Economics Honours

4/10/18

Donald Trump has made many promises during his 2016 Presidential Campaign such as

cutting corporate taxes, creating more jobs for the American people, repealing Obamacare, and

building a wall that Mexico will pay for:

“I would build a great wall, and nobody builds walls better than me, believe me, and I’ll

build them very inexpensively. I will build a great wall on our southern border and I’ll

have Mexico pay for that wall.” (Politifact)

Most of these promises have either been stalled or are “in the works”. In recent news, Trump has

targeted China (as usual) for their steel trade. Since they make just as much steel as every other

country combined, the price of steel is low. There’s so much in supply. The US president’s effort

to counteract China’s power over the market is a steel tariff. President Trump’s steel tariff of

25% will not benefit the U.S. Industry because it could spark a trade war, workers from nearly

every industry will be laid-off, and everyday items such as cars and household appliances will

increase in price.

Once again, President Trump made China a target - this time because they produce so

much steel it could only be sold cheap. However, especially since they aren’t our largest source

of import or export, many other countries will be caught in the middle. Canada is our largest

importer and exporter and “Canadian Trade Minister Francois-Phillippe Champagne said the

taxes would be "unacceptable," and said he'd take measures to defend the country's

workers”(CNBC). Mexico, Russia, South Korea, among other allies, will be affected by this

selfish tariff made only with America in mind. This is a perfect example of how history has a
tendency to repeat itself: during the Great Depression the US raise duties on imports causing the

other countries to do the same and resulting in the halt of world trade. This ended up prolonging

and worsening the Depression. Some other examples of retaliation would be when China

threatened to block US exports like iPhones, soybeans, and maize. Trump has also recently

threatened the E.U.:

“If the E.U. wants to further increase their already massive tariffs and barriers on U.S.

companies doing business there, we will simply apply a Tax on their Cars which freely

pour into the U.S. They make it impossible for our cars (and more) tp sell there. Big trade

imbalance!” (Twitter/economicshelp.org)

Other countries wouldn’t feel the need to retaliate if their well-being was considered in the

decision-making process.

The tariffs on the steel and aluminum industry have had a negative impact on American

workers as well. Whilst 33,464 jobs will be created in the metal industry, 146,000 to 180,000

jobs will be lost, this includes other industries which rely on these resources. The increase in

price will cause companies to cut costs, especially with the labor force. Manufacturing jobs,

which will be the most affected, are expected to decrease by 2,612. In the article, ​Trump’s

massive new tariffs could end up costing America 146,000 jobs​ by Bob Bryan, from Business

Insider, he talks about who really gets the short end of the stick:

“ The majority of these job losses, according to Francois and Baughman, would come

from lower-paying industries. “High-skilled jobs (managers, professionals, technicians

and related workers) account for one-third of the net job losses," the economists said.

"Low-skilled workers (production workers, machine operators, office workers,

 administrative workers, sales/shops staff, and farm workers) bear the brunt of the tariffs,

accounting for two-thirds of the total job losses." ​(Business Insider)

So, the ones who are paid the least are the ones who are the most affected. The tariff will

certainly increase the unemployment rate, as well as prices, and as a result, Americans will

become more cautious about their spending habits.

Mills and smelters are businesses that can directly benefit from the tariffs. It is likely that

they will see an increase in jobs in their field since the demand will be higher. So, this is creating

jobs but in a field that is on the decline:

“The Mills and smelters that supply Rama Terrio, and that will directly benefit from the

tariffs, have been shrinking for years. Today, those industries employee fewer than

200,000 people. The companies that buy steel and aluminum, to make everything from

trucks to chicken coops, employee more than 6.5 million workers, according to a heritage

foundation analysis of commerce department data.” ​(​NYTimes)

While it’s a nice gesture to help the underdog, it really doesn’t help our workers or our economy.

Americans aren’t always keen on buying expensive things. Cars, washing machines, and

refrigerators are already expensive and the increase in price will decrease the consumer’s

likelihood to buy. Many Americans don’t even have the means to afford to eat healthily so this

will definitely cause some problems. However, it’s not just large, expensive things becoming

more expensive, it’s also the little things like soda cans and glass bottles for their steel caps.

.This will certainly limit how consumers will spend their money and, as a result, weaken the

economy.
 In essence, there is not much to gain from the steel tariffs. It is unnecessary because it

focuses on dwindling industries and doesn’t grow the businesses already thriving. Hundreds of

thousands of workers will lose their jobs. With so many more people becoming unemployed on

top of higher prices of goods and services there won’t be much money stimulating the economy.

Additionally, it causes international issues that can easily be avoided. It doesn’t benefit the U.S.

industry.
Work Cited 
 
Bryan, Bob. “Trump’s massive new tariffs could end up costing America 146,000 jobs”. 
Business Insider. 6 March, 2018. . 
https://amp.businessinsider.com/trump-tariffs-on-aluminum-steel-could-cost-jobs-stud
y-2018-3​. 9 April, 2018. 
 
Franck, Thomas. “Canada, Brazil - but not China - will be hit hardest by Trump’s steel 
Tariffs”. CNBC. 5 March, 2018. 
https://www.cnbc.com/amp/2018/03/01/canada-brazil--but-not-china--will-be-hit-harde
st-by-trumps-steel-tariffs.html. 7 April, 2018. 
 
Hankla, Charles. “Opinion: What history teaches us about who wins in trade wars”. 
MarketWatch. 4 April, 2018. 
https://www.marketwatch.com/story/what-history-teaches-us-about-who-wins-in-trade-
wars-2018-03-02. 9 April, 2018. 
 
Kitroeff, Natalie and Ana Swanson. “Trump’s Tariff Plan Leaves Blue-Collar Winners and 
Losers”. The New York Times. 3 March, 2018. 
https://www.nytimes.com/2018/03/03/business/economy/tariff-blue-collar.html​. 9 
April, 2018. 
 
Mullaney, Tim. “Why Trump’s trade war will hurt more American jobs than it helps”. 
MarketWatch. 2 March, 2018. 
https://www.marketwatch.com/amp/story/guid/D7E0031C-1DA3-11E8-9B24-BAC2519
9BBC0​. 9 April, 2018. 
 
Pettinger, Tejvan. “Effect of US steel tariffs”. 7 March, 2018. 
https://www.economicshelp.org/blog/24571/trade/impact-of-us-tariffs/​. 9 April, 2018 
 
Russell, Karl and Carlos Tejada. “The U.S. Wants to Take On China With Trade. The Rest 
of the World Will Be Caught in the Middle.”.The New York Times. 6 March, 2018. 
https://www.nytimes.com/interactive/2018/03/06/business/china-tariffs.html. 9 April, 
2018. 
 
“Tracking Trump’s Campaign Promises”. Politifact. 
http://www.politifact.com/truth-o-meter/promises/trumpometer/​. 9 April, 2018 
 
 
 
 
 
 
 
 
 
 
Jada Crawford