The Washington PostDemocracy Dies in Darkness

Trump’s steel tariffs cost U.S. consumers $900,000 for every job created, experts say

Pressure is growing on Trump to remove steel and aluminum tariffs.

A worker leaves U.S. Steel's Edgar Thomson Steel Works on March 10, 2018 in Braddock, Pa. (Drew Angerer/Getty Images)

President Trump has shown little interest in removing the steel and aluminum tariffs he imposed more than a year ago despite growing evidence Americans are paying a hefty price for these tariffs and increasing pressure from Republicans in Congress to remove them.

U.S. consumers and businesses are paying more than $900,000 a year for every job saved or created by Trump steel tariffs, according to calculations by experts at the Peterson Institute for International Economics. The cost is more than 13 times the typical salary of a steelworker, according to Labor Department data, and it is similar to other economists’ estimates that Trump’s tariffs on washing machines are costing consumers $815,000 per job created.

“It’s very high. It’s arresting,” said Gary Hufbauer, a senior fellow at the Peterson Institute who did the steel tariff cost calculation. “The reason it’s so high is that steel is a very capital-intensive industry. There are not many workers.”

Trump administration accuses Chinese officials of ‘reneging’ on commitments in trade talks

Trump has said repeatedly that the metals tariffs are necessary for national security, for well-paying jobs and for leverage in trade negotiations. There was hope among Republicans and business leaders that Trump would remove the tariffs — at least on Canada and Mexico — once the negotiations over the U.S.-Mexico-Canada trade agreement, known as USMCA, were done. But the tariffs remain, a warning sign for Chinese leaders who want Trump to remove his tariffs on their country’s products as part of the deal the two sides are negotiating.

Supporters of Trump’s tariffs, such as the Alliance for American Manufacturing, counter that more than 12,700 well-paying jobs have been created or saved at steel and aluminum factories since the president put this policy in place in March of 2018. They also point to substantial amounts of investment in U.S. metal mills that should benefit the nation for years to come, including $1 billion that was just announced at a U.S. Steel plant outside Pittsburgh.

“Congrats to @U_S_Steel for investing $1+ BILLION in America’s most INNOVATIVE steel mill. 232 Tariffs make Pennsylvania and USA more prosperous/secure by bringing Steel and Aluminum industries BACK. Tariffs are working. Pittsburgh is again The Steel City. USA economy is BOOMING!” Trump tweeted last week.

U.S. unemployment fell to 3.6 percent, lowest since 1969

Many economists and business leaders point out that jobs in steel-using industries outnumber those in steel production by about 80 to 1, according to experts at Harvard University and the University of California at Davis.

Trump has claimed that other countries are paying the tariff bill, but evidence shows the tariffs are taxes paid by Americans. U.S. companies that buy metals are either absorbing higher costs or passing them along to consumers. General Motors and Ford said Trump’s tariffs have cost them $1 billion each.

“The consumer pays for this in the end. They just don’t always recognize it,” said James Knott Jr., chief executive of Riverdale Mills in Northbridge, Mass., which makes wire mesh products for everything from fences to commercial fishing nets. “These 232 tariffs protect my foreign competition rather than protecting me."

Raw steel prices surged after Trump put 25 percent tariffs on imported steel on some countries in March and then expanded the tariffs to most countries in June, including Canada, Mexico and the European Union. The result is that domestic steel prices have been higher than foreign ones, boosting profits for U.S. steel mills but putting U.S. manufacturers that use steel, such as Riverdale, at a disadvantage to European and Chinese competitors.

Is this economy too good to be true?

Riverdale is absorbing the tariff costs for now, but Knott said it forced him to cut costs elsewhere. He ended up reducing his 200-person workforce by 50 people. He did it via attrition — simply not filling vacancies after people left — but it is hampering him at a time when he says business should be thriving in a strong economy.

Republicans in Congress are growing increasingly vocal in their insistence that Trump remove the steel and aluminum tariffs, at least on Canada and Mexico, which are major feeders of metals to the United States. Some GOP senators are threatening not to approve Trump’s USMCA agreement until the tariffs on U.S. neighbors are removed.

“If these tariffs aren’t lifted, USMCA is dead. There is no appetite in Congress to debate USMCA with these tariffs in place.” wrote Sen. Charles E. Grassley (R-Iowa) last week in a Wall Street Journal opinion piece.

Tom Gibson, president of the American Iron and Steel Institute, said Trump’s tariffs are about righting years of nations such as China undercutting U.S. steel production. He said U.S. steel mills are running at more than 80 percent capacity, a level not seen in over a decade, and imports have fallen from 29 percent of the U.S. market a year ago to 20 percent now.

In the game of "Trade Wars," perhaps the winning move is not to play. (Video: Daron Taylor, Jhaan Elker/The Washington Post)

“The steel tariffs implemented by the president last year have enabled steelmakers to begin to recover from the historic import surges that devastated the industry a few years ago,” Gibson said. “The tariffs are working, but now is not the time to lift them.”

‘America First’ may be last hope for these cattle ranchers

But evidence is growing that the metals tariffs are starting to bite. Last year U.S. manufacturing companies went on a hiring spree, adding the most new employees in more than two decades as the strong economy caused demand to rise. But since the start of the year, manufacturing job growth has cooled. From February to April, U.S. manufacturers added 12,000 net new manufacturing jobs, the weakest gains in the sector since before Trump took office.

Hufbauer and Euijin Jung of the Peterson Institute calculated that every steel job saved is costing U.S. consumers over $900,000 because U.S. companies have been paying about 10 percent more for steel since Trump’s tariffs went into effect. The total additional cost to the economy is about $11.5 billion a year.

There is debate among economists about how many jobs have truly been created or saved because of Trump’s tariffs, but Hufbauer and Jung decided to take the Alliance for American Manufacturing’s figure for 12,700, which works out to over $900,000 a job. AAM said about 9,300 of those jobs are steel alone, which means the cost could be more than $1.2 million per steel job.

Supporters of tariffs counter that the U.S. Treasury is receiving some revenue from the tariffs and that the longer the tariffs remain in place the more the domestic industry will thrive.

A Commerce Department spokeswoman pointed to strong job growth in the manufacturing sector last year, including in industries that are users of steel and aluminum inputs, as a sign the economy is thriving under Trump’s policies.


Whiskey sour: U.S. craft distillers say Trump trade war with Europe is killing export plans

U.S. economy feels like the 1990s, but with more inequality, less readiness for a downturn

The WTO just blew up Trump’s argument for steel tariffs