Like many presidents before him, Donald Trump plans to slap tariffs on foreign steel and aluminum in an effort to protect American jobs and domestic producers. He’s unlikely to have much success.
The U.S. imports four times as much steel as it exports, and imports are on the rise again. While the U.S. imports steel from more than 100 countries, three-quarters come from just eight countries, according to the International Trade Organization.
The top supplier to the U.S. in 2017 was Canada, followed by Brazil, South Korea, Mexico and Russia. Other notables include Turkey, Japan, Taiwan and Germany.
China is just outside the list at No. 11 despite producing about half of the world’s steel. The U.S. already has restrictions in place on Chinese steel.
The president on Thursday indicated he will announce new tariffs next week, a move taken by most of his predecessors going back to Richard Nixon in the 1970s. Trump campaigned in 2016 against what he called “unfair trade” and promised to get tough with trading partners.
The White House said the tariffs are needed to protect American-based businesses and workers from cheap foreign steel that it claims is unfairly subsidized. A Commerce Department report pointed to several mill closures in the past few years and the loss of several thousand jobs.
“We are going to continue to protect American workers,” White House spokeswoman Sara Sanders said Thursday.
The decline in U.S. steel jobs has been going on a long time despite frequent interventions by Washington.
The industry now directly employs about 140,000 workers, according to Bureau of Labor Statistics. More than half a century ago as many as 650,000 people were employed in the industry.
The steel industry has undergone vast changes since the end of World War Two. For one thing, a stream of technological advances have spawned huge increases in productivity, allowing steelmakers to do more with fewer workers.
Steelmakers also gather up and reform scrap metal more than ever, a form of recycling that also requires fewer workers.
Stiffer foreign competition and more imports, to be sure, have played a role in reducing the number of American steel jobs. Yet tariffs imposed by prior presidents from both parties, including George W. Bush, Bill Clinton and Ronald Reagan, have done little to stem the tide.
In some cases, higher tariffs have encouraged other U.S. manufacturers to seek out cheaper substitute materials to avoid the higher cost of steel that often results. Many American manufacturers are wary of tariffs.
“We need to better understand the details around the announcement today,” said General Motors GM, -4.36% pointedly noting that is has the ability “to adjust and adapt to a variety of market changes around the world.”
Foreign rivals might also retaliate with tariffs of their own, raising the stakes of a trade war that could eventually harm the economies of all involved.