Recently when I stood alongside President Trump in Michigan and declared “this is Trump country” in front of 15,000 people, I witnessed first-hand our president interacting with thousands of American workers. I truly believe that no one cares more about standing up and fighting for American workers than our president.
In recent months, President Trump took courageous action with the Section 232 relief to save tens of thousands of American jobs by imposing tariffs on foreign aluminum and steel imports. Prior to President Trump issuing the Section 232 relief, global overcapacity of aluminum directly threated U.S. national security, negatively impacted American workers and caused aluminum smelters across America’s heartland to shut down. This led to thousands of American workers losing jobs, decimating communities across the United States.
Despite President Trump’s strong decisive leadership, America’s allies and economic foes are now jockeying for exemptions from these tariffs – threatening to undermine their effectiveness. President Trump is expected to make a decision on exemptions on June 1, and I am confident that he will negotiate a winning solution that is in the best interests of American workers.
Russia, the European Union, the Middle East, and Australia work hand in hand with Chinese aluminum producers in the global marketplace. The Chinese will find any way to cheat the system and avoid tariffs, by moving Chinese product through countries aligned with the United States or making strategic acquisitions of facilities in countries that are not subject to the same scrutiny.
For instance, Australian producers, some of whom are partially owned by the Chinese, do not need an exemption to survive or thrive. It’s interesting – like other countries, Australia consumes almost none of the aluminum it produces. If completely exempted, all of Australia’s aluminum exports will be targeted at the United States. Even now, as Australia attempts to position itself for a permanent exemption from President Trump’s 232 tariffs, imports of primary aluminum from Australia skyrocketed by 95 percent in recent months after already increasing by over 1000 percent the year before. If this situation continues without either applying the Section 232 tariffs to Australia or placing a quota on their shipment volumes, the Australian industry will completely replace the U.S. industry. The Trump administration will not allow American workers to lose out, while the European Union, the Middle East, Australia or others game the system.
President Trump will always put “America First,” at home and abroad and I applaud him for his visionary leadership on U.S. trade policy. As the Trump administration works to make tariffs effective and decrease the likelihood of countries cheating the system there are two options: 1) broad implementation (i.e. no special treatment); or 2) exemptions with quotas. While not ideal, quotas at least ensure that countries can’t increase their exports from previous levels by becoming a backdoor entry point for other countries. If any country is permanently exempted from the 232 tariff, whether it be Canada, Mexico or others, a quota needs to be put in place to ensure that the benefits of the relief flow to the United States, not foreign steel or aluminum industries.
Under President Trump’s leadership, things are finally looking up for hard-working Americans. Smelters are restarting in Western Kentucky, Missouri and across the country with thousands of new American jobs being created. President Trump is keeping his commitment to American workers that he so clearly spelled out on the campaign trail.
The fearmongering from the fake news media and free-market zealots misses the mark on why President Trump is fighting for these tariffs. The claims of massive job loss and economic hardship from the tariffs are unsupported and frankly ridiculous.
The “America First” agenda championed by President Trump will ensure that the domestic aluminum industry can compete on the global stage and fight back against illegal trade practices and countries that cheat. Too much is at stake for America to not take a stand.
While the European Union, the Middle East, and Australia vigorously seek to represent their own national interests, we too should represent ours. Come June 1, I am confident that President Trump will negotiate from a position of strength and put “America First” as we work together to Make America Great Again.
The Trump administration recently announced that it would impose tariffs of 25 percent on steel imports and 10 percent on aluminum imports from all countries except Canada and Mexico. Despite the fact that these tariffs affect only a narrow sliver of the U.S. economy and are quite modest in size, many commentators have claimed that they will have an outsized impact. Critics point to a recent study by Joseph Francois and Laura Baughman of The Trade Partnership, which claims that the tariffs would result in a net loss of 146,000 jobs. In a new report, EPI Director of Trade and Manufacturing Research Robert E. Scott explains why the actual economic impact of the tariffs will be quite minor, and why Francois and Baughman’s study should be treated as an outlier and not as a guide to policy decisions.
Scott argues that the Francois and Baughman results are driven overwhelmingly by a nonstandard modeling assumption. Relaxing this assumption and bringing the Francois and Baughman model in line with the vast majority of trade policy modeling reduces their estimate of job losses by roughly 97 percent—dropping the estimated number of jobs lost from 146,000 to under 5,000.
“There is no credible evidence that these tariffs could drag on growth in demand anywhere near enough to generate employment losses as large as the authors report,” said Scott. “Policymakers should ignore hyperbolic claims, when the vast majority of research shows the overall economic impact of these tariffs will be quite minor, while helping to shore up a critical industry.”
