Trump’s Trade War Bears Sour Fruit

Trump’s trade war is already bearing fruit, but it’s sour fruit. A handful of steel production jobs have been protected – but in the process, thousands of others have been killed off, and American manufacturing has been seriously jeopardized as a result. Harley-Davidson’s recent announcement is just one example, and make no mistake, the motorcycle producer’s decision to relocate some facilities outside of the US is directly the result of Trump’s decisions.

The largest manufacturer of nails in the US, located in Poplar Bluff, Missouri, has already begun layoffs as a direct result of the tariffs, which have increased the cost of the company’s raw materials to an unsustainable level, and the company is considering relocating to Mexico.

These are stories we can expect to be repeated thousands of times across the US, and domestic manufacturing suffers and their supply chains get disrupted to a breaking point as a direct result of Trump’s trade war. Most American manufacturers have global supply chains and rely on imported raw materials, and when those raw materials increase in price, those American manufacturers have to either find new sources, or increase prices – or in many cases, succumb to market forces and simply sell fewer goods, lay off workers and decrease returns and value to shareholders. This is simple economics that is widely understood by economists – simple economics which the President either ignores or does not understand.

While the President enjoys whipping his supporters into a frenzy by claiming to “save” jobs in steel-producing cities, the fact is, steel production – like almost any other industry – requires far fewer workers due to efficiency and increased levels of automation. Steel supported 650,000 American jobs in the 1950s, a figure which has dropped to 140,000. The decrease in steel jobs isn’t all because of foreign steel – much of the decrease can simply be attributed to more efficient processes.

According to a recent Newsweek report, the steel and aluminum manufacturing industry can expect to see an additional 27,000 jobs over the next three years as a result of the tariffs, but this gain is miniscule compared to the jobs which will also be lost as a result of the same policy. According to the report, for every steel or aluminum job created, 16 other jobs will be lost.

Contrary to Trump’s contention that trade wars are “easy to win,” in fact, they have been proven to be highly destructive. George W. Bush imposed a steel tariff of up to 30 percent on imported steel in 2002, a move which yielded the same results and harmed steel-consuming industries, including the American auto industry.  

There are no winners in a trade war, and the potential for global disruption and economic depression are greater than ever. The protectionism of the 1930s which triggered the Great Depression is nothing compared today, and the potential for a global depression is very real.

 

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