Trade groups to Trump: Do not impose tariffs on steel and aluminum
"Dear President Trump, On behalf of the following organizations, we urge you not to impose tariffs or other restrictions on imported steel and aluminum pursuant to the recommendations made by Commerce Secretary Wilbur Ross under Section 232 of the Trade Expansion Act of 1962.
"Many of the United States’ largest suppliers of steel and aluminum are covered by free trade agreements like NAFTA and the USKorea Free Trade Agreement, and some of our largest suppliers are covered by NATO, which requires its members to defend American security and provide assistance during emergencies.
"Likewise, the U.S. Defense Department has a number of tools at its disposal to receive supplies necessary for national security. Specifically, we have a number of defense-procurement memorandums of understanding with our allies, as well as “security of supply” arrangements intended to 'ensure the mutual supply of defense goods and services.'
"These bilateral agreements with allied states allow the Defense Department to 'request priority delivery for DoD contracts, subcontracts or orders from companies in these countries.'
The economic case for steel and aluminum tariffs or other import restrictions is also weak. First, steel and aluminum tariffs or other import restrictions would hurt downstream domestic manufacturers.
"According to 2015 census data, for instance, steel mills employ about 140,000 Americans and add about $36 billion to the economy, or about 0.2 percent of gross domestic product.
"Meanwhile, steel-consuming industries, including manufacturers who rely on steel imports, employ 6.5 million Americans and add about $1 trillion to U.S. GDP. Raising costs on manufacturers will jeopardize far more jobs than could possibly be saved by imposing steel tariffs or other restrictions.
"As an example, in 2002, George W. Bush’s administration acquiesced to the demands of the domestic steel industry and imposed safeguard tariffs on steel pursuant to Section 201 of the Trade Act of 1974. It is estimated that these tariffs resulted in nearly 200,000 job losses and cost nearly $4 billion in lost wages before they were withdrawn in 2003.
"Similarly, according to projections from NERA Economic Consulting, while a 7 percent across-the-board tariff on primary and semi-finished aluminum would add about 1,000 jobs to the U.S. aluminum sector and increase domestic aluminum output by $850 million annually, for the manufacturing sector as a whole, employment would decline by 3,040 jobs and annual output would fall by $1.4 billion.
"The economy as a whole would lose 22,600 jobs and total output would fall $5.0 billion per year.
"Not only would steel and aluminum tariffs or other import restrictions raise costs for domestic companies, they could ensnare unrelated domestic industries in a tit-for-tat game of foreign retaliation." ■