I love American Steel.  And American Aluminum.  I am a casual purchaser of metal, but frequently enough that I have an account at the local Dayton office of ALRO Steel.  I am a novice welder and car builder, which means I need raw materials to work with.  American metals are far higher quality to work with than Chinese steel, and even though the cost is quite a bit higher, I need to purchase the U.S. steel for my application.  In the picture above I need to expand the straight cut just a bit so it can be identical to the stock diameter of a 50 year old gas tank filler neck that I am trying to replicate in stainless steel.  Stainless steel from China will tend to crack when stretched.  The high quality American stainless steel I’m using will handle the stretch quite easily.  And when you weld with Chinese “mystery metals,” the results are very poor as you are not dealing with pure metal.  A novice welder like me can’t afford to have poor metals if I hope to have that perfect stack of dimes, full-penetration weld.

But I’m going to have to pay a higher price to buy US steel (and aluminum) going forward with Mr. Trump’s new tariffs.  Its not just the purchasers of Chinese steel that will pay a higher price; US manufacturers will be able to increase prices with a higher post-tariff price of their Chinese competitors.  We will undoubtedly lose more steel-using jobs due to higher prices of a key resource input than will actually be generated in the steel industry, and everyone will pay higher prices than they would otherwise.  But hey, we’re making America great again!

The steel special interest pleaders make a good point–current Chinese production of steel is not a market result, but rather the results of government action in China.  Effectively, China taxes their citizens to subsidize global steel consumption.

“The Chinese government has supported the country’s steel industry primarily through cash grants, equity infusions, government-mandated mergers and acquisitions, preferential loans and directed credit, land use subsidies, subsidies for utilities, raw material price controls, tax policies and benefits, currency policies, and lax enforcement of environmental regulation. The Chinese government maintains a majority share in the top-producing (by 2014 tonnage) Chinese steel producers. Domestic steel producers are not competing with private enterprises but with sovereign governments that do not need to use free-market principles to operate.”

Yet as Milton Friedman said years ago, our best response is to not repeat Chinese folly with our own.  Further, aside from the higher steel prices, it is likely that China will respond with its own tit for tat, and another US industry that exports to China will see its sales slow in the retaliatory move.  We learned in the ’30s that global trade wars really are just cutting off our nose to spite our face.  Mr. Trump, you have the economy moving in the right direction now with tax and regulatory reform, don’t punish most Americans in your support of the special interests.

EDIT Update:  Veronique De Rugy asks a few good questions over at NR online:

Talking about perspective, where was Trump’s economic adviser, Gary Cohn, making the case for workers in steel- and aluminum-consuming industries? Where was Treasury secretary Steve Mnuchinm explaining that tariffs don’t bring jobs back but can force manufacturing production abroad? Where was national security adviser H. R. McMaster explaining that, contrary to what the Department of Commerce says, this is not a national-security issue for the military?

Maybe they weren’t invited to the big-government-handout party.