U.S. tariffs on aluminum and steel imports will add thousands of jobs at domestic producers, offsetting labor losses in other industries, while economic growth will slow by a tiny percentage, according to the Coalition for a Prosperous America.
The study is from the nonprofit organization, which has supported the U.S. administration’s skepticism toward free trade. The group estimates President Donald Trump’s 25 percent tariff on steel imports and 10 percent tariffs on aluminum will add about 19,000 jobs, making job losses downstream and in other parts of the economy negligible. The impact would hit the economy by $1.4 billion, or 8/1000th of 1 percent of U.S. gross domestic product, the organization said.
“The tiny tiny decline in GDP is a result of these tariffs in the medium term,” Jeff Ferry, research director for the Coalition for a Prosperous America, said in a telephone interview. “In the longer term, I would anticipate that the effect of tariffs are positive because a longer-run analysis shows what happens to steel and aluminum industries as a result: additional production, revenue, hiring and investment.”
The study comes as many forecasts say the controversial import tariffs would largely hurt downstream sectors of the economy that use raw steel and aluminum to make consumer products such as automobiles and beverage cans. Harbor Intelligence said on March 1 that Trump’s aluminum tariffs would boost production jobs by about 1,900, but 23,000 to 90,000 U.S. manufacturing job will be lost.
Research finds slight decline in GDP, no job loss
Washington. A new study from the Coalition for a Prosperous America (CPA) finds that the effects on the US economy of the recently announced Section 232 steel and aluminum tariffs would be nearly undetectable, with the net job impact approaching zero. Gross domestic product would decline by only eight one-thousandths of one percent.
CPA’s study projects a net gain of 19,000 jobs in steel- and aluminum-producing industries. This significant increase in good-paying manufacturing jobs will almost offset any job losses in downstream industries using steel and aluminum. In the longer term, additional production, revenue, jobs, and investment in the steel and aluminum industries will likely boost the economy.
“Our research shows that the likely, actual effects of these tariffs on the US economy will be minimal in the medium term,” said CPA Research Director Jeff Ferry. “The domestic price increases of steel and aluminum will be far less than the level of the tariffs, and the gains from increased production and utilization in the two industries are likely to be positive in the longer term.”
The steel and aluminum tariffs were announced recently for national security reasons under Section 232 of the Trade Expansion Act of 1962, a move that CPA supports. As Michael Stumo, CEO of CPA, noted, “Steel and aluminum are vital building blocks for any strong, independent country’s industrial strength. The national security benefits of having profitable growth and hiring in these industries is clear. We now see that speculation about costs was overblown. However, the administration should still expand protection to downstream steel and aluminum users. If we are to go beyond national security to eliminating the trade deficit for economic growth, a comprehensive suite of tools to include tariffs, competitiveness policy and exchange rate management should be developed.”
Some past studies have incorrectly suggested that the tariffs could harm economic growth and cost more jobs. The Trade Partnership, for example, has claimed that the Section 232 tariffs could lead to approximately 145,000 lost jobs. While both CPA and the Trade Partnership used Global Trade Analysis Project (GTAP) data in their research, the Trade Partnership’s work wrongly assumes substantial unemployment in the US economy—a point inconsistent with the current 4.1 percent unemployment rate. Ferry says the Trade Partnership study appears to be based on assumptions that hold fixed, certain economic variables, like wages, that force a high and unrealistic job loss figure.
Ferry said, “The fact that 97 percent of the Partnership’s claimed job losses occur in the services industries points to deep and systemic flaws in their modeling assumptions. Because we simply corrected the model to be in line with the reality of full or nearly full employment today, we are very comfortable with our findings that the projected job losses are unlikely to occur.”
In its research on the national security tariffs, CPA discovered that similar tariffs imposed by President Bush in 2002 were preceded by similarly alarmist studies forecasting job losses. Those studies were shown to be incorrect. Instead, steel-using industries subsequently added 228,000 jobs in 2002.
Read more about CPA’s new research on the economic impacts of steel and aluminum tariffs imposed under Section 232.
As President Trump remarked in his recent State of the Union speech, the United States will no longer surrender to its trading partners, “[we] expect our trading relationships to be fair and reciprocal.” In his speech, Mr. Trump highlighted the administration’s spectacular achievements in its first year. From tax reform to judicial nominations, a strong economy to a stock market at record highs, no president has completed more in their first year in office than President Donald Trump.
