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continued from page 8              on national security concerns — Section   a share of the United States economy
         at an event that was pulled together   232  of  a  law  enacted  in  the  Cold  War.   than are steel and aluminum  produc-
         hastily, and while his preferences were   The argument is that with domestic met-  ers. Lydia Cox of Harvard and Kadee
         broadly known, some congressional Re-  als  production  undermined,  the  United   Russ of the University of California,
         publicans and business lobbyists were   States is left vulnerable in the event of   Davis, estimate that steel-using indus-
         still taken by surprise.  By the initial   conflict that disrupts trade flows.  tries employ 80 times as many workers
         Thursday afternoon, many allies of the   All of this should end up in furi-  as do industries producing steel.
         president  implored  him  to  change  his   ous lobbying in the days ahead to try   For consumers goods containing met-
         mind. But the new tariffs now seem to   to persuade the president to exclude   als will  become more expensive. But
         be going into effect.              military allies’ metals from the tariffs.   there’s not much reason to expect enor-
           Despite Trump’s criticisms of trading   Defense Secretary James Mattis warns   mous price increases for most goods.
         practices by China and other countries,   tariffs should be targeted so as not to   The  United States  imports  only  some
         and the fact that such  harsh  words   damage  relationships with allies, the   one-third of its steel, and the tariff
         have been  a hallmark  of  his  years  in   president ignored that advice.  would  not  apply to domestic produc-
         public  life,  it appears the  details of   There will be losers and winners. Big   tion; aluminum is more heavily depen-
         this policy have not been fully worked   winners  are the United States steel   dent on imports, with only 10 percent
         through. The White House offers few if   and aluminum industries, which have   of aluminum made domestically.
         any real implementation details.   lobbied for years for this kind of aggres-  So prices will go up by only a fraction
           One possible rationale is that Ameri-  sive government action.      of the tariff amount. However consumers
         can steel and aluminum companies     The most immediate  losers  are the   don’t typically buy raw steel and alumi-
         have long complained of unfair practic-  industries that rely on steel and alumi-  num. People purchase consumer goods
         es by overseas competitors, particular-  num as an input and will face higher   in which those raw materials are but one
         ly  Chinese  state subsidies  promoting   prices.  That includes  some of the na-  input. A car includes not just steel and
         production.  This  can  flood  the  global   tion’s biggest industries:  the automo-  aluminum but also plastics and textiles
         marketplace with metals, depress pric-  bile sector;  aerospace; heavy equip-  and glass, not to mention the computer
         es and make American production less   ment; and construction.  In short, the   circuitry that controls it all, the design
         economical than it otherwise would be.  chassis of a Ford, the body of a Cater-  know-how and assemblage work, along
           American trade officials have sought   pillar bulldozer, the wings of a Boeing   with a profit margin for both the auto-
         redress in various ways, including  a   aircraft, and the steel girders inside a   maker and the dealer.
         decision by the George W. Bush admin-  New York skyscraper are all about to   For any given product, it is hard to pre-
         istration in 2002 to impose steel tariffs   get more expensive.       dict whether producers will eat the cost
         of up to 30%. But that targeted the law   After the president’s announcement,   of more expensive metals, pass the cost
         at safeguarding domestic industries   shares of U.S. Steel and Century Alu-  on in the form of higher prices, or both.
         harmed by imports. Trump’s now used   minum were each up about seven per-  Put differently: If your favorite beer pro-
         that provision to impose tariffs on such   cent shortly afterward, while shares of   ducers are looking at paying an extra
         things  as  imported  solar  panels  and   Ford, Caterpillar and Boeing were each   fraction of a cent for each aluminum can,
         washing machines.                  down about three percent.          they might just take on the cost them-
           The Trump administration is on more   The  industries  that use  steel  and   selves, they might raise prices, or they
         uncharted ground by basing the tariffs   aluminum  are  considerably  larger  as   might split the difference. It is hard to
                                                                               know in advance how much of each will
         Port crane loading rolled steel sheet coil in a cargo ship.           take place.
         Photo © Lucagal  / Dreamstime.com                                       To the question of whether this mat-
                                                                               ters for the economy, it may be instruc-
                                                                               tive to remember that  the American
                                                                               economy is relatively strong at the
                                                                               moment, and has been historically re-
                                                                               silient to most disruptions. Companies
                                                                               are good at restructuring their supply
                                                                               chains to minimize disruption because
                                                                               of tariffs like these. Overall, the 2002
                                                                               Bush administration steel tariffs have
                                                                               been judged to be costly relative to the
                                                                               jobs  that were  saved. On  the  other
                                                                               hand those tariffs but they were hardly
                                                                               the cause of some economic disaster.
                                                                                 This action may create some jobs in
                                                                               domestic metals-producing industries,
                                                                               cost some jobs in fields where steel and
                                                                               aluminum are inputs, and push con-
                                                                               sumer  prices  a bit higher.  The  large
                                                                               and dynamic United States economy
                                                                               can handle it. The risk comes from the
                                                                               potential ripple effects.
                                                                                 Affected countries may well retaliate
                                                                               by ordering tariffs on American goods,
                                                                                                continued on page 12

         10     Wire Rope News & Sling Technology   April 2018
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