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]