Foolishness of Trump's Steel Tariffs in One Image

Trump hopes tariffs will bring back steel manufacturing jobs. It won't happen.

Trump wants to save steel-related jobs.

However, the jobs are gone and will never return. NAFTA has nothing to do with it.

The US is producing 7.7% more steel than in March of 1990 with over 48,000 fewer workers.

I created that Chart in Fred by totalling steel workers in Indiana, Ohio, Texas, and Pennsylvania. Those are the only states tracked now. If there were more states tracked in 1990, the decline in workers is even greater. There is production in other states but it is minimal.

Don't blame NAFTA. Steel employment went on a deep dive nearly four years earlier.

The fact of the matter is US plants are aging dinosaurs compared to China's. China invested in modernized plants, the US didn't.

Before anyone bitches about subsidies, please take a look at US subsidies in the aerospace sector from absurd defense spending contracts.

Consider Sugar and Corn

The US cannot compete with sugar production from countries like Brazil where cane grows better, so we have sugar tariffs. As a direct result of sugar tariffs, US candy production went overseas.

US crop subsidies support excess corn production which we dump on the rest of the world. Still, we have tariffs on ethanol from Brazil because it is cheaper to make ethanol from sugar cane than corn.

The US and EU are the worst offenders when it comes to agriculture. Global trade talks break down every year over US and EU agricultural policies.

Blatant Hypocrisy

It's easy to criticize China over steel because no one hears third world complaints against the US on agricultural policy.

Economic Madness

The bottom line is simple: If its good for the consumer, it's good policy.

Instead, Trump is promoting trade wars that mathematically cannot be won.

For a mathematical explanation of trade deficits, please see Trump's Tariffs Show He's "Clueless About Trade".

Trump's trade policies are set to exacerbate the next global recession, but economic illiterates are egging him on.

A global trade war looms.
It's economic and mathematical madness.

Mike "Mish" Shedlock

Comments (58)
No. 1-25
Sechel
Sechel

u.s. aluminum smelters consume roughly ten times the power of chinese smelters according to a bloomberg story. you'll never hear trump argue that u.s. producers should modernize their plants to consume less power. far easier to cry fowl and get gov't to throw a tarriff your way. u.s. producers will not invest in more plants or modernize, they'll simply use the tariffs to raise prices. u.s. producers have not shown a huge inclination to build new modern plants and increase capacity which leaves them exposed to higher fixed costs in the future should the plant go idle.

TheLege
TheLege

'Protecting jobs' is politically expedient. And so it comes to pass. Politicians believe that the average Joe is dumb as dog sh!t (not unreasonable) so they can get away with implementing ridiculous policy.

Sechel
Sechel

Ironically trump is producing a controlled economy. his solution is always tarriffs and import restrictions. he even wants to force utilities to buy coal when natural gas , solar and wind may be cheaper. a planned economy is why france lost out to great brittain and why the ussr lost out to the united states.. now trump wants to introduce failed economic lessons to the u.s.

formula57
formula57

And the foolishness is too encapsulated in one tweet - "When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!"