The Peril of Trump’s Steel Tariffs

There’s a reason I don’t much like governments. Power corrupts, as they say and so the more powerful your government the more it’s power can be corrupted and exploited by those who can control it to the detriment of those who can’t.

Nowhere is this more obvious than in the administration of Donald J Trump. We’ve heard stories of Kushner companies receiving loans from banks after the latter met with Jared Kushner at the White House, among other issues too numerous to count. But one I want to highlight is this new tariff on imported steel. Ostensibly, the goal is to support the domestic steel industry so that America can continue to make weapons and tanks at home rather than rely on foreign steel for that. But that is bollocks. The government could have given direct subsidies to companies making weapons for the Department of Defense is that were the goal.

The real goal here was to reward a few wealthy owners of steel companies at the expense of the rest of the population. There are just a handful of companies that make steel in America, with a few thousand owners and less than a dozen really wealthy CEOs who have the lobbying power and an easily corruptible administration who don’t know anything about economics. Almost every industry in America uses steel and other metals. By using the power of government to hit 25% taxes on all steel imports, 10% on aluminum etc, Trump has effectively raised prices on inputs for automobile manufacturers, appliance makers, airplane makers like Boeing, aluminum can makers and users like Coca Cola and so on, just to give the domestic steel industry and it’s owners a pay raise. It’s a heist, like I’ve seen many times in Nigeria with government picking winners and losers in all industries. America should not be treading that line but here we are. The winners on this deal are those few hundred owners and runners of the steel industries and their few hundred thousand workers. The losers are the rest of America’s industries, the consumers who will be hit by higher prices on cars, appliance, soda, etc and the whole economy which will continue to struggle as demand slumps.

It’s no shocker steel company prices rose on the announcement while most other companies stocks fell. Neither am I surprised that Gary Cohn who actually understands economics and for a while ran Trump’s economic council has voluntarily resigned. There’s no point being in the place if they’re only there to pretend to do right while your very valid inputs are ignored in favor of cronyism like this.

That’s not how you make America great. This is how you cancel the benefits of your own tax policies, jeopardize your legacy just so you and your friends can eat. If you don’t believe me, read up on George Bush’s steel tariffs which he implemented in 2002 and had to revoke a year later because it adversely affected the economy and almost sparked off a very costly trade war.

But that’s what your president is bringing back in 2018. That’s really sad and highly ignorant. That’s all I can say.


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