Leibowitz: Harris, Trump don't talk much about steel and trade - because they (mostly) agree

Donald Trump has doubled down on trade restrictions and supports them on friend and adversary alike. Steel and aluminum tariffs, a keystone of the Trump trade policy in his first term, will, if he has his way, be expanded. The current push to impose steel and aluminum tariffs on imports from Mexico will likely be implemented in a second Trump term. In addition, tariffs on imports from most or all countries will increase. Trump is a devotee of tariffs.

The Harris campaign likes tariffs too, but not the universal tariffs favored by the Trump team. Steel and aluminum tariffs will continue in a prospective Harris administration, as will tariffs on Chinese imports. Harris opposes new across-the-board tariffs on imports, but she likes them on steel, aluminum, and China.

This all seems strange to any person who came of age in an era when the tariff wars of the 1930s were not that distant a memory. The Smoot-Hawley tariffs of 1930 are still infamous to most economists. But the public at large, many members of Congress, and the administration don’t criticize them as much. Perhaps unwittingly, the public is being led to believe that tariffs are good for the US.

The Harris campaign, like Trump’s, wants to use tariffs to buck up key industries and to differentiate between friendly and unfriendly countries. But the downstream injury to consumers and industries in the United States garners scant attention in the campaigns.

Speaking of “key” industries, both the Harris and Trump campaigns view steel as such an industry. Readers will recall that I view this characterization as rather outdated. Steel once was vital to the American and global economies, but that is not nearly as true as it once was.

A hallmark of the economies of developed countries is the reduction of steel intensity. The more advanced an economy becomes, the less dependent it is on steel. And there are other products that have displaced steel. In autos and trucks, aluminum and carbon fiber are increasingly important. In warfare, airplanes and missiles use very little steel. Even helmets for soldiers aren’t made of steel anymore.

Steel is still an important industry, but less than before. Thus, policy makers should look more carefully at the consequences of potentially harming important downstream interests by protecting an industry from competition.

There are no doubt many industries that still depend on steel, including transportation, construction, and energy. But given the economy-wide impact of steel tariffs, there should be some consideration by the candidates of the downstream effects. Yet, politically, the clout of downstream industries and consumers now pales in comparison to the clout of steel producers and the United Steelworkers union. Politicians try to read voters, and yet neither party seems very interested in moderating tariffs to placate consumers.

Another major tariff issue is China. Again, both candidates’ campaigns believe that China is an economic threat to the US, and they favor more restrictions on Chinese imports. Europe, as I’ve written before, has joined that movement. Recent decisions in both Europe and the US have imposed prohibitive tariffs on imported electric vehicles from China, for example. It is certainly possible to advocate tariffs on China because of its threat to global markets. That seems a better use of tariffs than applying them to industries like steel.

As the campaign nears its end, I would have expected more attention to trade as a political issue. But the two sides, to the detriment of public debate, seem to agree on so much of trade that there is little attention to it. Perhaps the debate this week between the vice presidential candidates will feature at least a question on trade and tariffs. But don’t count on it.

The only major difference is the emphasis by the former president on across-the-board tariffs on friend and foe alike. That’s in contrast to the Harris campaign, which might impose them on foes but not on friends. For both parties, the reliance on tariffs as an instrument of domestic policy now seems to be a given.

Editor’s note

This is an opinion column. The views in this article are those of an experienced trade attorney on issues of relevance to the current steel market. They do not necessarily reflect those of SMU. We welcome you to share your thoughts as well at info@steelmarketupdate.com.