President Trump refused to back down last week on his plans to impose steep tariffs on steel and aluminum. Calling current U.S. trade deals “very stupid,” Trump has vowed to transform U.S. trade policy by imposing protectionist tariffs and renegotiating trade deals. But Trump’s obsession with the U.S. trade deficit is unjustified, and his trade policies will harm consumers and blue-collar workers — the very people he seeks to help.
Despite Trump’s insistence that our annual trade deficit is $800 billion, America’s actual trade deficit for 2017 was actually only $566 billion, according to the U.S. Bureau of Economic Analysis. Why the difference in numbers? Trump only focuses on our trade deficit in goods, and does not take into account our trade surplus in services. Sure, we import loads of industrial supplies and machinery, but we also export business, financial, and information services. Trump refuses to accept that the U.S. economy is now service-based, not manufacturing-based.
More than 12 percent of domestic workers hold jobs in mining, manufacturing, and construction — about the same percentage employed by state and local governments, according to 2016 Department of Labor statistics. In the 1950s, nearly one-third of the labor force worked in manufacturing, but improved technology and foreign competition caused many of those jobs to vanish, especially in the Rust Belt. Many of these disaffected workers became Trump voters because he promised to bring back the jobs they had lost.
But now more than two-thirds of workers are employed in the service industry, and service work — not manufacturing — is the future of employment in a developed country like the U.S. Former steelworkers would have a much better chance training to program the machines that have displaced them than getting their old jobs back.
But even if manufacturing were the future of work, Trump’s trade policy would still be disastrous. Sure, aluminum and steel tariffs could potentially help a few manufacturing workers, as some companies have pledged to start hiring for high-paying jobs once the tariffs are in place. But the majority of U.S. blue-collar workers do not actually produce aluminum and steel — many of them transform these materials into other products, and their jobs would be endangered.
Workers employed in metal fabrication, car manufacturing, and the manufacture of machinery and other transportation goods would be hit hardest by Trump’s tariffs. The Trade Partnership, a consulting firm, predicts that job losses in these metal fabrication and product manufacturing industries would far surpass job gains in the steel and aluminum industries, without even taking into account potential trade wars and losses in other economic sectors. The prices of the materials they need would increase due to U.S. tariffs, while they would see fewer sales due to increasing prices and potential retaliatory tariffs from the European Union, Canada, Mexico, and China. Rather than helping blue collar workers, steel and aluminum tariffs harm them.
Not only do tariffs protect one industry while punishing another, but tariffs also hurt American consumers. Planning to buy a new car? Secretary of Commerce Wilbur Ross predicts that a $35,000 car would cost $35,175 under the new tariffs. To be fair, a person buying a new $35,000 car probably is not too concerned with an additional $175. But it is the smaller, everyday purchases that would most burden the middle class.
Ross noted that the price of a can of Campbell Soup would only increase negligibly. Holding a can, he said, “I just bought this can today at a 7-Eleven ... and it’s priced at $1.99. Who in the world is going to be too bothered?” Though the visual aid was humorous, surely Ross must understand that the vast majority of middle-class Americans would never pay $1.99 for a can of Campbell Soup that retails at Target for less than a dollar. This is the sort of elitism that bleeds through when talking about trade protectionism and tariffs. Trump’s administration wants to take action in order to fulfill campaign promises to help America’s “forgotten men and women,” but it fundamentally misunderstands what their lives are actually like, and how their lives can really be improved. The prices of canned goods and blue jeans might not matter to Ross, but increasing prices of food and clothing could do real harm to Americans who live paycheck-to-paycheck.
Blue-collar workers as a whole will not benefit from populist protectionism, nor will consumers at large. A small subset of American workers would benefit, as would the corporations that employ them. But those who govern a free society should not show favoritism to tiny minorities. They should make trade policy that truly is fair for everyone. Trump’s “fair trade” does not treat American workers fairly — only free trade does that. Our trade policy should be more open and more free, because free trade will help the economy grow and benefit American consumers.
If the president wants to help the forgotten men and women of America, he should begin by ending this trade war before it begins — unless he wants more unemployed blue-collar workers and higher grocery bills.
Amelia Irvine (@ameliairvine3) is a contributor to the Washington Examiner's Beltway Confidential blog. She is a Young Voices Advocate studying government and economics at Georgetown University.
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