STEEL TARIFFS AND YOU….If arid economic theory isn’t your cup of tea, read this LA Times story to get a good idea of why protective tariffs are a bad idea:
Before President Bush decides what to do about steel tariffs, he might want to square things with the 2 million metal-benders of America.
….[Mike] Chubb, an industrial engineer let go in March by a truck part maker, just wants another job. Any job. And a new president.
“Yes, I was a casualty of steel tariffs. Yes, I feel a great deal of bitterness,” said Chubb, who survived previous rounds of industry contractions but senses that this loss is permanent. “Basically, my job went to Korea. It’s not coming back.”
The tariffs, put in place to protect companies and workers in steel-producing states such as Pennsylvania, have cost jobs in steel-consuming states such as Michigan. While the administration expected that the tariffs would not be well-received in international markets, it did not fully anticipate the backlash at home.
….Things didn’t proceed quite according to plan.
Spot market prices for some types of steel soared after tariffs took effect. Metal-bending operations such as Tindall’s found that customers were not willing to absorb the higher costs. The tariffs were ruled illegal by the World Trade Organization, and the European Union is threatening $2 billion in retaliatory sanctions.
The whole story is pretty good, and explains both the appeal and the danger inherent in tariffs. It’s worth reading.