[Congressional Record Volume 164, Number 38 (Monday, March 5, 2018)]
[Senate]
[Pages S1333-S1334]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
TARIFFS
Mr. ALEXANDER. Mr. President, 16 years ago President George W. Bush
announced that tariffs would be imposed on steel imports from several
countries. The goal was to help protect the domestic steel industry. It
was a good goal by a well-intentioned President whom I supported, but
it backfired.
Last week President Trump announced that he intends to impose new
tariffs on imports of steel and aluminum for the same reasons. It is a
good goal by a well-intentioned President, but I am afraid it will
backfire, just as it did for President Bush 16 years ago.
Here is the problem: Tariffs are big taxes, and they are big taxes
that raise consumer prices. These new tariffs may temporarily save a
few jobs in plants that produce steel and aluminum, but they will
destroy many more jobs in auto plants that use steel and aluminum.
This is especially bad news for Tennesseans because one-third of our
State's manufacturing jobs are auto jobs, with more than 900 plants in
87 of our 95 counties. Anything that threatens to destroy or damage
auto jobs is of grave concern to Tennesseans. It will now be cheaper
for some Tennessee auto parts suppliers to move outside the United
States, buy steel and aluminum there, and then ship finished parts back
to this country.
These new tariffs will hurt more than U.S. auto manufacturers. The
President indicated this morning that a final decision hasn't been
made. I hope that before he makes a final decision, he will take into
consideration the choices that companies such as Electrolux are making,
which demonstrate that broad tariffs are bad for American workers and
will cost Americans jobs, not just auto jobs.
Here is one example of the damage the proposed steel tariff would do
in Tennessee to a home appliance manufacturer that uses 100 percent
American steel. Immediately after the tariff was announced last week,
Electrolux--Europe's largest home appliance manufacturer--announced
that it was putting on hold a $250 million expansion in Springfield,
TN, just outside of Nashville. Electrolux has made multiple investments
in Tennessee, with plants in Memphis, as well as Springfield.
Electrolux employs more than 1,000 Tennesseans.
The company said: ``Unfortunately, this decision gives foreign
appliance manufacturers a cost advantage that is
[[Page S1334]]
hard to compete against.'' Note that Electrolux says that it gives
foreign manufacturers an advantage. Electrolux buys all of the carbon
steel it uses in its Tennessee plants from American steel mills. Let me
say that again. Electrolux, which employees 1,000 people in Tennessee
making home appliances, buys all of the carbon steel it uses in
Tennessee plants from American steel mills. Yet it has put its
expansion on hold because it believes the tariff will make it difficult
for Tennessee plants to compete with plants overseas. Why? Because the
new tariff is expected to cause American steel mills to raise their
prices to match the newer, higher price of imported steel. The result
of the tariff, therefore, will be higher costs for Electrolux and fewer
jobs in Springfield, TN, making home appliances with 100 percent
American steel. Instead, there will be more jobs overseas making home
appliances with 100 percent foreign steel.
The new U.S. tariffs on imported steel will raise the price of all
steel sold in our country, so appliance manufacturers with plants in
the United States will have a hard time competing with plants outside
of our country.
We should learn the lesson from 2002 when President Bush imposed
similar tariffs--again, a good goal, a well-intentioned President, but
it backfired. According to one widely cited independent study, the
tariffs raised consumer prices and ``[m]ore American workers lost their
jobs in 2002 to higher steel prices than the total number employed by
the U.S. steel industry itself.'' President Bush's tariffs also led to
retaliation, as other countries threatened to impose new tariffs on
American exports, which would have cost even more U.S. jobs.
On Friday, the Wall Street Journal editorial board reminded readers:
``Steel using industries in the U.S. employ some 6.5 million Americans,
while steel makers employ about 140,000. Transportation industries,
including aircraft and autos, account for about 40% of domestic steel
consumption, followed by packaging with 20% and building construction
with 15%. All will have to pay higher prices, making them less
competitive globally and in the U.S.''
That was the Wall Street Journal.
The backlash to the 2002 tariffs was so strong that President Bush
terminated them early.
I want to give President Trump credit for listening. He invited a
number of us who disagree with his advisers on trade to the White
House. He has listened carefully. So far, we haven't persuaded him. I
hope we still can. I thank him for listening. I hope he will continue
to listen.
It is unusual to have a lesson in American history so much like the
action he is proposing to take that was not good for the country no
matter how well-intentioned the President was or how good an idea it
seemed.
Since history can often serve as a guide, I refer my colleagues to
two addresses I delivered on the U.S. Senate floor on September 2,
2003, and November 11, 2003, summarizing the disastrous effect
President Bush's proposed steel tariffs had on U.S. jobs.
