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Learning the Lessons of Protectionism the Hard Way

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Tariffs beget more tariffs. Veronique de Rugy explains:

In the end, the steel tariffs have made the production of American-made products more expensive. This makes those American producers who use steel less competitive on global markets.

Enter American producers of line pipe. As it happens, the raw materials these producers use in their domestic production of large-diameter welded line pipe and structural pipe are subjected to Section 232 tariffs (25 percent on steel imports from Canada, China, Greece and India, 50 percent on imports from Turkey and quotas on imports from Korea). As expected, the line pipe producers’ production costs rose. And now these producers have gone before the USITC to argue that they are being injured by dumping — selling in the United States at prices below “fair value” — carried out by Chinese and Indian manufacturers of allegedly subsidized line pipe.

Three of the five USITC commissioners agreed. This ruling will trigger countervailing and anti-dumping duties from the Department of Commerce, and as a result, everything will end up being more expensive.

The question is: When and where does this cascading protectionism stop? Of course, the steel tariffs have affected products other than large-diameter line pipe. All American producers that use steel as inputs are negatively affected by the administration’s import taxes. Inevitably, then, the USITC will see a surge of American manufacturers coming to ask for protection from foreign competitors for their products when, in fact, they need only protection from the Trump administration’s trade hawks, who have made input more expensive.

[Veronique de Rugy, “Learning the Lessons of Protectionism the Hard Way,” The American Spectator, February 28]

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4 COMMENTS

  1. “When and where does this cascading protectionism stop?”
    Simple answer…when President Trump wins the trade war against Governments that have used unfair trade practices against American businesses and workers. America comes first.
    Veronique de Rugy needs to get back to us after President Trump wins.

  2. Like all extreme free-traders Ms de Rugy has never had to worry about outsourcing. They pontificate about their free-trade heaven from their ivory tower. Their world exists on paper and in computations. Meanwhile in the real world breadwinners(and non-breadwinners) lose their ability to help to provide for their families. And the costs of these massive job losses goes beyond the family and into our society.