When President Trump recently put tariffs on steel imports essentially because other countries where "stealing" American steel worker jobs and American money in the form of trade deficits, was he really stopping the stealing? You've heard the expression "robbing Peter to pay Paul" right? Was there a little (or depending who you talk to a lot) of that going on?
The markets clearly felt uncertain with the changes and have reflected that in their numbers. An article I read or news item I heard said that the steel industry employs around 200,000 to 250,000 workers. Obviously, the goal of the tariffs would be to increase the number of steel workers the industry employs and put more Americans back to work. However, the same news piece also said that the auto industry employs 6.5 million workers. Last I checked there was still some steel used in automobile manufacturing. Plus, what about plane manufacturers, laundry equipment, refrigerators and other major appliance industries? The news piece I heard/saw, pondered the effect of the tariff on the auto industry? Would the tariffs cause a loss of jobs in the auto industry because it increased the cost of autos forcing Americans to keep their cars longer reducing US car sales? How would that play out in terms of the gains in the steel industry? Even if the employment percentage gains were large in the steel industry vs percentage losses in other industries, the per capita employment number losses and dollars in those other industries might be far larger. Would that not be "robbing Peter to pay Paul”? The world is a delicate balance these days and tipping/putting fingers on scales can have unintended consequences, which is when markets get spooked. Plus, what about American's favorite beers? The price of unwinding after work just got higher. Republicans are big on the trickle-down effect but are they going to get an unexpected trickle down here? Ronald Reagan actually employed a similar strategy during his presidency which was a win for Americans. Foreign car manufacturers started building their cars here in the US employing more Americans. Was that such a different period in time? I don't think we were quite the global economy then that we are today. Could President Trump pull this off? Does he have trickle up his sleeve? Only time will tell us whether steel will end up stealing or not.
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