Apr 01, 2019
Metal Tariffs Just Pick Winners and Losers: And the Losers Outnumber the Winners
Post by Freedom Partners
In a recent study, 80 percent of surveyed businesses said that the Trump administration’s metal tariffs have affected them negatively.
It’s another reminder that tariffs, which are taxes on American businesses and consumers, don’t just pick winners in the market.
They pick losers, too. And those losers far outnumber the winners.
Everyone else loses
The steel and aluminum industries may win out in the short-term by these tariffs — but thousands of other firms are suffering, principally those that purchase steel and aluminum as inputs for the products they produce.
MillerCoors, for example, lost over $40 million in added production costs when the price of aluminum jumped.
Caterpillar, the world’s largest machinery company, says it may have taken a $100 million hit in 2018 when its production costs soared.
As prices climb, employers shed jobs
The damage from the Section 232 tariffs far exceeds what little gain they produced. One study found that the price of steel products had climbed nearly 10 percent, as competition among metal producers shrank. Consumers will have to pay that higher price.
Workers are affected, too. The same study found that steel-using companies will need to pay an extra $650,000 for each job they create. Some companies have had to resort to layoffs.
Mid-Continent Steel and Wire Inc., which makes fasteners, says it will need to lay off staff to compensate for the effects of the tariffs. Other companies have found that opting to purchase from foreign suppliers is more profitable than sticking with domestic ones.
Quotas are not the answer
There is a push to replace these harmful tariffs with quotas limiting metal imports. However, quotas are no better than tariffs. They artificially control supply, interfere with trade and are difficult to eliminate. Instead, we need to drop all trade barriers.