Tue. Mar 2nd, 2021

US Department of Commerce recently recommended that President Donald Trump impose new taxes and regulations on aluminum and steel imports – and recommended the top 24 percent global rate. Trump himself reportedly said he could favor the 25 percent rate, Because it’s a round number that sounds better.

The Chairman is correct that a round number is ideal for aluminum and steel import taxes. The ideal number is zero.

The Commerce Department’s recommendations were based on the President’s request to review the effects on national security of steel and aluminum imports under Section 232 of the US Trade Law. This ambiguous law has not been used since 2001, when the Department of Commerce concluded “The production level and production capacity of the American iron ore and steel industries exceeded the volume required to meet US national security requirements.” According to the Department of Defense at the time, “Import of iron ore and semi-finished steel does not currently affect national security when assessed in terms of its ability to meet defense demands.”

This is true for both steel and aluminum today.

In its report to Trump, the Commerce Department did not even try to make a serious case that imports of steel or aluminum were harming US defense capabilities. Even accepted “Military consumption of aluminum is a small percentage of total consumption.”

Instead, it emphasized that Trump has vast rights to restrict imports Industries Agriculture, transportation, energy, health care, financial services and others. Using this vague, omnipresent criterion, the Commerce Department found that imports threatened to impair America’s national security, and presented Trump with a variety of possible sanctions.

He should reject them all.

New taxes or regulations made it more expensive to make things in the United States, as well as increasing the supply of steel and aluminum available to foreign competitors.

Political cartoon on economy

For example, according to the American Automobile Policy Council, “We are concerned with the unintended consequences, particularly as the proposal would lead to higher prices for steel and aluminum in the United States than the price paid by our global Competitive in comparison. It will give space to the American automotive industry, which supports more than 7 million American jobs at a competitive disadvantage. ”

American industries will be encouraged to move overseas by raising the cost of essential inputs such as steel and aluminum. President George W. Bush learned this the hard way when he imposed the steel tariff back in 2002. The president of the Air-Conditioning and Refrigeration Institute said: “Steel is a fundamental component of everything we make – every day we pay extra for the means of steel. More industry is shifting to Asia.”

Encouraging offshoring is the opposite of Trump promised American voters: “I just want to tell all other companies that we are going to do great things for business. There is no reason for them now.”

Import taxes would also reduce US energy security and break away from Trump’s goal of energy dominance. Steel and aluminum are important inputs for energy exploration, production, and transportation.

When all else fails, the crony capitalists seeking special treatment from the government revert to dubious national security claims. For example, American sugar producers Call Chinese imports are “a security risk,” and have been used to defend protectionist policies that force American consumers to pay Twice World price for sugar. American shipbuilder The emphasis Banning the use of foreign-built vessels for domestic shipping is “vital to the economic security of our country.” As a result of its Dear Jones Act, it is now cheaper to ship American petroleum from the Gulf Coast to Canada than an American refiner from the East Coast.

If Trump bans imports then our own national defense industries will be forced to pay more for aluminum and steel to help save Americans. Motor and Equipment Manufacturer Association Noted that the aluminum import ban would “jeopardize our ability to manufacture and provide these critical products to the US defense industry in the United States, and the Forging Industry Association Views The steel ban could jeopardize the ability of its members to supply the US military.

Trump has repeatedly promised to make the United States the best place in the world to do business. He should keep his promise, and the US manufacturers and national security should reject the Commerce Department’s proposed hit.

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