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Trump and American Steel: Another Story of Economic Nostalgia
Blast furnaces at the now-closed Bethlehem Steel mill in Bethlehem, PA.
Given that Donald Trump gave his big trade-bashing economic speech in Pennsylvania, it’s not so surprising he talked about steel. American steel, dadgummit! Here’s Trump:
A Trump Administration will also ensure that we start using American steel for American infrastructure. Just like the American steel from Pennsylvania that built the Empire State building. It will be American steel that will fortify American’s crumbling bridges. It will be American steel that sends our skyscrapers soaring into the sky. It will be American steel that rebuilds our inner cities. It will be American hands that remake this country, and it will be American energy – mined from American resources – that powers this country. It will be American workers who are hired to do the job. We are going to put American-produced steel back into the backbone of our country. This alone will create massive numbers of jobs.
So this was, I guess, both an attack on subsidized Chinese steel and a “buy American” pitch.
Now the entire US steel industry directly employs just 142,000 American workers, according to the American Iron and Steel Institute. Or only twice the headcount of Apple alone.
Which is not to say it is an insignificant industry. The US steel industry is the world’s fourth-largest. Indeed, the total value-added output of the entire US metal manufacturing industry is some $60 billion, employing some 400,000 workers.
But here’s the thing: the manufacturers that use steel generate nearly $1 trillion in value-added output, according to the Cato Institute, using government data. And they employ some 6.5 million people. What’s more, as Cato argues, “low-priced steel imports provide a substantial net benefit to the US economy” as an input to other manufacturing. This is a good thing for most American manufacturing and is in effect a net transfer of wealth to the US from China.
More from Keith Hennessey:
Steel is an intermediate good. When you raise protectionist barriers against imported steel as Mr. Trump threatens, you temporarily help U.S. steelworkers. You also raise input prices for American firms that use steel to build bridges and buildings and make cars, and trucks, trains and train tracks, appliances, ships, farm equipment, drilling rigs and power plants, and tools and packaging. Higher input costs hurt American workers in those factories and on those construction sites.
Mr. Trump should ask the workers who make dishwashers at Whirlpool’s plant in Findlay, Ohio whether they’re in favor of more expensive steel. Or he can ask the John Deere workers who use steel at their factories in Iowa, Kansas, Louisiana, North Carolina, North Dakota, Tennessee, and Wisconsin. Or the auto workers at almost any U.S. car and truck assembly line. Raising prices for imported steel hurts all of these American workers.
The New York Times offers some value-added insight of its own on the long-term decline of American steel manufacturing, not forgetting the role of automation and technological progress as Trump typically does:
Published in Economics[Trump] is right that the number of steel industry jobs — more precisely “iron and steel mills and ferroalloy manufacturing,” in government data-speak — is down by 44 percent in the Pittsburgh area since 1990, a span in which the United States entered the North American Free Trade Agreement and engaged in much more extensive trade with China.
But two things are worth knowing. Before Nafta was even a gleam in a trade negotiator’s eye, Pittsburgh had already lost the biggest chunk of its steelworking jobs. The culprit in that era was both international competition and the introduction of mini-mills, which allowed the production of steel with far fewer man-hours. Because of that and other technological innovations that improved productivity, total American steel output is about the same now as it was in 1990, even with far fewer workers.
That steep contraction in steel production jobs has been more than counterbalanced by a rise in other types of work. The 5,100 steel production jobs lost in Pittsburgh are dwarfed by the 66,000 health care jobs gained in the same time span. Pittsburgh has often been viewed as the very model of a city moving beyond its heavy industrial history to find new prosperity in areas like health care, banking, and professional services.
Thank you. You’ve given me a response that perfectly encapsulates why the Bush-era GOP is defunct.
You simply assume that privatizing SS was a good idea. You believe that Obama has been severely limited as president, somehow. You’ve managed to conclude that I want politicians to lie to the public. And, putting a nice cherry on top of the sundae, you seem to doubt that public officials can know what good policies are.
I humbly suggest that if the elected officials of a given political party do not know what good policies are, they will bring disaster- and eventually, the public will stop voting for them. For example, note the fate of the Bush-era GOP, already mentioned.
When the last GOP government told the people what they did not want to hear, and then implemented policies that brought disaster, I would say that advocating essentially the same policies is moronic. But this is what the Republican party is still doing.
Hence, Trump- who at least advocates different policies, which I believe are better for the country than the witless globalism espoused by the GOP establishment.
But it remains true that should Trump be elected, he must make those policies succeed. That is what will make the public “come around.”
I suggest you notice that the policies you advocate have failed miserably, thus inspiring your silence.
Now since the donor class of the GOP, which has an army of paid shills, has profited handsomely from those policies, this silence will not be forthcoming.
Hence, I expect this will eventually drive either the donors or the voters out of the GOP, forever and all time, depending on which side wins out on the actual policies.
Time will tell, etc.
In comparison to what he could have done if the Democrats had retained Congress, yes.
Sorry about that, I assumed you only liked Trump’s economic ideas because they were good for getting elected, not for actually implementing them.
I doubt that most officials do know, not that they can know. Specific to this post, I think the policies Trump favors are terrible.
Hence why I oppose Trump.
The “policies that people didn’t want to hear” are not the same policies “that brought disaster”.
We disagree, which is why we’re discussing economics.
You lost. Get over it. Globalism has failed, bringing ruin to the nation.
Trump recognizes this, and is attempting to paint a vision of a different future.
He may or may not succeed, but at least he is making an effort to save the United States, instead of attempting to smear it out of existence in a vain effort to avoid the reckoning over globalism that we need and should have.
As I’ve said about a hundred times, the game the GOP is playing is politics.
I do not come here to discuss economics, and I remain amazed at how much discussion this site has about it.
I take it as a sign of why the GOP has failed.
It’s as if an architectural firm spent all its time lecturing people about gravity, in an attempt to explain why its buildings fall down so much.
This is both futile and tiresome. But if the only tool you have is a hammer, everything looks like a nail, doesn’t it?
In Washington, there are no permanent victories or permanent defeats, just permanent battles.
I generally just avoid the conversations I don’t wish to participate in.
Based on your gravity analogy, if you think the entire GOP understanding of economics is wrong, you should start a conversation about it.
If you think that a huckster like Trump is going to save our nation you really are in desperate straights, my friend. He is only good at one thing – promoting his “brand” and getting folks like you to believe his BS.