Here's Why Labor Should Resist Trump's Tariff
It was sad to see some labor and labor-friendly people, like Ohio Senator Sherrod Brown and AFL-CIO president Richard Trumka, cheer Trumpâs decision to impose a 25 percent tariff on imported steel and 10 percent tariff on aluminum. They framed it as a just response to âunfairnessâ and âcheatingâ by foreign producers, which usually means China, which is little different from Trumpâs rationale. Brownâs rhetoric had a combative aroma to it: âIf we fail to stand up for steel jobs today, China will come after other jobs up and down the supply chain tomorrow.â
The tariffs are right for Trumpâ"nationalistic, truculent, bombasticâ"but people who cherish international solidarity and humane social policies should think again. They will do little if anything to help the steel industry, could harm steel-using industries, will probably provoke retaliations that will leave everyone worse off, and w ill add a fresh dose of bellicosity to a world already overdosing on it.
The European Union has announced intentions to raise duties on red-state products like peanut butter, Harleys, and bourbon. (Announcing the measures, European Commission president Jean-Claude Juncker said, âWe can also do stupid. We also have to be this stupid.â) China is also threatening retaliation; soybean farmers fear they may be targets. Whenever tariffs are in the news, mainstream commentators inevitably draw analogies to the Smoot-Hawley Tariff, the 1930 bill almost universally credited for helping make the Great Depression great by provoking a global trade war. Those are way overdone, but Trump was characteristically wrong when he pronounced trade wars âgood, and easy to win.â
Itâs not clear how Trump imagines victory in this fight. Letâs take a look at the economics of steel, an industry Trump equates with national greatness. If thatâs the measure, American greatness has su ffered from a long bear market. Back in 1958, the heart of an era that Trump seems to romanticize, steel accounted for less than 1 percent of total US employment. Twenty years later, 1978, it was down to 0.5 percentâ"and thatâs before the accelerated deindustrialization of the 1980s brought us the term âRust Belt.â Itâs now under 0.1 percent. But itâs not like steel itself is disappearing. While steel employment is off 54 percent since 1990, the production of steel (by the Federal Reserveâs measure) is up 18 percent. Between 1990 and 2015 (the latest year available), productivity per hour of labor in the steel sector was up 151 percent. Laborâs share of value-added in the industryâ"the portion of the difference between revenues and costs of raw materials thatâs paid out to workersâ"fell from 23 percent in 1990 to 13 percent in 2015. In other words, steel workers arenât doing well, but the steel industry is doing OK. Itâs not booming, but itâs solidl y profitable. Itâs hard to see how Trumpâs tariffs are going to change this in any meaningful way.
We have some recent experience with steel tariffs, the ones imposed by George W. Bush in March 2002. Bush lifted them in December 2003, under threat of retaliation by the EU, with another politically well-selected set of targets (Florida oranges, and Harleys again), and complaints by domestic steel users. During the 21 months they were in effect, steel employment fell by 9 percent, but production rose by 20 percent. Thereâs evidence that steel-using industries, like autos and appliances, took a mild hit from the resulting higher prices; a survey by the US International Trade Commission, an independent, quasi-judicial branch of the federal government, found higher steel prices, at least for a while, that were hard to pass along, and mildly increased difficulty in sourcing steel. Overall, the ITC estimated that the tariffs resulted in a âwelfare lossâ of $42 million, an almost immeasurably trivial amount by the standards of the US economy. Of course, the story could have been different had Bush not lifted the tariffs, and the retaliations escalated. It wouldnât be surprising if Trump does the same; heâs already making exceptionsâ"though itâs worrisome that he is now ordering his aides to prepare a fresh set of tariffs on Chinese goods.
So the tariffs are likely to have little economic effect, though they do add to the political ugliness thatâs the Trump regimeâs stock in trade. But they demonstrate something curious about Trumpâs political vision. Unlike earlier American presidents, Trump is not an apostle of a better world to come. Thereâs none of Clintonâs âBridge to the 21st Centuryâ or his annoying appropriation of Fleetwood Macâs âDonât stop thinking about tomorrow.â While a lot of that was campaign con artistry, thereâs still something to be said for the outlook in general. Trump is more interested in bui lding a bridge to 1958, when steel and coal were regarded as some kind of royalty. It would make more sense instead to develop an industrial futureâ"one manufacturing the infrastructure of a clean energy and transportation systemâ"in the abandoned parts of the Midwest and South, regions suffering from poverty, isolation, addiction, and early death. But that would take major amounts of public investment and planning, things that Trump and his party are profoundly opposed to. Thatâs what we should be pushing for, not cheering snake oil like metals tariffs.Source: Google News