Just four days ago, the Biden administration launched a new line of attack against former President Donald Trump and his campaign promise to raise tariffs if he were elected in November.
Such higher tariffs would constitute “welfare for the rich that would fuel inflation.” raise prices for consumersaccording to a Axios summary of a White House note. The change in messaging, The New York Times reported, it was an attempt to “recalibrate” Biden’s economic message in the face of stubbornly high inflation and a lingering sense among voters that the economy is not doing well. In fact, this is an attempt to remind voters that Trump’s economic plans include the deliberate goal of artificially inflating prices, because that’s what tariffs do.
On Wednesday, President Joe Biden called for a tariff increase.
During a visit to the headquarters of the United Steelworkers union in Pittsburgh, Pennsylvania, Biden said he would move to “triple the tariff rate on both steel and aluminum imports from China” if a new Commerce Department investigation should he discover that China is selling steel to America at low prices, what Biden has called “unfair”. Biden also reiterated his opposition to Japan’s Nippon Steel’s purchase of US Steel, saying the US-based company should remain “American-owned, American-run”.
Earlier in the day, the White House officially announced a goal to triple some existing tariffs on steel and aluminum imported from China, from 7.5% to 25%. These higher tariffs would be separate from (and in addition to) the 25% tariffs on steel and 10% tariffs on aluminum that then-President Donald Trump imposed in 2017 through a different law that grants presidents the authority to increase tariffs for apparent “national security.” ” reasons.
With the announcement, Biden scored an impressive series of own goals. The call for higher tariffs not only weakens his own campaign’s attack on Trump’s plans to raise tariffs, but also highlights Biden’s willingness to favor economic policy, seemingly without regard for those who will face as a result higher prices. Remember, higher tariffs intended to protect an industry create higher costs along the supply chain. The promise to raise tariffs to protect steel workers is a promise to raise prices for industries that use steel, and the last six years have provided a real-life experiment in how this works: the cost of tariffs Trump was almost entirely paid for by American consumers and consumers. downstream industries.
Indeed, if higher tariffs were the solution to anything, wouldn’t there be evidence of it by now? American steel and aluminum production has remained stable since Trump’s tariffs were imposed six years ago, and America’s largest steelmaker, US Steel, is up for sale. Trump promised that protectionism would be the path to a steel production revival, and that clearly hasn’t been true, but maybe it will work if Biden pushes the button a little harder? What does it mean?
The only good thing that can be said about the idea of Biden’s proposal is that it will probably be ineffective because America no longer imports much steel or aluminum from China.
According to the Census Bureau, the United States imported 25.6 million tons of steel in 2023. Last year, China was the source of 553,000 tons of steel, which might seem like a lot, but it amounts to just 2% of total imports.
Biden’s plan to raise tariffs would “only impact 0.6% of American steel demand,” THE Wall Street Journal he reported Wednesday afternoon, underscoring how insignificant this action is likely to be.
However, the mixed signals sent by the president matter. He is proposing a change that will likely be ineffective in achieving its stated goals and, to the extent it has any impact, the result will be higher prices for American businesses and consumers. Meanwhile, he’s rolling out that plan to raise prices at the same time that his campaign is trying to make voters forget how much they hate inflation, and in the midst of an attack on Trump’s plans to make the exact same thing.
All of this amounts to an economically senseless and politically lazy attempt to pander to an incredibly narrow slice of the American electorate – union workers – by using the presidency’s power over trade to influence elections.
As with Trump’s attempts to raise trade barriers for purely political reasons, Biden’s call for higher tariffs on Chinese steel and aluminum is a good reminder that the president’s broad powers over trade policy should be curtailed .