If any doubts remained six months into the Biden Administration that the Administration would be any less protectionist or “Buy American” oriented than its predecessor, they were largely laid to rest by recent comments from Commerce Secretary Gina Raimondo in an interview with Bloomberg News *[1] (reported in World Trade Online[2]). In the interview, Secretary Raimondo extolled the virtues of the Section 232 “national security” tariffs and quotas on imported steel and aluminum originally levied by the Trump Administration and maintained to date under President Biden.
Secretary Raimondo asserted that “those tariffs have been effective at helping American workers in the steel industry that, you know, folks are back to work . . .We’re seeing steel operations back up to capacity or producing more. So, we cannot simply say we are going to get rid of the tariffs because we need to protect our steel industry and those workers.” She also justified the continuation of the tariffs and quotas by asserting that “China had been dumping cheap steel and aluminum into America.” Raimondo conceded that the Trump Administration’s imposition of additional tariffs on steel and aluminum imports from US allies in Europe (U.S. allies in other parts of the world were not mentioned) raised “challenges” for the Biden administration and confirmed that negotiations with the EU were ongoing. However, she emphasized that simply eliminating the tariffs was not the solution being pursued by the Administration.
The comments also reveal a misunderstanding of the effects of the tariffs. They have not had a measurable impact on U.S. imports of steel from China, since most such imports were made subject to substantial anti-dumping and countervailing duties under the Obama Administration. In 2016, the final year of the Obama Administration, China was only the tenth largest source of steel imports into the U.S., responsible for only 0.08% of imports.”[3] (To be fair, I note that China’s flooding of the world steel market adversely affected producers in most national markets because the glut of commodity-grade Chinese steel world-wide drove prices down everywhere.)
Further, as National Foreign Trade Council President Rufus Yerxa has observed,[4] the section 232 tariffs have benefitted a small group of U.S. [steel] manufacturers but have had a much more significant negative impact on downstream users of steel (and aluminum).[5] These impacts affect workers in those enterprises as well; 12 million persons are employed in industries that use steel in their production processes, and 2 million of those are in industries where steel in “intensively” used. In contrast, even pro-steel-industry studies indicate that the section 232 tariffs have created only about 3,200 new steelmaking jobs.[6]
At a time when the United States is experiencing levels of inflation at levels not seen for several decades (caused by various factors including the pandemic and supply chain glitches as well as tariffs), it seems strange to me that the Biden Administration insists on adhering to a bogus program—steel and aluminum imports from allies such as Germany, South Korea, Japan (and originally Canada and Mexico) have never posed a threat to U.S. national security or even economic security. Moreover, the continuation of the tariffs occurs while both Secretary Raimondo and Treasury Secretary Janet Yellen agree that tariffs on Chinese goods (levied by Trump under section 301) have harmed U.S. consumers. Between the China tariffs and those on steel and aluminum, most consumers are or will ultimately be impacted whether they are purchasing automobiles, washing machines or other goods that require steel and aluminum for production, as at least a significant portion of the tariffs are being passed on to consumers.[7]
Will Clayton Fellow for Trade and International Economics, Baker Institute for Public Policy.
[1] Commerce Sec. Raimondo on Chip Shortage, Skills Gap, China Tariffs, July 28, 2021, https://www.bloomberg.com/news/videos/2021-07-28/u-s-commerce-chief-on-chip-shortage-skills-gap-tariffs-video.
[2] World Trade Online, Raimondo: U.S. will not “Simply” get Rid of Section 232 Tariffs, July 29, 2021, https://insidetrade.com/trade/raimondo-us-will-not-%E2%80%9Csimply%E2%80%9D-get-rid-section-232-tariffs-eu.
[3]Int’l Trade Administration, Global Steel Trade Monitor, March 2018, https://legacy.trade.gov/steel/countries/pdfs/2017/annual/imports-us.pdf.
[4] World Trade Online, op. cit.
[5] Econofact, Steel Tariffs and Jobs Revisited, February 6, 2020, https://econofact.org/steel-tariffs-and-u-s-jobs-revisited;.
[6] Economic Policy Institute, U.S. Section 232 Tariffs Lifted the Steel Industry—and Should be Continued, March 24, 2021, https://www.epi.org/press/u-s-section-232-tariffs-lifted-the-steel-industry-and-should-be-continued-new-study-shows-steel-import-measures-benefited-workers-and-created-jobs/.
[7] Econofact, op. cit.
