Originally Published: March 4, 2018 6 a.m.
WASHINGTON (AP) – President Donald Trump's move to impose tariffs on imported steel is meant to protect an industry that employs about 140,000 Americans. Yet by raising the price of steel, those same tariffs stand to hurt a far larger group of U.S. workers: the 6.5 million who work in industries that buy steel – from automakers to aircraft manufacturers to suppliers of building materials.
Trump has vowed to impose 25 percent tariffs next week on imported steel and 10 percent on aluminum, which he says pose a threat to America's national security. By building barriers to imported metal, the tariffs would allow U.S. steel companies to expand production and charge higher prices than they could without broader competition. Those higher prices, in turn, would squeeze the companies that use the materials and potentially the consumers who buy the finished goods.
Some economists warn that if consumers must pay more for cars or businesses more for heavy equipment, the resulting slowdown in spending could hamper the economy.
"Higher prices for consumers could eventually lead to slower U.S. economic growth and result in reduced (overall) factory employment," Moody's Investors Service cautioned in a report.
The tariffs and the prospect they will ignite a conflict with America's trading partners has rattled Wall Street: The Dow Jones industrial average plunged 420 points on Thursday and an additional 71 points Friday.
Commerce Secretary Wilbur Ross went on CNBC to dismiss as overblown any fears that steel-consuming companies stand to suffer in any meaningful way.
"It's trivial," Ross said.
The Commerce secretary argued that the tariffs would add only about $175 to the cost of a $35,000 car – one half of 1 percent.
Ross also held up a Campbell's Soup can to illustrate what he called the negligible effect that steel tariffs would have.
"In the can of Campbell's Soup," Ross said, "there's about 2.6 pennies' worth of steel. So if that goes up by 25 percent, that's about six-tenths of 1 cent on the price of a can of Campbell's Soup.... Who in the world is going to be too bothered by six-tenths of a cent?"
At rally after rally, Trump blamed past trade deals and Chinese dumping for closing U.S. steel plants.