New York, NY — President Donald Trump’s move to impose tariffs on imported steel is welcome news for an industry that employs over 140,000 Americans. Neglected for over a decade by the Obama administration, a series of extremely unfair trade deals decimated the U.S. steel industry, once considered one of the most powerful in the world. Steel isn’t just used to make cars, it also goes into our aircraft carriers, our bridges and our buildings. To pretend that steel is just another import like clothing, is to live in a state of denial and delusion. Which is exactly what former president Obama did as he stood by and assisted countries like China and Germany in the systematic dismantling of the U.S. steel industry.
President Trump has vowed to impose 25 percent tariffs next week on imported steel and 10 percent on aluminum, which he correctly identifies as a threat to America’s national security. One of the first few countries which Germany invaded during the Second World War was Sweden, to secure its iron ore deposits – a key ingredient in manufacturing steel to feed the German war machine. In times of crisis, when America needs to ramp up the manufacture of infrastructure or war material, the steel industry can’t be revived in a matter of months, it takes years to bring steel production back up to speed, which is why President Trump’s move is prescient. With global tensions rising, it’s better to prepare the country for the unlikely probability of military confrontation than to sit back and hope that it never happens.
By building barriers to imported metal, the tariffs would allow U.S. steel companies to expand production and than they could without foreign steel companies dumping the resource in the U.S. market. In countries like China, poor quality steel is manufactured in unsafe and sometimes inhumane conditions, with workers poorly paid and made to work unsafe hours, with limited recourse or access to safety. The unsavory industrial practices of the Chinese have allowed them to manufacture steel at impossibly low prices and flood the global market with that steel. By not imposing tariffs, the U.S. would indirectly be sanctioning the continuation of such abusive practices.
The tariffs and the prospect they will ignite a conflict with America’s trading partners rattled Wall Street. On Thursday, the Dow Jones industrial average plunged 420 points on Thursday, but the market stabilized when it recognized that President Trump’s measures would overall be good for the U.S. economy and the strength of America. On Friday the market settled and only shed 0.29 percent, suggesting that traders were not buying into the media hype of doom and gloom because of the tariffs.
Commerce Secretary Wilbur Ross went on CNBC to dismiss as overblown any fears that steel-consuming companies stand to suffer in any meaningful way. According to Ross,
The Commerce secretary argued that the tariffs would add only about $175 to the cost of a $35,000 car – one half of 1 percent – a statistically insignificant amount and one that may not necessarily be borne by customers.
Ross also held up a Campbell’s Soup can to illustrate what he called the negligible effect that steel tariffs would have,
“IN THE CAN OF CAMPBELL’S SOUP, THERE’S ABOUT 2.6 PENNIES’ WORTH OF STEEL. SO IF THAT GOES UP BY 25 PERCENT, THAT’S ABOUT SIX-TENTHS OF 1 CENT ON THE PRICE OF A CAN OF CAMPBELL’S SOUP. WHO IN THE WORLD IS GOING TO BE TOO BOTHERED BY SIX-TENTHS OF A CENT?”
President Trump unlike politicians before him, is making good on a campaign promise that he made on the campaign trail in 2016 to restore the U.S. steel industry. At rally after rally, President Trump rightly pointed out that unfair trade deals the Obama administration had entered into and Chinese dumping were closing U.S. steel plants. President Trump vowed to revive the industry and to “put American-produced steel back into the backbone of the country.” A promise which he is now delivering on. At a rally in Scranton, Pennsylvania, the day before the election,
“We are going to put the miners and the factory workers and the steel workers back to work.”
As of mid-2017, the Trump administration was imposing 149 different restrictions on steel imports, reversing decades of institutionalized dismantlement of the U.S. steel industry.
President Trump’s trade team is well positioned to fix the U.S. steel industry and is stocked with veterans of battles over the steel trade. As a trade lawyer, U.S. Trade Representative Robert Lighthizer represented steel companies. As a private investor, Commerce Secretary Ross bought and revived troubled steel companies, restoring hundreds of thousands of steel jobs to American workers.
There;s widespread agreement that overproduction by China has flooded world markets with steel and hurt steel makers by depressing prices.
President Trump, always the master tactician, has navigated the quagmire of Washington by relying on a little-known and little-used weapon in his fight to protect steelworkers – Section 232 of the Trade Expansion Act of 1962. This provision authorizes the President to restrict imports and impose unlimited tariffs on national security grounds. According to Dean Pinkert, a partner at Hughes Hubbard & Reed and a former commissioner on the U.S. International Trade Commission,
“It’s an effective but unconventional approach.”
Since the United States joined the World Trade Organization in 1995 under then-president Bill Clinton, it has pursued only two such investigations. On both occasions – a 1999 case involving oil imports and a 2001 case concerning iron ore and steel imports – the Clinton administration declined to recommend sanctions and stood idly by as the Chinese and Germans decimated the U.S. steel industry.
There is no denying that a healthy industrial base is crucial to the nation’s military – something that Adolf Hitler understood well when he invaded Sweden. According to the Pentagon over 3 percent of U.S. steel production goes toward defense. Any disruptions to the supply and production of steel would have a huge impact on America’s ability to defend itself. The steel and aluminium tariffs are essential therefore in President Trump’s overall plan to Make America Great Again – so let the steelworkers rejoice!