I thought we just got through a big fight with Democrats over what should and shouldn’t count as “crumbs” in a tax context. Pelosi’s been running around insisting that an extra $1,000 in taxpayers’ pockets from the GOP tax cuts means nothing in the grand scheme of things, which is easy for a millionaire many times over like her to say. For a middle- or working-class family, a thousand bucks will help pay for new clothes for the kids, a much-needed car or home repair, a month’s worth of groceries, or any number of other necessities. Paul Ryan went so far as to tout one woman’s quote to the AP that her very modest $50 tax cut under the Republican bill would at least pay for her Costco membership this year. Every crumb counts when you’re not rich, Nancy.
So here’s Commerce Secretary Wilbur Ross, an honest-to-goodness billionaire, defending Trump’s dopey steel tariffs — a tax that’ll hit those same middle- and working-class taxpayers the hardest — with a Republican version of the “crumbs” argument. He starts with cans of soup and soda, noting that the tariffs should produce a price hike of less than one cent. But as we move on up to cars, the math gets shakier. Using Ross’s own figures here, a $35,000 car will now cost $175 more just for the steel involved. That’s nearly 20 percent of the hypothetical $1,000 tax cut most taxpayers will see; per Scott Lincicome, assuming 17 million cars sold this year, you’re talking about $3 billion sucked out of the economy in new taxes. And cars are just one (admittedly very expensive) item. A penny on a can of soda or soup means nothing, but when you’re buying those items every week along with myriad other goods that incorporate steel and aluminum, it adds up. You would think, if the White House is going to send someone out to sneer that new, wholly needless taxes on everyday items are “no big deal,” they could at least find someone who, unlike Ross, isn’t worth 10 figures.
But if it’s necessary for national security, we have no choice, right? That’s Trump’s justification for the new tariffs: Under the 1962 trade law, the president can slap taxes on imports if the economy has been weakened by them to the point that national security is threatened. Makes sense, writes Irwin Stelzer, except for the fact that (a) the economy’s stronger right now than it’s been in years and (b) the Secretary of Defense, whose entire job is to worry about national security, lobbied Trump *not* to impose broad tariffs for fear that it would wreck U.S. alliances. And as for sticking it to China:
China is the world’s dominant steel producer, but experts said the impact of Trump’s decision to slap 25 percent tariffs on steel imports, and 10 percent on aluminum, won’t have a big impact on China since it only accounts for 2 percent of U.S. imports. The government in Beijing is not about to start a trade war over the tariffs, they added.
“What an extremely stupid move,” said Li Xinchuang, vice secretary general of the China Iron and Steel Association. “A desperate attempt by Trump to pander to his voters, which I think in fact runs counter to his ‘America First’ pledge. The U.S. is now setting a very, very bad example.”
It’s Canada and Brazil, two U.S. allies, who’ll be hit hardest by the new tariffs if in fact they’re globally applied rather than targeted at adversaries. In fact, the foreign power that’s rattling its economic saber at Washington this morning isn’t China. It’s the EU. Great job all around here — on the geopolitics, the messaging, and the kitchen-table bottom line.
Exit question: Another industry that’ll be hit hard by steel and aluminum tariffs is, uh, brewing. Lucky for Trump that his voters don’t much like cars or beer, though, right?