impose 25 Percent Tariffs on Steel and Aluminum, Expect Higher Prices
All US consumers of steel and aluminum will pay higher prices, especially the automakers.
The reinstitution of aluminum and steel tariffs across the board is in direct violation of Trump’s loudly bragged USMCA “Best Trade Deal in History”.
Trump has proven ability to repeatedly make the same mistakes, needlessly taunt allies, and violate his own treaties.
No good, and lots of bad will come from this, just as happened before.
One economic illiterate defended the tariffs, allegedly to keep jobs.
Of which there are 84,000 direct jobs.
For the benefit of those 84,000 people, another 335 million people (pop of US) will overpay for all goods and services in need of steel.
Not even the UAW supports these tariffs. That’s 370,000 workers.
There are many small parts manufacturers who will go out of business.
As my post shows, tariffs increase costs and reduce net jobs. Tariffs are economic idiocy.
Economic illiterates, those with TDS Type II, and the 84,000 screaming for protection (because the US is the highest cost producer in the world) are the only ones screaming to pay more to get less.
I think the problem here is people can’t see the big picture. The steel job “losses” may look devastating because if a town is entirely dependent on steel mills then it will seem like an apocalypse when they shut down.
And while an abandoned/devastated town is bad in of itself, it leaves hidden the many benefits for millions of people elsewhere.
So we get a news clip of “rust belt America” but we don’t get to see prosperity America elsewhere. Ultimately, this ties into net migration of people from one state to another. And while it’s easy to blame “blue” state policies or “red” ones for that matter it’s really a matter of the free market dictating where jobs and prosperity go.
The battle between Red and Blue will be settled when Trump will win and everybody will benefit !
UAW boss supported Kamala. UAW workers voted for Trump.
I can’t speak for all states but in NJ and Florida certain industries will come to a screeching halt if Trump is successful in deporting all illegal aliens. The relevance is that the skills and work ethic has been bred out of most of the last two generations. Think of this in the context of losing an industry like steel that not only depends on skilled workers but enormous capital investment. How would we ever restart steel production a generation or two after all the mills close because of obsolescence? We cannot stand by and let that industry fail. Trumps tariffs from his first term allowed the industry to invest in modernizing some of their mills but there is much more to be done.
Talking to a vintner in the Texas Hill Country, he said how the law forced him to hire Usonians, rather than the Mexican family of temporary workers who come every harvest season to work in his vineyards. The Usonians ended up damaging some vines and for the next harvest seasons he’d rather pay those he was forced to hire to stay in hotel rooms away from his vines.
I had to look it up. First time I’ve heard ‘Usonian’ to describe a group of people but I get why you did it and it makes sense. I could have used the term in my comment above…””work ethic has been bred out of most (Usonians) of the last 2 generations.
Therefore, yes, they are stealing our jobs. They are the steelers and we are everyone else.
In his first term as President, Trump promised to revive and support the US coal industry. It turned out to be a disaster for the coal industry.
https://phys.org/news/2019-05-coal-power-trump.amp
Perhaps he will do a better job of supporting US steel, aluminum, and automotive industries. Only time will tell.
I am watching it all unfold with great interest.
I personally would prefer an across the board tariff on everything imported into this country and an elimination of the IRS. Capitation taxes are unconstitutional only tariff and excise taxes are allowed in the Constitution. A while back when I ran for office I did the math and a 5% tariff would have replaced revenue generated. With DOGE cutting the waste, it may still work. No citizen should be forced to give an annual accounting of their finances and bed partner to their servant government.
Direct taxes are constitutional but they are subject to the rule of apportionment by population.
Article I, Section 9, Clause 4:
No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or enumeration herein before directed to be taken.
Under Article I, Section 9, Clause 4 and Article I, Section 2, Clause 3 of the Constitution, direct taxes are subject to the rule of apportionment. Under the rule of apportionment, Congress sets the total amount to be raised by a direct tax, then divides that amount among the states according to each state’s population. Thus, a state with one-twentieth of the Nation’s population would be responsible for one-twentieth of the total amount of direct tax, without regard to that state’s income or wealth levels
An 1861 federal tax on real property illustrates how the rule of apportionment operates. Congress enacted a direct tax of $20 million. After apportioning the direct tax among the states, territories, and the District of Columbia, the State of New York was liable for the largest portion of the tax, $2,603,918.67, and the Territory of Dakota was liable for the least, $3,241.33.
Let the UAW workers and all other folks who voted for Trump taste the consequences of their choices. Ignorant choices have repercussions. Economic illiteracy, and illiteracy in general, has consequences.
There’s economic illiteracy, and then there’s
In the 60’s GM was today NVDA. GM was a globalists. Ribicoff and Ralph
Nader destroyed GM and Detroit. US steel supplied steel to Detroit. It takes a decade for cancer to grow: US Steel was hollowed up in the early 1980’s. In the early 60’s the steel workers went on strike. The global industrial production plunged. JFK settled with them. When US Steel ceo Roger Blough raised prices by 3% whiskey Joe son JFK started ranting: Blough stabbed me in the back. He and his gang forced Blough to rescind the 3%, but after a few months he raised them again: to cover payroll, to expand and to improve plants. The globalist dems are Anti industries for 60 years. Trump rejuvenated US industries along with highly skilled workers, expanding USW union workers.
