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)
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QTPie
QTPie

What you say may or may not be true. I don’t know without seeing the actual the numbers since while other countries have increased their production, at the same time their domestic consumption of steel has been rising much more than ours and at least part of their production increase has been to satisfy increasing domestic demand (and as such you’d expect a natural decline in our world market share as the denominator including the whole world has been growing). The pertinent point though is that I still think that you are making a different argument than the president’s. If he says that our steel industry has been “decimated” then one would recon that there’s has been a significant decrease in our domestic steel production - which is definitely not the case.

pi314
pi314

@QTPie - If Google was restricted to operate only in the US due to trade barrier, even if it

pi314
pi314

'

pi314
pi314

even if it 'maintain' its market presence, it is losing out and eventually will become irrelevant.

QTPie
QTPie

True, but there’s a big difference between ‘maintain’ and ‘decimate’.

Sechel
Sechel

China isn't even a top exporter of Steel to the United States, Or Mexico or Canada for that matter. The nations they export are countries like Vietnam and Pakistan. I suspect Trump is merely trying to blow up NAFTA for reasons that have little to do with economics. I agree with you that automation and not unfair competition is what's taking away steel jobs, but I don't hear you talking much about those simple macro formulas all of us studied in Economics 101 & Economics 201 in College. I'm a little rusty, but isn't the problem with our balance of trade not that countries are taking advantage of but that as a nation we consume too much and save too little? If we consumed less and saved more, we wouldn't have to borrow and would export more, bu then consumers would have less goods. We could be like China where there's too much investment and Consumers subsidize production but that model is failing and consumers in that nation are poor rather than rich if you listen to Michael Pettis

Tony_CA
Tony_CA

Free trade is complete scam, and everyone no is it. It's a labor arbitrage game nothing more.

Tony_CA
Tony_CA

Correction: Free Trade is a complete scan, and everyone know is it. It's simply a labor arbitrage game- nothing more.