Tariffs Will Take U.S. Down Wrong Economic Path

Last December, President Donald Trump closed out the year by signing the Tax Cuts and Jobs Act into law, the most significant tax reform in more than 30 years. Yet with another stroke of his pen, he could very well undo all the positive economic impact that has and is expected to follow that historic moment.  Earlier this month, the president signed proclamations that imposed a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports. While both are set to take effect this week, it is not too late for him to reverse course, before taxpayers and the economy bear the brunt of the subsequent consequences.

Put simply, the tariffs amount to a tax on American consumers as countless supply chains are forced to increase costs on their products, passing on those excess costs as a result. Average taxpayers, and their families, will ultimately pay higher prices on a multitude of consumer products from cars to canned goods to baseball bats.  And while consumers will feel an immediate impact on their wallets, the long-term effects could prove to be more severe, especially for the economy and workers across the nation.

The president has pledged to put America and American jobs first.  And perhaps he believes that’s what he’s doing by imposing tariffs. The tariffs, though, will have the opposite effect and will hurt, not help, the economy and workers. This is not conjecture, but rather history that tells us so.  This happened when the Bush Administration increased tariffs on steel and some 200,000 jobs were lost as a direct result.

This time around will prove no different. U.S. manufacturers that use steel employ an estimated 40 to 60 times more U.S. workers than do steel-producing facilities. Multiple industries will feel the economic sting of tariffs on steel and aluminum imports, including auto and machinery manufacturers, retailers and the beer industry.  According to a private analytical firm, Trade Partnership Worldwide, the tariffs could result in the loss of nearly 180,000 jobs.

Nothing is more important to long-term U.S. prosperity than being able to sell exceptional products in markets that 95 percent of the global population calls home. Yet all of that is in jeopardy if the president continues to forge ahead with these tariffs.

A fortress mentality does the United States no good in the global marketplace. It only serves to spur our trading partners to treat U.S. products in the same hostile manner. If foreign governments respond “in kind” with tariffs of their own then our exports of manufactured goods could decline. After Trump initially announced the proposed tariffs, European Commission President Jean-Claude Juncker floated the possibility of retaliatory tariffs on a variety of U.S. exports.

Taxpayer organizations, free market groups and business groups have all warned the Trump Administration about the consequences of continuing down the tariff path, but to no avail.  Members of Congress have also weighed in with Senate Finance Committee Chairman Orin Hatch bluntly stating:

“Simply put: This is a tax hike on American manufacturers, workers and consumers. Slapping aluminum and steel imports with tariffs of this magnitude is misguided. It undermines the benefits that the new tax law provides and runs counter to our goal of advancing pro-growth trade policies that will keep America competitive in the 21st century global economy.”

Levying tariffs on steel and aluminum imports is a step in the wrong direction and moves us away from the policies that have kept prices down for consumers and steered our economy in a positive direction for decades. Furthermore, this type of protectionist trade policy inhibits free trade and damages our standing in the global arena. The Trump administration should keep in mind that in a retaliatory trade war, there are no real winners.


David Williams is president of the Taxpayers Protection Alliance.

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