WASHINGTON (Mar. 1, 2018) – The R Street Institute disagrees vehemently with President Donald Trump’s decision to levy heavy global tariffs of 10 percent on imported aluminum and 25 percent on imported steel pursuant to Section 232 of the Trade Expansion Act of 1962. As R Street has repeatedly noted, there is no persuasive national security or economic rationale for the tariffs sought by the president.

The U.S. Defense Department needs only about 3 percent of steel produced domestically. Of the nation’s 10 largest suppliers of steel, only Russia could be considered a strategic threat, while Canada is the single largest supplier of steel to the United States. In addition, the United States has various treaties that require allies to provide supplies in the event of a true national security emergency.

“Imposing tariffs of this magnitude will certainly alienate key allies at a time of increasing uncertainty in the world,” R Street’s Senior National Security Fellow Megan Reiss said.

The economic case for steel tariffs is equally thin, noted R Street’s Trade Policy Counsel Clark Packard.

“Today’s decision will jeopardize far more jobs than could possibly be created or saved in the steel industry,” Packard said. “These tariffs may temporarily pad the bottom line of domestic steel companies but they will do so at the expense of the broader economy.”

According to 2015 U.S. Census data, steel mills employ about 140,000 Americans, while steel-consuming industries, including automakers and other manufacturers who rely on imported steel, employ more than 5 million. It is estimated that nearly 200,000 jobs and $4 billion in wages were lost during the 18 months during 2002 and 2003 that President George W. Bush imposed tariffs on imported steel pursuant to Section 201 of the Trade Act of 1974.

“The tariffs sought by President Trump are much broader than the more targeted tariffs implemented by the Bush administration,” Packard said. “American businesses that export their products abroad also will almost certainly face foreign retaliation. There will be no winners in a global game of tit-for-tat retaliation.”

Today’s decision could undo much of the progress made in recent years in reducing excessive taxes on American businesses and families, Packard added. R Street strongly urges Congress to take affirmative steps to rein in the president’s powers to impose tariffs, and in particular, to overturn today’s misguided decision by the White House.

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