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Response to Trump on steel
From Keith Hennessey, a Lecturer at Stanford University's Graduate School of Business.
"In Pennsylvania today Donald Trump said, “When subsidized foreign
steel is dumped into our markets, threatening our factories, the
politicians do nothing.”
This is false. President Bush imposed tariffs on imported steel in
2002. A month ago the Obama Administration imposed duties on Chinese
steel of more than 200 percent and up to 92 percent on steel imported
from South Korea, Italy, India, and Taiwan.
Steel is an intermediate good. When you raise protectionist barriers
against imported steel as Mr. Trump threatens, you temporarily help U.S.
steelworkers. You also raise input prices for American firms that use
steel to build bridges and buildings and make cars, and trucks, trains
and train tracks, appliances, ships, farm equipment, drilling rigs and
power plants, and tools and packaging. Higher input costs hurt American
workers in those factories and on those construction sites.
Mr. Trump should ask the workers who make dishwashers at Whirlpool’s
plant in Findlay, Ohio whether they’re in favor of more expensive steel.
Or he can ask the John Deere workers who use steel at their factories
in Iowa, Kansas, Louisiana, North Carolina, North Dakota, Tennessee, and
Wisconsin. Or the auto workers at almost any U.S. car and truck
assembly line. Raising prices for imported steel hurts all of these
American workers.
Yes, the Chinese are selling steel in the U.S. at a low price, called
“dumping.” Yes, this hurts the owners and employees of U.S. steel
manufacturers. It also helps many other American workers and even more
American consumers. And the Obama Administration is using the tools in
current law to respond to the Chinese actions.
Trump: “A Trump Administration will also ensure that that we start
using American steel for American infrastructure. … We are going to put
American-produced steel back into the backbone of our country. This
alone will create massive numbers of jobs.”
No, it won’t, and the downside is it would cost taxpayers more. Put
another way, any given amount of tax dollars will build less
infrastructure. We’ll repair fewer bridges but, by golly, the fixed ones
will have ‘MERICAN steel. I’d rather get the best value for every tax
dollar we spend on infrastructure, thus ensuring we fix as many bridges
as possible.
Mr. Trump’s lines may sound good in steel country, but his
policies would harm other American workers, drivers, and taxpayers. On
the whole Donald Trump’s steel policy would be bad for America."
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