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Steel Prices: How We Got Here & What Could Happen
By Scott Buehrer
May 14, 2021
History suggests the steel tariffs were a bad idea; current events reinforce that notion:
For more than 100 years, the federal government has been implementing quotas or tariffs on imported steel to support domestic steel producers. Historically, government action in the steel market arises in times of low steel prices as a means of supporting steel producers and marketed for political purposes to attract support from voters, particularly in the Rust Belt. As a result, steelmaking jobs might have been saved, but a far greater number of jobs in steel-consuming industries, including the metal fabrication sector, were lost. As with any tariff and quota action, the U.S. economy typically sees a net loss in jobs.
President George W. Bush’s steel tariffs began as a campaign promise to steelworkers in West Virginia. Tariffs ranging from 8% to 30% were established by the Bush administration in March 2002 and were intended to last for three years. At the time steel prices were at a historically low level in the U.S. The tariffs were not imposed on all imported steel and were not imposed on all countries exporting steel to the U.S. For example, Canada and Mexico were excluded because of NAFTA concerns and other countries, such as Argentina and Turkey, were exempted.
What started as a three-year tariff program was abandoned after 22 months because of the World Trade Organization’s decision that the U.S. was in violation of a WTO agreement and a threat from the European Union to impose new tariffs on U.S.-sourced goods.
The overall economic impact of the tariffs in the U.S. was a jobs killer. Although the steel industry added about 3,500 jobs, the rest of the manufacturing sector shed an estimated 200,000 jobs, some of which were related to manufacturers leaving the U.S. to secure lower-cost steel.
The full article was published on “The Fabricator” web site. This is just an excerpt.