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Op-Ed: If Trump’s Trade War Saved the Steel Industry, Then the Free Market Lost

Op-Ed: If Trump’s Trade War Saved the Steel Industry, Then the Free Market Lost

donald trump steel industry trade war

President Donald Trump took a victory lap on Twitter on Monday for his controversial trade war against China, claiming that steel tariffs have “totally revived” and “saved” the steel industry in the United States:

Tariffs on the “dumping” of Steel in the United States have totally revived our Steel Industry. New and expanded plants are happening all over the U.S. We have not only saved this important industry, but created many jobs. Also, billions paid to our treasury. A BIG WIN FOR U.S.

— Donald J. Trump (@realDonaldTrump) January 28, 2019

Did Tariffs Save the Steel industry?

The New York Times reported earlier this month that the U.S. steel industry has opened dozens of new steel mills, and restarted or made new investments in its business over the last year, but that doesn’t mean all is well.

The same report also cited data from the American Iron and Steel Institute that showed as of November 2018, jobs numbers in the steel business were 4 percent lower than they were four years ago in 2014 as the steel industry turns increasingly to robotic automatons for production.

Saving the Steel Industry at What Cost?

If the Trump steel tariffs did revive and save the steel industry in the United States, that would mean that under Trump’s direction the government has intruded upon the normal operations of the free market to create a result desired by the government and not determined by the market.

This is antithetical to the Republican Party’s purported support for the unobstructed activity of free markets, unfettered by the interference of government with political considerations in mind.

As Donald Trump himself once tweeted:

It’s time for government to stop picking winners & losers. Let’s make sure everyone can achieve the American dream!

— Donald J. Trump (@realDonaldTrump) June 22, 2015

Tariffs Subvert the Free Market

Tariffs are a government’s way of picking winners and losers, so they violate this standard trope of Republican Party marketing, which Donald Trump himself has espoused. Instead of the domestic steel business making the necessary adjustments and absorbing the necessary costs to remain competitive in the market, the government has socialized these costs to the rest of the economy with the companies that buy raw steel bearing the brunt of the cost.

Tariffs are Wealth Redistribution

So not only are import tariffs a way for the government to pick winners and losers instead of the market, they end up being a form of wealth redistribution from some American businesses (those which buy an imported product) to other American businesses, which get a special subsidy from the government equivalent to every extra dollar other businesses are forced to pay.

Tariffs are a Tax Increase

Tariffs are obviously and quite technically a tax increase on the businesses forced to pay these duties on imports. So not only do they violate free market principles, and not only are they a form of corporate crony nepotism by means of wealth redistribution, but they are also an explicit tax increase on productive sectors of the economy that takes more money out of private businesses’ pockets and puts it in the pockets of Washington bureaucrats.

Which is a problem because the government has an endless appetite for wasting money. Like the National Institutes of Health study that spent $874,503 to get quails high on cocaine and see how it affected their mating habits…

One of the things I hate most about Washington is that they have literally NO IDEA how to spend your money. That’s why I do waste reports, and do a FESTIVUS WASTE REPORT with some of the worst offenders of the year. Here are some of the worst in waste.

— Senator Rand Paul (@RandPaul) December 23, 2018

Trade War Causes Blowback

Not only do tariffs benefit some American businesses only at the expense of other American businesses by raising their taxes, but they hurt still more American businesses when other countries impose retaliatory tariffs.

Soybean farmers in Tennessee and other food businesses in the United States have been hit so hard by retaliatory Chinese tariffs because of Donald Trump’s steel tariffs, that the federal government has already had to put the taxpayer on the hook for $12 billion to bail them out.

And now these farmers are more reliant on Washington, face economic uncertainty, and have had their relationships with their global customers destroyed by the Trump administration’s economic interventions.

Disclaimer: The views expressed in the article are solely those of the author and do not represent those of, nor should they be attributed to, CCN.

Feature Image from AP Photo / Evan Vucci

About The Author

Wes Messamore

Grew up reading Isaac Asimov, J.R.R. Tolkien, The Bible, Ayn Rand, John Locke, and Robert Heinlein while listening to conservative talk radio, reading used economics textbooks, and reading through most mainstream political newspapers and magazines.

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