More is still to be done. Mr. Trump must follow through on his campaign promise to put American workers first and not allow naive free trade activists to impose ideological purity over polices that protect thousands of American jobs. This is true for America’s aluminum industry, an iconic industry decimated by a flood of illegal imports of aluminum into the United States.
Since in 2003, the United States’ primary aluminum industry has lost nearly 75 percent of its aluminum production capacity — with those jobs stolen by countries like China, India, Russia, the Middle East and others. This global overcapacity has cost the U.S. industry alone thousands of jobs that provide a valuable source of income to middle-class communities across America’s heartland. At full capacity and without an illegal flood of imports, the American primary aluminum industry is responsible for over 10,000 jobs and contributes over $3.5 billion in U.S. economic output.
The nature of the disadvantage complicates things. The real problem is one of systemic chronic overproduction, largely by state-enterprises, as a result of pervasive government subsidization around the world. Other administrations’ attempts to negotiate their way to a solution through global forums have been completely ineffective. Some of the largest aluminum industries around the world are largely state-owned.
Nearly all of the aluminum producers in the Middle-East are state-owned, the overwhelming majority of Chinese producers are state-owned, nearly half of the industries in Central and South America are state-owned, and even a large portion of Indian producers are state-owned. Not only is this level of state-ownership highly distortive, but these suppliers and others are not playing by the rules. What is needed is real concrete action by the administration now to address the surge of imports from these countries devastating America’s aluminum industry and threatening U.S. economic and national security.
In April 2017, President Trump and his administration announced the Section 232 investigation, to put American workers first. This little-known provision, carried out under Section 232 of the 1962 Trade Expansion Act, would allow Mr. Trump to “adjust imports” that threaten to undermine national security. Primary aluminum can be produced to very high levels of purity which is then used to support our troops overseas by reinforcing tanks, armored vehicles, and body armor.
In many of these small towns across America, aluminum plants are more than just a local business; the jobs these plants support are very well-paid and form the backbone of the local community. Imports of highly subsidized of aluminum at distorted prices, however, threaten that tradition, but change is coming.
In mid-January 2018, as part of the Section 232 investigation Mr. Trump initiated, the U.S. Department of Commerce presented its report to the president outlining the impact foreign aluminum has on our national security infrastructure. Upon receipt of this report, Mr. Trump has less than 90 days to review and decide on a course of action.
Having seen first-hand Mr. Trump interacting with America’s workers across this great nation, I know he truly cares about the welfare of our American workers. This president cares deeply about protecting American jobs and I’m confident he will stand with thousands of American aluminum workers and their families who supported his historic election. Undoing the mistakes of the past and restoring American manufacturing is not easy, but it is essential to defending our borders and ensuring a strong vibrant America.
Some opponents of fair trade deals are trying to undermine the president’s goal of protecting American manufacturing by hiding behind false claims that tariffs will hurt consumers. Beer producers, for example, are making overblown statements about the consequences of tariffs. But they don’t offer any evidence because they can’t.
From 2011 to 2016, the price of aluminum collapsed, declining by 30 percent. Over the same period, the price of beer, did not decrease, it increased, and beer producers simply pocketed the windfall. That alone exposes their real goal, which is business as usual, where American manufacturers get gouged, and we throw up our hands and say we can’t do anything about it.
By imposing broad comprehensive tariffs, President Trump has a unique opportunity to save thousands of the American aluminum jobs and put U.S. national security first. Now is the time for decisive action by the Trump administration on the aluminum 232 as we work together to Make America Great Again.
• Corey R. Lewandowski, campaign manager for the Trump campaign and chief strategist of America First Policies, is the co-author of “Let Trump Be Trump: The Inside Story of his Rise to the Presidency” (Center Street, 2017).
In his State of the Union address, President Trump told the American people and the world that the era of economic surrender is over. “From now on,” he said, “we expect our trading relationships to be fair and … reciprocal.” Trump likewise told the World Economic Forum in Davos, Switzerland, this past Friday that we need “fair and reciprocal trade”, noting that “the United States will no longer turn a blind eye to unfair economic practices, including … industrial subsidies and pervasive, state-led economic planning.” Simply put, we cannot have free trade if other countries don’t play by the rules.
As the CEO of Century Aluminum, America’s largest aluminum producer, I have seen firsthand the devastation that results when countries engage in unfair trade practices. The American primary aluminum industry has lost 62 percent of its production in the past five years alone.