Mr. President, I ask unanimous consent to have printed in the Record
a copy of the Wall Street Journal's March 2 editorial on tariffs.
There being no objection, the material was ordered to be printed in
the Record, as follows:
[From the Wall Street Journal, Updated March 1, 2018]
Trump's Tariff Folly
(By the Editorial Board)
Donald Trump made the biggest policy blunder of his
Presidency Thursday by announcing that next week he'll impose
tariffs of 25% on imported steel and 10% on aluminum. This
tax increase will punish American workers, invite retaliation
that will harm U.S. exports, divide his political coalition
at home, anger allies abroad, and undermine his tax and
regulatory reforms. The Dow Jones Industrial Average fell
1.7% on the news, as investors absorbed the self-inflicted
folly.
Mr. Trump has spent a year trying to lift the economy from
its Obama doldrums, with considerable success. Annual GDP
growth has averaged 3% in the past nine months if you adjust
for temporary factors, and on Tuesday the ISM manufacturing
index for February came in at a gaudy 60.8. American
factories are humming, and consumer and business confidence
are soaring.
Apparently Mr. Trump can't stand all this winning. His
tariffs will benefit a handful of companies, at least for a
while, but they will harm many more. ``We have with us the
biggest steel companies in the United States. They used to be
a lot bigger, but they're going to be a lot bigger again,''
Mr. Trump declared in a meeting Thursday at the White House
with steel and aluminum executives.
No, they won't. The immediate impact will be to make the
U.S. an island of high-priced steel and aluminum. The U.S.
companies will raise their prices to nearly match the tariffs
while snatching some market share. The additional profits
will flow to executives in higher bonuses and shareholders,
at least until the higher prices hurt their steel- and
aluminum-using customers. Then U.S. steel and aluminum makers
will be hurt as well.
Mr. Trump seems not to understand that steel-using
industries in the U.S. employ some 6.5 million Americans,
while steel makers employ about 140,000. Transportation
industries, including aircraft and autos, account for about
40% of domestic steel consumption, followed by packaging with
20% and building construction with 15%. All will have to pay
higher prices, making them less competitive globally and in
the U.S.
Instead of importing steel to make goods in America, many
companies will simply import the finished product made from
cheaper steel or aluminum abroad. Mr. Trump fancies himself
the savior of the U.S. auto industry, but he might note that
Ford Motor shares fell 3% Thursday and GM's fell 4%. U.S.
Steel gained 5.8%. Mr. Trump has handed a giant gift to
foreign car makers, which will now have a cost advantage over
Detroit. How do you think that will play in Michigan in 2020?
The National Retail Federation called the tariffs a ``tax on
American families,'' who will pay higher prices for canned
goods and even beer in aluminum cans. Another name for this
is the Trump voter tax.
The economic damage will quickly compound because other
countries can and will retaliate against U.S. exports. Not
steel, but against farm goods, Harley-Davidson motorcycles,
Cummins engines, John Deere tractors, and much more. Foreign
countries are canny enough to know how to impose maximum
political pain on Republican Senators and Congressmen in an
election year by targeting exports from their states and
districts. Has anyone at the White House political shop
thought this through?
Then there's the diplomatic damage, made worse by Mr.
Trump's use of Section 232 to claim a threat to national
security. In the process Mr. Trump is declaring a unilateral
exception to U.S. trade agreements that other countries won't
forget and will surely emulate.
The national security threat from foreign steel is
preposterous because China supplies only 2.2% of U.S. imports
and Russia 8.7%. But the tariffs will whack that menace to
world peace known as Canada, which supplies 16%. South Korea,
which Mr. Trump needs for his strategy against North Korea,
supplies 10%, Brazil 13% and Mexico 9%.
Oh, and Canada buys more American steel than any other
country, accounting for 50% of U.S. steel exports. Mr. Trump
is punishing our most important trading partner in the middle
of a Nafta renegotiation that he claims will result in a much
better deal. Instead he is taking a machete to America's
trade credibility. Why should Canada believe a word he says?
Mr. Trump announced his intentions Thursday, so there's
still time to reconsider. GOP Senators Orrin Hatch (Utah) and
Ben Sasse (Nebraska) spoke up loudly against the tariffs, but
a larger business and labor chorus is required. Mr. Trump is
a bona fide protectionist so he won't be dissuaded by
arguments about comparative advantage. But perhaps he will
heed the message from the falling stock market, and from the
harm he will do to the economy, his voters, and his
Presidency.
Mr. ALEXANDER. I yield the floor.
The PRESIDING OFFICER. The Senator from Pennsylvania.
Mr. CASEY. Mr. President, I ask unanimous consent to speak as in
morning business.
The PRESIDING OFFICER. Without objection, it is so ordered.
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