In other words, steel and aluminum may win in the short term, but the steel and aluminum users and consumers lose. In fact, tariff hikes are really tax hikes. Some of those five million jobs will be put in harm’s way. If they sell less to foreigners, the trade deficit goes up, not down. Since so many of the things Americans consumers buy today are made of steel or aluminum, a 25 percent tariff may get passed on to consumers at the cash register. This is a regressive tax on low income families.
Trump should also examine the historical record on tariffs, because they have almost never worked as intended and almost always deliver an unhappy ending. The Smoot Hawley tariff of 1929 signed into law by Herbert Hoover gave us the Great Depression and worsened it. Richard Nixon’s 10 percent import surcharge contributed to the stagflation of the 1970s. George W. Bush tried to save the steel industry by imposing tariffs on steel. If those tariffs worked, we wouldn’t be having this discussion today. We tried to save the color television industry with protectionist measures. Instead, they wiped out domestic production.