The Case for Tariffs

American Steel
American Steel

President Trump feels that his recent decision to impose broad tariffs on imported, foreign steel and aluminum makes perfect sense, and that these actions will lead to a stronger America.

Here’s why.

Following decades of bad foreign trade policy conducted by both Republican and Democrat administrations who hadn’t a clue how to negotiate real business deals, President Trump inherited a nation with massive trade deficits with some of the largest nations on the planet… not all of whom are our friends.

America’s foreign trade deficit with China is our largest among all of our trading partners. “More than 65 percent of the U.S. trade deficit in goods was with China.  The $375 billion deficit with China was created by $506 billion in imports.  The main Chinese imports are consumer electronics, clothing, and machinery.”

“How does China keep prices so low?  Most economists agree that China’s competitive pricing is a result of two factors: [first] a lower standard of living, which allows companies in China to pay lower wages to workers, [and second] an exchange rate that is partially fixed [artificially, by the Chinese government, compared] to the dollar.”  That second factor refers to China’s long-standing and unfair practice of currency manipulation.

But when it comes to steel and aluminum specifically there is more at stake than just dollars.  The result of all those decades of America being taken to the cleaners by every major industrial nation on the planet is that we have just about lost our capacity to produce steel – used in tanks, warships and rifles – and aluminum – used in fighters, bombers and missiles.

We get our steel from (in descending order) Canada, Brazil, South Korea, Mexico, and even Russia (about 10%).  There are some obvious problems with that list of nations.  While Canada is friendly and just to our north, the rest of those suppliers are hardly stable or nearby.  When it comes to aluminum the list is even more risky; Canada, Russia, the United Arab Emirates and China (again, in descending order).

You may recall then President Obama telling an Indiana steel worker union official back in June of 2016 that some jobs – “jobs of the past… are just not going to come back.  He even ridiculed then Presidential candidate Donald Trump’ promise to do just that, saying that Trump had no clue how to bring those lost jobs back… apparently because he (Obama) didn’t have a clue.  And yet now in 2018 we are seeing those jobs

Well, the permanent loss of jobs and manufacturing capability might be fine for some sectors of industry – children’s toys for example, or bicycles, stationary and cheap t-shirts – but when it comes to making our own steel and aluminum we simply cannot afford to lose those jobs.

Jobs manufacturing steel and aluminum are not “jobs of the past”.  And yet, for decades (not just under Obama), America’s steel and aluminum mines, refinery’s and processing plants have very nearly become just that – things of the past.  These are hard, dirty jobs the elitist Leftists living in New York or in California’s Silicon Valley see as unfit employment for Americans… better suited to less sophisticated third world countries.

Building the necessary infrastructure of mines, refineries and processing plants – and assembling the skilled workforce that operates all of that – takes decades to put in place, and maintaining all of that requires constant use, upkeep and modernization.  Once American steel and aluminum production is shut down we simply will not be able to restart it quickly and easily.

If we allow our domestic steel and aluminum production capability to fall away and be replaced by foreign sources, as is our current national path – whether those foreign sources are in Canada or Mexico, or overseas in places like Brazil, China and Russia – we are increasingly strategically vulnerable.  We will be entirely incapable of sustaining the sort of manufacturing required to conduct a major war without receiving the necessary raw materials through vulnerable supply lines, many of which will cross oceans we may not control.

The hard truth is that the ability to produce quality steel and aluminum is at the very heart of any industrialized nation – especially one that seeks to maintain its place as a premier world military power.

Does America benefit from resurrecting our ability to produce our own domestic steel and aluminum?  Yes, it is absolutely critical that we maintain our ability to manufacture our own steel and aluminum right here in America.

Could there be a trade war result from these tariffs?  That depends on a thousand factors.  But in the long run America’s value to the world as an insatiable marketplace throws the scales in our favor.

President Trump has done right by our economy so far.  He has rolled back decades of business-choking regulations prompting American corporations to bring home billions of dollars that sat in overseas accounts being sheltered from crippling U.S. tax rates.  We have the lowest unemployment our nation has seen in 17 years.  More jobs were created last month than any month in the past 18 months.  President Trump has lowered taxes for small business.  Personal income is up and hundreds of thousands of Americans are receiving bonuses – many for the first time in their lives.

I say let’s just let President Trump play the tariff card and see where that goes.

 

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