While former President Donald Trump may have touted his business experience as a qualification for the job, President Joe Biden’s administration is getting things done where Trump couldn’t.
The Biden administration and the European Union struck a deal in November for the removal of Trump-imposed U.S. tariffs on European steel, lowering the cost of steel for everyone from automakers to wind turbine makers and from high tech gadgets to consumer goods like appliances.
At the same time, the deal limits the amount of imports so as to protect the U.S. steel industry in a balanced way.
Conservative economists still criticize the latest deal because it calls for putting a limit on imports even though tariffs are removed. But it’s a centrist policy the Biden administration is known for and partly why American voters put him in office.
The Republican Party had a history of free trade principles railing against protectionist tariffs like the ones Trump imposed. And Democrats had long favored tariffs in an attempt to preserve high-paying union jobs. But loyalties have switched.
The deal also removed all tariffs on iconic U.S. goods sold in Europe such as Harley Davidson motorcycles, Kentucky bourbon and Levi’s jeans, in a windfall for politically purple Wisconsin, decidedly red Kentucky and blue California.
Trump imposed the tariffs on steel in the guise of national security aimed at China who flooded world markets with cheap steel. But that argument doesn’t wash because U.S. allies like Europe, Canada and Mexico, not its enemies, were harmed by the tariffs, according to a report by the conservative Peterson Institution for International Economics.
The tariffs “damaged the U.S. economy” the institute noted in its extensive fact-laden report, costing $3 billion alone to Harley Davidson, bourbon makers and Levi’s.
Because the U.S. tariff argument was so weak, the European Union filed a formal trade dispute with the World Trade Organization, the body by which international trade disputes are adjudicated.
Moreover, Trump steel tariffs aimed at shoring up the steel industry and increasing capacity had uneven impact because they applied only to raw steel and not refined products. Manufacturers of refined steel and aluminum products actually objected to the tariffs at the time, saying prices would rise.
And that’s exactly what happened. In fact, while prices rose 20 percent for aluminum and steel prices doubled from the time of the tariffs imposed until September, the manufacturing capacity of both industries did not rise as much. In fact, both industries’ manufacturing capacity are about flat since tariffs were imposed, according to Federal Reserve economic research.
In fact, one could argue when it comes to products made of steel, Trump policies had more to do with current inflation than Biden policies. The recent removal of tariffs will still give the steel industry some protection, but it will also help keep prices low for consumers.
It’s a balanced policy that works for everyone.