One year after President Trump imposed tariffs on steel and aluminum imports, the question logically arrives: How is that going?

Sure enough, the past week, a set of studies landed. One from analysts at Columbia, Princeton and the Federal Reserve Bank of New York found that American consumers largely have picked up the tab. Another from the Center for Economic and Policy Research put the price at $6.9 billion in lost income for first 11 months of last year.

Perhaps the most helpful is the work of Ned Hill and Fran Stewart of the John Glenn College of Public Affairs and the Ohio Manufacturing Institute at Ohio State. They dove deeply into what has happened here. After all, steelmakers and workers in these parts are supposed to be among the leading beneficiaries of the tariffs.

At first, Hill and Stewart were puzzled. The tariffs appeared to have little effect. Then they learned why — the big tax cuts engineered by the president and the Republican Congress in late 2017. In a conversation last week, Hill reminded that the tax cuts are roughly equal in size to the stimulus package enacted in 2009 as a response to the Great Recession. The boost to the economy initially served to mask any drag due to the tariffs.

Consumers kept spending. Affected businesses, or those seeing higher prices, looked to weather the storm before weighing changes in their supply chains.

Then Hill and Stewart started to discover more, for example, from a survey conducted by the Ohio Manufacturing Extension Program toward the end of last year and into this year. Such tariff actions are supposed to give an industry or sector a breather, a chance to regroup for the competition. Tariffs are a tool for the short term. What many steel-buying businesses began to realize is that these tariffs may be around for a while.

That seemed especially so after the completion of the renegotiated trade agreement with Canada and Mexico last fall. The tariffs on steel and aluminum remain, and as Hill and Stewart point out, Ohio has “the largest exposure of any state to retaliatory tariffs imposed by Canada,” with the metals-industry the most exposed.

Hill and Stewart report finding no evidence that Ohio employers or workers “have experienced significant benefits” from the tariffs. Neither have they found “major harm.” They note little change in steel production or in steel employment, with slightly fewer jobs in December (83,200) compared to the start of 2018 (83,500).

What they explain is that the longer the tariffs hold, or expand, the greater burden they become. Recall the president has threatened both to hit China harder and impose duties on imports of European auto goods. According to Hill and Stewart, those two steps would risk a recession.

If the downturn isn’t national, Hill adds, it will be regional.

The Manufacturing Extension Program survey captures the dynamic of mounting worry. One question asked whether the tariffs affected your company. Nearly 500 companies responded — with the “negatively” or “very negatively” outpacing “positively” or “very positively” 9 to 1.

A second question went: “What government regulations concern you the most?” In this instance, more than 200 responded. A year ago, just 4 percent cited tariffs. This time, the share was two-thirds.

On Wednesday, the Commerce Department reported the trade deficit reached an all-time high of $621 billion for goods and services, mostly reflecting a slowing global economy, robust consumer spending here and a strong dollar. Contrary to the president’s frequent assertions, the trade deficit isn’t some kind of scoreboard for tallying unfair trade practices.

It involves other things, just as the White House alone applying tariffs isn’t likely to push China into complying with global trading rules. Many countries have a gripe with China. Better to join in leveraging the collective muscle? In a similar way, Hill and Stewart make clear that if the Chinese are dumping state-supported steel, legacy American steelmakers face a strategic investment challenge for the longer term, keeping up with “the rise of the modern flex-mill,” the new technology achieving higher quality at lower cost.

How are the president’s tariffs helping in that cause? Not much if steel consumers pull back, or look elsewhere for supply, leaving investors reluctant to step up.

 

Douglas is the Beacon Journal/Ohio.com editorial page editor. He can be reached at mdouglas@thebeaconjournal.com.