Steel Tariffs Prove To Have Been A Very Bad Idea
August 15, 2002
Many economists forecasted serious economic dislocations would arise from the Bush administration's steel tariffs imposed in March. Now the proof is in. Steel prices have risen by 30 percent to 50 percent. And at an aptly named hearing, "Unintended Consequences of Increased Steel Tariffs on American Manufacturers" before the House Small Business Committee, owners of small steel-using businesses outlined woes caused by the tariffs -- and the threats posed to their continued operations.
- They reported they are unable to obtain the kinds of steel they need to manufacture their products.
- The shortages are forcing them to lay off workers -- many of whom, ironically, are members of the United Steelworkers of America.
- They face steel price hikes of up to 54 percent -- meaning not only higher prices for American consumers, but also less competitive prices overseas on the products they make for export.
- Economist Laura Baughman testified that eight times as many jobs will be lost in steel-consuming businesses as may be saved among steel producers.
She and Joseph Francois of the Consuming Industries Trade Action Association estimated that 5,000 to 9,000 steel industry jobs might be saved by the tariffs -- but at a cost of around 36,000 to 74,000 other jobs. They estimate the economic loss of each job saved in steel manufacture at more than $400,000.
As it that weren't bad enough, we've angered our global trading partners and undercut our arguments for freer world trade.
Source: Pete du Pont (National Center for Policy Analysis), "Paying a Price for Steel Tariffs," Washington Times, August 15, 2002.
Browse more articles on Tax and Spending Issues