December 19, 2018
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Trump’s tariff plan will hurt more than it will help. Congress must stop it.

Gabor Degre | BDN
Gabor Degre | BDN
Garrett McIntyre, an assistant brewer at Geaghan Brothers Brewing, stacks cans of beer at the company's Brewer facility in August. A US tariff on aluminium imports would increase costs for breweries across the country.

President Donald Trump imposed tariffs on steel and aluminium imports this week to “regrow” the metals industries. After warnings that such a move could ignite a trade war that would hurt American consumers and workers, Trump walked back part of his tariff plan on Thursday, saying he would temporarily exempt Canada and Mexico and may consider other exemptions.

That is not enough, however, and the tariffs, set to go into effect in 15 days, should be stopped, a responsibility that now falls to Congress.

Economists warn that Trump’s claim that “trade wars are good and easy to win,” is way off the mark.

First off, tariffs raise the prices of goods that consumers ultimately buy. The 25 percent tariff on steel imports is akin to a 25 percent tax, which will raise the cost of steel used by industries as diverse as American car makers, shipbuilders and producers of wood chipper knives that are used in lumber mills and sawmills. Trump also imposed a 10 percent tariff on aluminium imports, which will raise the costs for breweries, aircraft makers and other manufacturers.

Although the tariffs are on imports, the price of U.S.-produced steel and aluminium will also rise as domestic producers try to quickly increase production.

When costs rise for these manufacturers, they will pass the costs on to consumers, so Americans will be paying more for cars, canned foods and, yes, beer. American taxpayers will also pay more to build ships, airplanes and other equipment for the U.S. military.

Manufacturers will look for cheaper places to make their products, which will be outside the U.S. “Does Mr. Trump want more cars made in Mexico?” The Wall Street Journal asked in a Feb. 19 editorial.

There are about 16 times more workers in steel-consuming industries, such as construction, oil and gas exploration and manufacturing, than there are employed by U.S. steel makers. So, although the tariffs may save some steel-making jobs, they will result in the elimination of thousands of other American jobs.

President George W. Bush imposed tariffs on some steel imports in 2002. As a result, 200,000 jobs were lost, significantly more than the total employment (187,500) in the country’s entire steelmaking industry, two economists with Trade Partnership Worldwide reported in 2003. The job losses led to a loss of $4 billion in lost wages, their report said.

Second, other countries will retaliate if the US imposes tariffs. Trump says China is his target, but Canada is the top source of steel and aluminium that is imported by the US. Brazil, South Korea and Mexico are the next largest exporters of steel to the US. It is likely that these countries will respond by placing tariffs on goods they import from the US, which would be especially harmful to American carmakers, electronics and medical equipment manufacturers, agriculture and aircraft makers. Again, costs will rise and the increase will be passed on to consumers in the form of higher prices. Jobs will also be lost as companies seek ways to reduce their costs.

If a trade war erupts, which economics say is likely, it will depress the U.S. economy, slowing growth, which will harm American workers and investors. It will also harm Maine as many of its signature industries, including timber, agriculture, brewing, construction, metal fabrication, lobster and blueberries are heavily dependent on steel, aluminium and trade.

Third, Trump’s rationale for the tariffs — that steel and aluminium imports threaten national security — are suspect. The defense industry accounts for just 3 percent of American consumption of these metals. U.S. steel mills are operating far short of full capacity and Canada could produce a reliable supply, the Wall Street Journal reported.

Given that they are not necessary and would do a great deal of harm to the U.S. economy, the tariffs Trump approved Thursday are a horrible idea. In fact, Trump’s top economic advisor, Gary Cohn, quit this week because he disagrees with the tariffs.

It now falls to Congress to intervene to stop them. House Speaker Paul Ryan has been an outspoken critic of Trump’s tariff plan. He and others Republicans will now have to put America’s best interests above their loyalty to the president.

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