President Trump deserves applause for boosting the prospects for this county’s forgotten manufacturing workers, notably in steel and aluminum. Democrats lately have neglected these Americans. Hillary Clinton barely campaigned among them in Michigan in fall 2016, and she thoroughly ignored them in Wisconsin.
Alas, Trump is doing this all wrong. He likely will hurt the very middle class that he has championed since his escalator ride onto the political stage.
Trump aims to protect U.S. metal makers with new taxes of 25 percent on foreign steel and 10 percent on overseas aluminum. “Tariffs” is just a jumped-up word for taxes on imports. Like other business taxes, these will trickle down through higher prices (average new cars: up an estimated $177; cars and appliances: up some 5 to 10 percent), lower wages, curbed output, and outsourcing.
These taxes will haunt metal-buying companies.
“This is a $347 million tax on America’s brewers,” Beer Institute CEO Jim McGreevy explained Monday on the Fox Business Network.
“We think the estimate for beer is about 20,000,” he said, citing job losses tied to costlier aluminum cans. “That’s brewers, brewery workers, waitresses, bartenders, truck drivers.”
“Here’s a simple, ‘real-life’ impact of the tariffs,” a friend on the West Coast tells me. His metal-products company serves the aircraft and aerospace industries, among others. “In late January, we bid on a job, but didn’t get the purchase order until the end of February. Now we are ordering the raw material to fabricate the parts, and the price increases have killed our profits.”
Neel Khosa of AMSYSCO, an Illinois-based steel-wire maker, told Curbed.com: “The steel tariffs will shoot Trump’s infrastructure plan in the foot, to some degree.” These new taxes will make bridges, tunnels, and roads more expensive. A typical oil pipeline could cost $76 million more. Ironically, any steel in Trump’s signature southern-border wall now likely will be pricier.
The Trade Partnership predicted Monday that these new taxes will create 33,464 metals-industry jobs. Too bad these taxes will “cost 179,334 jobs throughout the rest of the economy, for a net loss of nearly 146,000 jobs,” including 28,313 fewer construction posts. “More than five jobs would be lost for every one gained.”
The biggest fear is that foreign nations will retaliate by taxing U.S. exports. A trade war, like military combat, will generate casualties and collateral damage.
These fresh nightmares are totally unnecessary, economically self-mutilating, and politically destructive. To his enormous credit, Trump has distinguished himself as a full-throated, Reaganesque tax fighter. Thus, as the Tax Cuts and Jobs Act has gained popularity, Trump’s and the GOP’s approval ratings have risen.
Now, maddeningly, Trump is muddling this excellent tax-cutting message by increasing taxes on basic commodities, which will spur unintended consequences in unexpected ways.
So, how should Trump help workers in metal and other industries?
Insourcing.
Trump, his advisors, and American diplomats worldwide should encourage overseas manufacturers to relocate to the U.S.A. Trump and Republicans have spent 14 months making America competitive again. So, let’s compete!
America now boasts a 21 percent corporate tax, immediate expensing of capital purchases, aggressive deregulation, speedier permit approvals, increasingly abundant energy, and reenergized producers of metallurgical coal, which fires blast furnaces. It also is cheaper to schlep steel from Dayton, Ohio to Detroit than from Mainland China to Motown.
Mercedes-Benzes are born in Alabama. BMWs hail from South Carolina. Chrysler is steering a Ram truck plant from Mexico to Michigan. Likewise, Team Trump should lure foreign metal makers right here.
(Conversely, as grim evidence that things are backsliding, Swedish appliance maker Electrolux’s $250 million expansion in Springfield, Tennessee is on hold, due to metal-tax worries.)
“America is open for business,” President Trump declared in Davos, Switzerland in January. Extending this invitation to metal moguls, from Sao Paolo to Seoul to Shanghai, would help U.S. manufacturing workers and consumers much more than the price hikes and pink slips that these infernal new taxes will forge.
If you think the cost of living is high now just wait a few more Trump years. American products are already so hyper-inflated that the rest of the world can not afford them. The U.S. government will be forced to further subjugate and exploit the American citizens. Trump is also building an economic wall that will keep outside traders away from all U.S. products while trapping U.S. consumers inside its own super inflated bubble.