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  • President Donald Trump’s proposed tariffs could help workers in aluminum and steel-related industries. 
  • However, the industries that could be hurt the most employ nearly 20 times as many people. 
  • The rationale of protecting workers by imposing tariffs “seems terribly misguided,” Tom Porcelli, RBC’s chief US economist, said.

President Donald Trump’s proposed tariffs on steel and aluminum could help workers in these industries, but end up doing more harm than good. 

On Thursday, Trump said he planned to impose a 25% tariff (a tax on imports) on steel, and a 10% tariff on aluminum. “When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win,” Trump tweeted early on Friday. 

Automakershomebuilders, and beer brewers have pushed back against the move because they rely on steel and/or aluminum to make their products. They’re concerned that tariffs would raise their costs of production and ultimately be passed on to consumers. 

And industries that use those metals to make other goods collectively employ nearly 20 times as many people as steel and aluminum producers.  

The White House’s position is to protect the steel and aluminum industries from unfair foreign competition. But the rationale of protecting workers by imposing tariffs “seems terribly misguided,” Tom Porcelli, RBC’s chief US economist, said in a note on Thursday. 

In January, 376,500 people worked in primary-metal manufacturing, which includes steel and aluminum production. An additional 38,700 people worked in metal-ore mining. Combined, that’s 415,000 workers. 

“Just for context that is only about 2 months’ worth of job gains or an extremely small 0.28% of total jobs,” Porcelli said. “Yet the folks in downstream manufacturing (i.e. the consumers of steel) employ 16x (!) as many people. Now, the negative impact from these tariffs on those downstream industries from a margin and employment perspective is difficult to predict, but it is rather obvious that the winners/losers ratio seems extremely skewed…”

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“We must protect our country and our workers,” Trump also tweeted on Friday. “Our steel industry is in bad shape.”

Indeed, employment in metal manufacturing still hasn’t recovered from its pre-recession peak in 2008. 

But history shows that tariffs could hurt the overall jobs market. The tariffs President George W. Bush imposed on steel cost industries that rely on it an estimated 26,000 to 200,000 jobs.  Additionally, studies of protectionism for the steel industry in the 1970s showed that American consumers paid $290,000 more in increased downstream costs to save a single job.

SEE ALSO: Trump’s newest trade policy has been tried before — and it was terrible for the US economy

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