Why are you looking at a chart that provides a ‘production index’?
The tonage of what we used to produce in the
70-80’s: Around 11k thousand tons.
90-00’s: Around 8k thousand tons.
10-20’s: Around 7.5k thousand tons.
Right now: Around 7k Thousand tons.
Manufacturing and production has been gutted in this nation Mike. It’s really not that hard to look up, unless you want to look up things that agree with your opinion.
How did I know how stupid your chart was? I’m a welder/fabricator and I know how much of our steel and aluminum is imported. A ton is imported, and it is always significantly cheaper than what we can make here. Because of regulations and worker protections.
We need tariffs to put the cost of regulations and worker protections on the public, else get rid of them and make production cheaper.
Next, Mike, you should look up our steel imports versus exports.
Tell me about how it’s not a massive deficit in trade, and our steel industry is doing great.
You support tariffs allegedly to keep jobs.
Of which there are 84,000.
For the benefit of 84,000 people, another 335 million people will overpay for all goods and services in need of steel.
And not even the UAW supports these tariffs. That 370,000 workers.
There are small parts manufacturers who will go out of business.
So, it is obvious that you are the one who cannot think clearly.
Tariffs are not a tax on the public. Tariffs are a transfer of the cost of regulations and worker protections on the public through higher costs of production by removing the cheap imports that avoid those costs.
Instead of putting the costs of the regulations and worker protections on the public for the last 50 plus years, we have instead allowed the destruction of the manufacturing and production of our nation. The only way our nation survives is off of cheap imports maintained through deficit spending. This is and always has been UNSUSTAINABLE.
I can think clearly, I simply think realistically and I also think ahead. The real wealth of any nation is in it’s production and manufacturing. When our currency fails, the real pain will begin. It is inevitable. Our debt growth follows an exponential growth curve.
We have an entire nation that cannot grasp that we need to deal with the pain before we can really start doing better. You people have had your free lunch for decades and now you think it’s going to last forever. Typical.
No Mike, I support Steel and Aluminum for the reason Trump gave. It is imperative that the US has a viable industry for national security reasons. Furthermore, the trillion dollar ‘Infrastructure bill’ besides modernization, was intended to support American workers, not Canada, China, Japan, Brazil or Europe. What do you have to say about the other industries we lost like pharmaceuticals and chips? Are they not national security as well? Or are you just picking on the blue collar guys?
Trump is increasingly acting like the Roman emperor Caligula. From Greenland, Gaza, Kennedy Center, Musk to tariffs, it all looks like completely capricious and irrational thinking. I am waiting for him to nominate a horse to a Cabinet position.
Good article Mish.. thank you for sharing.. You are absolutely right..
Tariffs are a TAX
the first 8 comments appear to be nonsense
The best way to settle this debate is for Trump to go full-on tariffs on every single thing we import into the US. Surely that will spark the “Golden Age” of US manufacturing, create jobs, pay down the deficit and debt, and make us all rich! Just like he said they would.
And if it doesn’t, maybe we will learn something from this experiment.
My fear is that Trump will wimp out again and again as his tariff deadlines near. Let’s see if he follows through with his steel and aluminum tariffs.
Meanwhile, I see that US refiners are refusing Mexican oil now because it’s water content has increased from 1% to 6% recently. So they are turning to more oil from Canada and Columbia.
PapaDave, the golden age is nearly upon us. Tomorrow I will show how this all works mathematically.
Looking forward to it Mish!
Meanwhile, Trump is saying that his 25% general tariff on all imports from Canada will be on top of the 25% on steel and aluminum; so possibly 50% tariffs on steel and aluminum in March! Woohoo!
And to top it off, he is considering 50% to 100% tariffs on cars made in Canada. Now we are talking!
This is going to create so many jobs in the US, and lower prices dramatically!
Golden Age, here we come!
It’s all a dog and pony show, or should I say “tariffs and immigrant” show that’s all smoke and mirrors. Sound bites, news clips, “acting tough” and then accomplishing nothing. But the cult is eating it up so why change anything?
https://www.newsweek.com/immigrant-deportations-removals-trump-biden-obama-compared-chart-2026835
The only thing to figure out here is whether Trump is being an economically illiterate and vengeful buffoon, or if this is some dastardly plan to enrich himself, as was the TRUMP coin off which his family made over $100MM in transaction fees, while retail investors lost $2BB+.
Making the imports more expensive allows certain US companies to raise prices and increase their profit margins. A few win, most lose.
As is proper.
They weren’t investors. They were bribers and a handful of simps we hadn’t completely monetized yet.
Canucs get … Rhymes with Canuc …
Rhymes with “Canuck bard in the fruitybowl, oh banal newb.”
The show must go on.
So long as you tell Trump that, you’re right.
He’s been living in his own Truman Show since his dad died.