Earlier this month, the U.S. Department of Commerce delivered a report on the national security implications of aluminum and steel imports after a significant and thorough investigation. Trump now has 90 days to decide whether to impose broad comprehensive relief, in the form of tariffs or quotas, to ensure that the U.S. aluminum and steel industries survive the accelerating surge of unfairly traded imports into the United States.
Leaders of U.S. trading partners, meanwhile, have presented themselves as globalization’s knights in shining armor. Last January, Chinese President Xi Jinping presented what some called a “robust defense of globalization” at the World Economic Forum in Davos. This year at Davos, it was Indian Prime Minister Narendra Modi’s turn. According to reports, Modi “took a swipe at the forces of protectionism that he said are seeking to reverse globalization, with rising tariff and non-tariff barriers around the world.”
In practice, however, when Xi and Modi speak of “globalization” and “free trade,” they mean something completely different. Their trade and economic policies reveal a vision of globalization in which rules are advisory as applied to them, but binding as applied to their favorite export markets.
Modi, for example, is himself considering a 70 percent tariff on solar panels — twice as high as the one that Trump recently imposed in the United States. Late last year, India also imposed safeguard duties on imports of steel sheet and plate, and the Indian aluminum industry is calling for an increase to their already existing duties on primary aluminum. This, despite the fact that Indian aluminum production increased by over 90 percent from 2013 to 2017.
In China, the so-called “socialist market economy” has spawned state-fed industry after industry. Its massive state subsidies have driven vast amounts of overcapacity not only in aluminum and steel, but also in coal, glass, solar and other industries, and it is moving swiftly into sectors like semiconductors, robotics, and other high-tech industries. China’s aluminum production alone has increased by more than 500 percent in the last 15 years. Xi’s words about economic openness and integration seem to apply only to China’s trading partners, while at home he pushes the limits of state economic control by expanding the party’s influence further than any Chinese leader in the post-reform era.
Elsewhere in the aluminum industry, countries in the Middle East have expanded rapidly using a combination of tariffs and energy subsidies despite there being little to no domestic consumption. These industries exist solely as export platforms, to take advantage of demand growth in the United States, European Union, and elsewhere. Even the European Union has tariffs in place on primary aluminum imports, diverting even more import volume to the United States.
This is what Trump meant by “fair and reciprocal trade” in his remarks at Davos this year. His point that free trade breaks down when “some countries exploit the system at the expense of others” is a response to years of mercantilist policies by countries that have used the rules to their advantage abroad, but refused to accept them in good faith at home.
It should come as no surprise, then, if the rhetoric of those like Modi and Xi no longer resonates in the United States. Trump’s National Economic Council Director Gary Cohn put it this way last April: “Fair means we treat our trading partners the way they treat us.”
As the CEO of one of the last remaining U.S. companies in an industry that’s been wiped out by mercantilist trade policies with great human and economic cost, I don’t think that’s unreasonable. Solar panels and washing machines are a start. Now is the time for the Trump administration to follow through with action on aluminum and steel.
Mike Bless is president and chief executive officer of Century Aluminum.
WASHINGTON (Reuters) – The U.S. Commerce Department has sent President Donald Trump the results of its national security probe into aluminum imports, Trump administration officials said on Sunday, while declining to disclose details.
White House spokeswoman Lindsay Walters confirmed that the findings in the “Section 232” probe were delivered on Friday, just before many government agencies shut down due to the lack of a government funding deal in Congress.
Another administration official said an announcement regarding the submission was expected on Sunday, but that it would look similar to the one that accompanied a Jan. 11 submission on a parallel probe into steel imports.
That announcement did not divulge whether the Commerce Department found that steel imports pose a threat to national security, nor whether it recommended Trump impose broad new tariffs or quotas on imports to protect domestic producers.
Trump has promised he would take action to protect steel and aluminum workers from imports, especially in the face of Chinese overcapacity in both metals.
But the question of whether to order broad tariffs or quotas on steel and aluminum has been the subject of intense debate in the White House, pitting officials who favor more aggressive restrictions against pro-business factions who favor a more cautious approach to avoid a run-up in prices of the metals or disruptions to U.S. allies that produce them.
“We look forward to swift and decisive action by the President on this issue in order to save the American aluminum industry,” Century Aluminum (CENX.O) said in a statement on Sunday night. “American producers need comprehensive relief against excess capacity from all state supported enterprises — not just China — to create a fair playing field.”
Critics say using national security to erect steel and aluminum tariffs could trigger a trade war with China, undermine the global rules-based trading system and hurt America’s friends more than China, as well as damage global growth prospects.