Trump's steel tariffs do more harm than good to U.S. companies

by Somar Hadid | 01/29/2019

Trade and the economy were two of the major cornerstones of Donald Trump’s presidential campaign. In an appeal to voters of the rust belt states, many of which also happen to be swing states, Trump asserted that he would fix the “disastrous” trade deals imposed by the previous administration in a bid to bring back manufacturing jobs that were outsourced overseas. The main way Trump plans to fix these trade deals is through tariffs. A tariff is a tax on an imported good, and a 15-percent tariff, for example, would indicate that for every dollar of that good a company buys, the company would have to pay the United States government 15 cents. The effect of this tariff is a higher price for the good for both consumers and producers alike, as producers inexorably due to an increase in manufacturing costs. After less than two years into his first term in office, one of the products that Trump has implemented tariffs on is steel. This has produced a wide range of reactions from across the political spectrum. Unsurprisingly, Trump has doubled down and defended his policies even as some of his top economic advisors, such as former National Security Advisor Gary Cohn, have resigned in opposition. In reaction to these new tariffs, there have been those who argue that Trump’s policies hurt the economy more than they help it, but there have been others who have supported them, most notably the domestic manufacturers of these items. A survey of leading economists from the Initiative of Global Markets indicated that although the tariffs would benefit some companies, the net economic losses as a result would outweigh the net economic gains. The organizations who would benefit from these tariffs are the domestic producers of these products, while the companies that would be undermined are those that utilize these raw materials for their manufacturing plants that in turn would be hurt by the rising costs.