Why lifting tariffs during the COVID-19 crisis is bad for America’s long-term health

Congress must leave the steel and aluminum tariffs in place and redouble efforts to find new uses for American products.

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SOURCEIndependent Media Institute

The spread of COVID-19 put Americans’ lives at risk. But even as people across the country hunker down in their homes to protect themselves, they have more to fear.

Stock market swings, business closings and other COVID-19 disruptions threaten the nation’s economic well-being.

Some members of Congress want to address the fallout by lifting tariffs on imports from China and other countries, believing that giving Americans access to a flood of cheaper goods will stimulate the economy.

But what might seem like a quick cure would actually jeopardize America’s long-term health.

America’s steel and aluminum industries are still trying to bounce back from years of dumping and other illegal trade practices, from China and other nations, which caused widescale factory closures and job losses.

Removing tariffs on those products now just invites more of the cheating that led to the penalties in the first place.

Chinese goods, for example, would swamp U.S. markets at the worst possible time, as American industries—still trying to recover from the illegal trade of the past—also face the COVID-19 economic slowdown. In the wake of increased dumping, U.S. factories would be forced to scale back or close, throwing more Americans out of work.

Members of Congress have to ask themselves: Whose side are they on?

The Chinese government subsidizes steel, aluminum and other manufacturing with cash, loans that producers don’t have to repay, and other kinds of aid. Then China dumps products in foreign markets at artificially low prices, undercutting domestic producers and costing workers their jobs.

From 2001 to 2018, America lost 3.7 million jobs—2.8 million of them in manufacturing—because of the trade imbalance with China. That imbalance was driven largely by unfair competition. The uneven playing field also dragged down wages and benefits for Americans who managed to continue to work.

Unleashing a flood of Chinese goods on U.S. markets now would put America in the same position again, only worse because American factories and workers are still grappling with the unprecedented effects of COVID-19.

But illegal trade isn’t just a danger to the economy.

America’s national security depends on a robust manufacturing sector that can turn out the weapons of war and provide the infrastructure for power, telecommunications and transportation. Eviscerating America’s steel and aluminum industries is China’s strategy for undermining U.S. power while consolidating its own. Unfair trade by other countries only compounds the problem.

At the insistence of the United Steelworkers (USW) and other unions, the U.S. in 2018 imposed a 25 percent tariff on steel and a 10 percent tariff on aluminum to safeguard America’s economic and security interests.

Tariffs reduced the demand for foreign steel and aluminum, giving the industries a chance to revive.

Some producers even pledged new investments in their facilities. After suspending construction of an electric arc furnace at its Fairfield, Alabama, works in 2015 because of unfavorable market conditions, U.S. Steel last year announced plans to complete the $215 million project and hire about 150 workers.

Yet America’s core industries remain vulnerable. Production increased after the tariffs went into effect, but demand fell again last year. Removing tariffs now in a misguided effort to stimulate the economy will only knock the industries on their heels again.

That’s exactly what China’s communist party leaders want. Already rebounding from COVID-19, Chinese government agencies openly plot about preying on countries still trying to come to grips with the disease. They flaunt their goal of dumping products like steel and aluminum on America—if given the chance again—so they can dominate those industries for years to come.

Right now, China sits on huge surpluses of steel and aluminum. If Congress lifts the tariffs, these products would deluge American markets almost immediately. U.S. manufacturing might never recover.

America must keep the steel and aluminum tariffs in place.

But those defensive measures aren’t sufficient by themselves to ensure the long-term survival of America’s core industries.

The nation must ramp up domestic demand—significantly invest in these industries itself—to keep factories operating and workers employed. A national infrastructure program—carried out with American labor and U.S.-made products and materials—would help accomplish this.

Investments in roads and bridges, environmentally safe sewer systems, clean-energy buses, high-speed rail and modern ports would create millions of jobs. Many of them would be in steel, aluminum and other industries, like electric bus manufacturing, where unions represent workers and ensure they have decent wages, benefits and working conditions.

The nation also must find and tap other potential sources of industrial demand. A return to commercial shipbuilding is one possibility.

America once led the world in the production of oceangoing tankers and freighters. But Asian nations, including China, highly subsidized their industries and forced U.S. competitors out of business beginning in the 1980s.

The industry’s demise cost thousands of jobs and left U.S. exporters at the mercy of foreign-owned ships, which can cut off service to American ports at any time. A revival of commercial shipbuilding would create demand for U.S. steel, aluminum and other products while enhancing national security at the same time.

Public health officials in charge of the COVID-19 crisis tell Americans to keep calm and take commonsense steps to protect themselves.

That’s also good advice for members of Congress wrestling with the virus’ economic impact.

Knee-jerk actions and quick fixes, like lifting tariffs on steel, aluminum and other manufactured goods, will make a bad situation worse in the long run. America will lose strength, and countries like China will benefit.

Congress must leave the steel and aluminum tariffs in place and redouble efforts to find new uses for American products. That’s the way to get America’s economy healthy again.

This article was produced by the Independent Media Institute.

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