Steel Tariffs and the Race to Be Protectionist in Chief

Biden sees Trump’s levies on metals imports and raises them to damaging effect

WSJ editorial. 

"Didn’t President Biden promise a better trade policy than his predecessor? Well, he now appears to be in a race with Donald Trump to be Protectionist in Chief. Witness his pitch for new tariffs at a campaign stop on Wednesday in Pittsburgh.

Speaking at United Steelworkers headquarters—where else?—Mr. Biden promised to crack down on Chinese imports. “Chinese policies and subsidies for their domestic steel and aluminum industries means high-quality U.S. products are undercut by artificially low-priced Chinese alternatives produced with higher emissions,” the White House said in a statement.

The Trump Administration tried to leverage tariffs on Chinese goods to get Beijing to reform its mercantilist policies. It didn’t work. Yet now Mr. Biden is proposing to triple the 7.5% tariff under Section 301 on certain Chinese steel and aluminum imports. He also teed up a trade investigation into Chinese shipbuilding in response to a petition by the union.

While Mr. Biden has scrapped nearly every Trump policy, he has maintained most of his predecessor’s tariffs despite their economic harm. The Detroit Free Press reported in 2019 that Ford worker profit-sharing checks would be 10% higher if not for Mr. Trump’s 25% tariffs on steel and 10% on aluminum.

An analysis by the Peterson Institute for International Economics found that each job “saved” by Mr. Trump’s steel tariffs cost consumers and businesses more than $900,000. Employment in iron and steel mills has fallen by about 3,000 since the Section 232 tariffs took effect in 2018.

China’s mercantilism is a special trade problem, but Chinese steel makes up only 2% of U.S. imports and 0.6% of consumption, largely owing to Mr. Trump’s tariffs and antidumping duties. Piling on more tariffs will raise costs for U.S. manufacturers that use particular grades of Chinese steel without alternatives.

In any case, neither candidate plans to limit his protectionism and industrial policy to China. Mr. Trump has proposed a 10% tariff on all imports. Mr. Biden on Wednesday reaffirmed his opposition to Nippon Steel’s purchase of U.S. Steel, though the Japanese company has promised to honor labor agreements and invest $1.4 billion to upgrade factories.

Mr. Biden also teed up plans on Wednesday to use tariffs to protect U.S. businesses burdened by his climate agenda. “American companies must lead the future of more sustainable steel,” the White House said. It’s not fair that “U.S. products have to compete with artificially low-priced alternatives produced with higher carbon emissions.”

Steel making is energy-intensive, and Mr. Biden’s green energy agenda threatens to make U.S. companies less competitive. U.S. Steel is challenging the Environmental Protection Agency’s “good neighbor” rule that requires it to make costly upgrades to reduce ozone in distant states. The Supreme Court is considering whether to block the rule.

Meantime, the Administration touts billions in subsidies for “green” manufacturing. Last month the Energy Department awarded steelmaker Cleveland-Cliffs $575 million for “two decarbonization investments” in Ohio and Pennsylvania. Cleveland-Cliffs’ workers are represented by the United Steelworkers and it lobbied the White House to block the Nippon Steel deal.

Cleveland-Cliffs wants to buy U.S. Steel, which it says will benefit workers. Doubtful. In February it closed a factory in West Virginia that employed 900. Tariffs and subsidies may prop up uncompetitive companies for a time, but they harm countless forgotten men."