The Impact of Trump's Steel and Aluminum Tariffs on Americans

Another question from a Quora troll. Let's explore the nuances behind the impact of President Trump's steel and aluminum tariffs in 2018, their subsequent removal in 2020, and the broader economic context during those years.

Introduction to the Tariffs

In 2018, the Trump administration imposed significant tariffs on steel and aluminum imports from various countries, including Canada and Mexico. The reasoning behind these tariffs was to protect domestic industries and jobs. The justification was to counter unfair trade practices and ensure fair competition. The tariffs, which initially applied a 25 percent duty on aluminum and a 10 percent duty on steel, were a significant move in the trade policy landscape.

The Tariff Implementation and Its Immediate Impact

When the tariffs were implemented, the U.S. aluminum production saw a positive bump, reflecting increased domestic demand. However, the long-term effects were not as favorable. At the time, U.S. aluminum production increased by 25 percent. This temporary boost was short-lived. When the tariffs were later lifted in 2020, as part of the negotiation to secure Mexico and Canada's sign-off on the new USMCA (United States-Mexico-Canada Agreement) trade deal, the situation took a different turn.

The Dwindling of Production and Shutdowns

The removal of the tariffs resulted in a significant drop in U.S. aluminum production. In fact, the production dropped by 25 percent, reversing the earlier gains. Additionally, one of the five remaining aluminum smelters in the U.S. was closed down. This closure marked a substantial loss in the country's aluminum production capacity, from 32 smelters in 1980 to just five by the end of the Obama administration. Such a decline reflects a broader trend of deindustrialization and consolidation in the metal manufacturing sector.

Economic Context and End User Impact

Another common misconception is that the cost of the tariffs was fully borne by the importers and would not affect the end-user. However, history has shown that this is not the case. When the tariffs were in place, consumers and businesses indeed paid more for goods made from steel and aluminum. The price increase was passed on to the end user, shifting the burden from the importers to the consumers.

Trump's Economic Creed

During President Trump's tenure, the economic climate experienced a robust period. Inflation numbers, for instance, were relatively stable at 1.9 percent. The GDP showed solid growth, with the highest wages for Blacks, Hispanics, and Asians in nearly four decades. Unemployment levels were at their lowest in 40 years, and there was no ongoing military conflict during his presidency. These achievements suggest that the economic policies, including the tariffs, did not noticeably harm the economy or the standard of living for many Americans.

Conclusion

In summary, while the tariffs may have had short-term boosts in production, the long-term effects, particularly after their removal, were unfavorable. The switch in policy to support the broader trade agreement with Mexico and Canada demonstrated a strategic shift in the U.S. trade policy. Moreover, the economic landscape under Trump was marked by stability, growth, and rising wages, highlighting a more favorable economic context than might be suggested by the tariffs' temporary presence.

For a more nuanced understanding of such complex economic issues, it is essential to consider a range of factors and impacts beyond the immediate effects of single policies.