This is why President Donald Trump’s recent posturing on trade is so worrisome. Even if the president’s actions are simply “The Art of the International Trade Deal,” meant to extract advantageous terms during trade negotiations, we cringe at the harm that has already been done.
One year ago, the Trump administration withdrew from the Trans-Pacific Partnership. In December, TPP signatory Japan reached a free-trade deal with the European Union that eliminated 95 percent of all tariffs. European agricultural producers gained access to Japan’s highly lucrative agricultural markets, while U.S agricultural producers remain shut out.
In January, the Trump administration imposed a 30-percent tax on imported solar panels. The increased cost of inputs is already harming American solar companies, including ones with a significant presence in the San Fernando Valley. SunPower, which has a facility in North Hollywood and which built and operates the world’s largest solar photovoltaic installation in the Antelope Valley, announced that these tariffs will cost the company $50 million in 2018 and $100 million in 2019. The Solar Energy Industry Association estimates that 23,000 American jobs will be lost. “There’s no doubt this decision will hurt U.S. manufacturing, not help it,” said Bill Vietas, who heads Cincinnati-based RBI Solar.
On March 8, the president signed a 25-percent tax on imported steel. Prices for American-made steel increased by 4 percent on that day alone. Prices are up 35 percent since Trump’s election. According to industry analysis, while tariffs seek to protect 140,000 U.S. steelworkers, they threaten 6.5 million workers in steel-dependent industries. Due to increases in the price of steel, Swedish manufacturer Electrolux suspended its planned $250 million Tennessee plant expansion, and Volvo is reconsidering the scope of its planned expansion of a South Carolina plant. Trump-authored trade restrictions could result in the loss of 2,000 U.S. auto manufacturing jobs in Volvo’s South Carolina plant alone.
According to analysis by the nonpartisan Trade Partnership, tariffs can be expected to create a net loss of 146,000 American jobs across various metal-using sectors. This estimate does not include the effect of retaliation by U.S. trade partners, which will surely affect industries well beyond those using steel.
The 30-percent steel tariff passed by President George W. Bush in 2002 and abandoned in 2003 reduced U.S. jobs and GDP, with one study estimating a total loss of 200,000 American jobs. We might forgive Bush for his tariffs. In the early 2000s, a mere 83 percent of economists held that trade restrictions are bad. Donald Trump apparently seeks to defy all economists.
Matthew Fienup is executive director of the California Lutheran University Center for Economic Research and Forecasting in Thousand Oaks.