Trump’s tariffs try to solve a problem that he has exaggerated, steel industry experts say

Announcing new tariffs this week, President Donald Trump pitched himself as the savior of a dying steel industry.

Trump campaigned on the idea that foreign nations — particularly China — were destroying American industry and killing millions of jobs. Now, as president, he’s delivered on a promise to punish those he has said are responsible, slapping a 25 percent tariff on imported steel and a 10 percent tariff on imported aluminum, with some exemptions.

“Our industries have been targeted for years and years, decades in fact, by unfair foreign trade practices leading to the shuttered plants and mills, the laying off of millions of workers, and the decimation of entire communities. That’s going to stop,” Trump said Thursday.

But the numbers, as well as industry experts, dispute Trump’s claims. Bureau of Labor Statistics data for the larger primary metal manufacturing industry indicates a loss of 300,000 jobs over the last 18 years, not millions, as Trump says. And experts say America’s steel industry is stable, China isn’t singlehandedly wreaking havoc on the industry, and jobs aren’t about to come roaring back thanks to the tariffs. What’s more, growth in steel production jobs is likely to be overshadowed by losses elsewhere, like companies that manufacture steel car parts.

“The steel industry itself has actually had fairly stable levels of production,” said Ned Hill, a professor at Ohio State University and Ohio Manufacturing Institute. “We have been producing about roughly the same amount of steel levels since 1988.”

To be sure: The steel industry has changed big time over the last four decades. There are fewer steel mills and jobs than there were at the industry’s peak decades ago, and many plants now finish semi-finished steel instead of making it from raw materials. But increased productivity thanks to new technology and automation, and reduced domestic demand, have had a far greater impact than foreign competition.

“In 1982, it took ten worker hours to make a ton of steel,” Hill said. “It’s now down to two hours.”

Expect that number to keep falling, too. Hill said one Cleveland, Ohio mill reported to him that they were down to one worker per hour to produce a ton of steel.

“Technology is driving a lower need for labor in all of these industries,” said Christopher Plummer, the managing director of Metal Strategies, a Pennsylvania-based firm. “There’s one [steel plant] in Austria that makes half a million tons of coil rod and they have a total plant workforce of 14 people. That’s where things are going.”

This, too, is reflected in the numbers. Productivity nearly doubled in the same 18-year time period federal employment data registered a loss of 300,000 jobs, according to the Bureau of Labor Statistics.

Consumption is down significantly over the last few decades, as well, because Americans just don’t use steel the way they used to, embracing plastic, composite wood, and lightweight steel products that simply use less of the metal.

“The interstate highway is built out,” Hill said. “Big steel skyscrapers? Built out.”

Charles Bradford, president of the metal market-focused firm Bradford Research, said tariffs aren’t a good way to stimulate the steel industry.

“They’re focusing on the wrong things if they want to help the steel industry,” he said of the Trump administration’s actions. “To help the steel industry, you want infrastructure spending.”

Experts said steel job additions would be modest and warned that other American jobs could be at risk with tariffs like these because importers could start manufacturing steel products like car parts outside the United States, importing the finished product into the country instead of building it with American manufacturers.

“Six-point-five million are employed at steel-using companies, like car manufacturers, or appliances,” Plummer said. “Steel employs 140,000.”

“You end up losing more jobs downstream than you make saving steel,” Bradford said.

All said the outsize blame on China is misplaced. The country is the world’s top steel exporter, but just 2.2 percent of American steel imports are from China, according to Plummer.

“They’re a factor now, but not as much as people think,” Plummer said.

While Trump complains that China sells steel at a loss in a process known as dumping and selling it through other countries as intermediaries in a process known as transshipping, all three said it wasn’t the problem Trump portrayed it to be, or that it shouldn’t be handled with tariffs.

“What we should be arguing for — instead of triggering a trade war and having an economic tantrum — is expediting the World Trade Organization process on dumping disputes,” Hill said.

Bradford said overall claims of transshipping have been exaggerated, too.

“Forget China,” he said. “China is immaterial.”

SOURCE: GoogleNews