Trump Repeats Nixon's Folly
President Trump just raised the price of cars, beer, vacations, and apartment rentals.
That’s not what most headlines say. Those headlines say that Trump will raise tariffs on steel and aluminum. Higher tariffs mean higher prices for those inputs—and therefore for the products ultimately made from those outputs. Automotive and construction top the largest users of steel in the United States. Aluminum is heavily used to make airplanes, cars and trucks, and beverage containers, and also in construction.
The last time the U.S. imposed steel tariffs, back in 2002, the project was abandoned after 20 months. A 2003 report commissioned by industries that consumed steel estimated that the Bush steel tariffs cost in excess of 200,000 jobs—or more than the total number of people then employed in the entire steel industry at the time.
Donald Trump is often compared to Richard Nixon in his disdain for law and ethics. The parallel applies to economics too. Nixon in 1971 quit the Bretton Woods agreement and imposed a surtax on all imports. The “shock” disrupted the world economy and profoundly angered formerly trusting friends already uneasy over the war in Vietnam. But Nixon, who knew little and cared less about economics, had his eye fixed on one concern only: the 1972 election. His emergency economic measures—joined to a loosening of monetary policy and a big increase in Social Security payouts the next year—were selected with an eye to one concern only. In the words of Allen Matusow, the shrewdest student of Nixon’s economic policy, “Somehow he had to make the economy hum by 1972 or face likely defeat in his quest for reelection.” What that meant in practice, Matsuow wrote, was that Nixon governed not according to what would work in the long term, but according to “the prevailing mood of the two-thirds of the country he called the ‘constituency of uneducated people.’”
https://www.theatlantic.com/politics/archive/2018/03/steel-tariffs-consequences/554690/
= new reply since forum marked as read
