Erica York: Trump's Steel, Aluminum Tariffs Hurt U.S. Economy

The Trump administration's imposition of tariffs on imported steel and aluminum in 2018 had significant impacts on the U.S. economy, according to Erica York, Vice President of Federal Tax Policy at the Tax Foundation. York's analysis, based on the Tax Foundation's General Equilibrium Model, reveals that the tariffs have had negative consequences for GDP growth, employment, and consumer prices.

The tariffs, which were initially imposed under the guise of national security, raised the cost of production for manufacturers, leading to reduced employment in those industries. The Peterson Institute for International Economics estimated that the cost per job saved in the steel-producing industries was approximately $650,000, indicating that the benefits gained from the tariffs were not significant enough to offset the negative economic impacts.

Moreover, the tariffs increased the average prices of steel and aluminum by 2.4 percent and 1.6 percent, respectively, disproportionately hurting "downstream" industries that use steel and aluminum in their production processes. This led to higher prices for consumers, as companies passed on the additional costs. The Tax Foundation estimated that repealing the Section 232 tariffs would increase long-run GDP by 0.02 percent ($3.5 billion) and create more than 4,000 jobs, further emphasizing the negative impact on consumers.

The retaliatory tariffs imposed by U.S. trading partners in response to the steel and aluminum tariffs have also had significant impacts on U.S. exports and the overall trade balance. The U.S. trade deficit in goods and services increased from $621 billion in 2017 to $845.3 billion in 2018, partly due to the retaliatory tariffs. The Peterson Institute for International Economics estimated that the tariffs would reduce U.S. exports by $12.3 billion and cost 155,000 jobs.

In conclusion, Erica York's analysis highlights the negative impacts of the Trump administration's steel and aluminum tariffs on the U.S. economy. The tariffs have led to reduced employment, higher prices for consumers, and a larger trade deficit, while the benefits gained from the tariffs were not significant enough to offset these negative consequences. Policymakers should consider these findings when crafting future trade policies to minimize the negative impacts on the U.S. economy.