Once again, the U.S. government is considering imposing tariffs that could have negative consequences for jobs, low-income consumers, and international relationships. The potential tariffs in question target tinplate steel, a key component used in the production of canned goods like tuna, soup, and diced tomatoes.
To clarify, these proposed tariffs would be in addition to the numerous metal tariffs that the United States has already implemented in previous years, including those imposed on steel and aluminum by former President Donald Trump in 2018. The lessons from that episode are clear: while the intention of the tariffs was to protect national and economic security, they ultimately harmed the U.S. economy and weakened its geopolitical standing.
In reality, these tariffs primarily benefited the relatively small U.S. steel industry at the expense of larger sectors that heavily rely on steel, such as automobile and household appliance manufacturers. At the time the tariffs were announced, the number of jobs in industries that depended on steel or steel products was approximately 80 times greater than the number of jobs in the steel production industry itself, according to economists Kadee Russ and Lydia Cox.
Furthermore, Trump’s tariffs caused steel prices in the United States to skyrocket, surpassing prices in other countries. As a result, downstream U.S. firms that utilized steel had to pay more, leading to an estimated 75,000 fewer manufacturing jobs than would have existed without trade restrictions.
The few jobs protected by the tariffs within the steel industry came at a significant cost. According to the Peterson Institute for International Economics, U.S. consumers and businesses paid over $900,000 per year for every preserved or created job.
These tariffs also strained relationships with our allies, such as the European Union and South Korea. While Trump’s trade rhetoric primarily focused on China, many of his tariffs affected countries globally. In fact, his steel tariffs disproportionately impacted our allies, as previous administrations had already imposed tariffs on Chinese steel that had restricted China’s access to the U.S. market prior to Trump’s involvement. In response, our allies retaliated with tariffs on American-made products, causing additional harm to U.S. firms and employees.
President Biden has maintained the majority of Trump’s metal tariffs or replaced them with alternative restrictive measures, such as import quotas.
Now, let’s turn to the current tinplate tariff case. The proposals for these tariffs originated from a complaint by the United Steelworkers union and Cleveland-Cliffs, one of the few U.S. companies still producing tinplate. They claimed that cheap tinplate imports from countries like Canada, the Netherlands, Germany, and China were hurting their businesses.
Similar dynamics are at play as in 2018, where the number of manufacturing workers employed by companies using tinplate far exceeds the number of workers in tinplate production, with a ratio of more than 30-to-1, according to calculations by Cato Institute scholar Scott Lincicome based on data from the International Trade Commission and Census Bureau.
Even from a perspective focused on protecting union jobs, the case for tariffs remains weak. Downstream consumer firms employ more than seven times the number of unionized workers compared to tinplate producers. Additionally, other businesses and employees along the canned goods supply chain are concerned about potential negative impacts. Vegetable farmers who rely on canning worry that higher input costs related to the tariffs could make their products unaffordable for consumers.
Consumers themselves may also have concerns about these tariffs. They are already grappling with rising grocery prices, and the impact could be even greater for low-income individuals who rely on canned goods rather than fresh produce and meat.
Interestingly, a recent news release from the United Steelworkers only mentioned China by name in relation to this case. However, the majority of U.S. tinplate imports come from other diplomatically friendlier countries, which would also be subject to these tariffs.
Some critics are calling on the Biden administration to prevent the tariffs from being imposed. However, in this particular type of tariff case, Biden’s political appointees have limited power to intervene. U.S. trade laws heavily favor protectionism, making it likely that the Commerce Department and International Trade Commission will proceed with imposing additional tariffs, regardless of the negative consequences for workers, consumers, or diplomatic relations.
Given Biden’s previous choices when he had more flexibility in determining tariffs, it is doubtful that he would express dissatisfaction with the outcome.
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