Last week President Trump announced that he’ll impose tariffs on imported steel and aluminum of 25 percent and 10 percent, respectively. Since the U.S. steel industry has suffered over the last few decades, this action might seem like a good idea — but is it? Here’s the reality. This action will punish American workers, invite retaliation — most likely against agricultural products from our Midwest — and harm U.S. exports.

These tariffs will benefit a few American firms, like U.S. steel producers which employ approximately 140,000 workers, but hurt steel-using industries, like aircraft, autos and construction, which employ 5.4 to 6.5 million U.S. workers.(1) And here’s why.

The tariffs will add costs and boost prices. And when prices rise, companies and consumers buy less often resulting in layoffs.

In The Spotlight

President Trump cited national security as the reason for the tariffs. But China and Russia — not our closest friends these days — supply 2.2 percent and 8.7 percent, respectively, of U.S. imports. But our closest allies, like Canada, which supplies 16 percent, S. Korea, which supplies 10 percent, and Mexico, 9 percent, will feel the real pain.(2) And importantly, Canada imports 50 percent of U.S. steel exports.

The U.S. Defense industry consumes 3 percent of U.S.-made steel.(3) And since U.S. steel mills operate below capacity, gearing up during a crisis is well within our means.

Should these tariffs be implemented, which are paid for by Americans, Barclays estimates that U.S. inflation will rise and economic growth will decrease.(4)

The tariffs also will result in higher steel costs for President Trump’s infrastructure plans.

From a political perspective, Buy American provisions sound good. But in reality the story is often different. History tells us that when implemented, many of these policies do more harm than good.

Let me be clear: buying American products is a very goods thing. But buying American products where we don’t have a competitive advantage is not. That’s why we trade. In areas where the United States does not have a competitive advantage, we’re better off importing.

The bottom line: Imports and exports are extremely beneficial to the American economy, American workers and American communities. In fact, trade now supports 1 in 5 American jobs and offers many more benefits than disadvantages.(5)

Unfortunately, misinformation about trade dominates the debate and has led to confusion and bad policy in Washington, DC.


1. WSJ editorial, March 2, 2018; Christine McDaniel, “Ten Things You Need To Know About Tariffs,” Mercatus Center, George Mason University, February 22, 2018.

2. WSJ editorial, March 2, 2018.

3. WSJ editorial, Feb 20, 2018.

4. Greg Ip, WSJ, March 3-4, 2018

5. Business Roundtable.


John Manzella
About The Author John Manzella [Full Bio]
John Manzella, founder of the Manzella Report, is a world-recognized speaker, author of several books, and an international columnist on global business, trade policy, labor, and the latest economic trends. His valuable insight, analysis and strategic direction have been vital to many of the world's largest corporations, associations and universities preparing for the business, economic and political challenges ahead.

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