Entering text into the input field will update the search result below

Potential Fallout Of Misguided Steel And Aluminum Tariffs

e21 profile picture

By Charles Hughes

President Trump recently announced that his administration would impose tariffs on steel and aluminum. Such tariffs could have substantial effects on a range of American industries and the overall economy.

In a column for Economics21, Berenberg Capital Markets chief economist Mickey Levy explored the potential macroeconomic effects of the announced tariffs. Those insights are important in helping to analyze the broader ramifications of the new duties.

This column examines the justification made for the tariffs and what lessons can be gleaned from past experience.

The administration cited national security interests as justification for the tariffs. The Department of Defense (DoD) issued a memorandum in response to the Department of Commerce's reports on the subject, noting that the U.S. military only requires about three percent of domestic steel and aluminum production. Due to this small share, the DoD reiterated that it "does not believe the findings in the reports impact the ability of DoD programs to acquire the steel or aluminum necessary to meet national defense requirements."

Even with the many factors affecting steel jobs and production, from trade to automation to the state of the global economy, domestic production of aluminum and steel has been fairly stable for decades, except for a substantial decline during the Great Recession. This is shown in the figure below, with the first quarter of 1990 indexed to 100. If national security concerns are indeed the animating force behind steel and aluminum tariffs, the U.S. military would already seem to have an abundant, reliable supply of domestic production.

Domestic Production Of Raw Steel And Aluminum

Steel and Aluminum Production


Source: Board of Governors of the Federal Reserve System.

One reason to think the announced tariffs on steel are not likely to have a substantial effect on China is that the country

This article was written by

e21 profile picture
e21: Economic Policies for the 21st Century is a Washington-based center of the nonprofit, nonpartisan Manhattan Institute dedicated to economic research and innovative public policies for the 21st century. Drawing on the expertise of practitioners, policymakers, and academics, we aim to advance free enterprise, fiscal discipline, economic growth, and the rule of law.

Recommended For You

Comments (1)

Ben Gee profile picture
Is the US starting a trade war?
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.