One community that’s still feeling the economic impact wrought by the decades-long disintegration of the American steel industry is Baltimore.
Once the largest steel mill in the world, the gargantuan Bethlehem Steel plant in Sparrows Point, Maryland, is long gone.
Not even a shadow remains of this former ticket to the middle class for tens of thousands of Baltimoreans.
Though welcome, the warehousing, distribution, and other businesses that have sprouted in its place provide nowhere near the number of quality jobs that steel once did.
The loss of that plant left a giant economic, cultural, and psychological void in the greater east side of Baltimore city and its surrounding suburbs.
But no matter what policies President Donald Trump pursues, it won’t be coming back — not like it used to be, at least.
And neither will the thousands of jobs lost over the decades at the nation’s few remaining steel mills.
The competition from foreign producers at the heart of Trump’s proposed steel and aluminum tariffs is one of the main reasons for the major decline in U.S. steel employment.
Like Trump’s promise to bring back America’s coal industry, his planned tariffs seem based solely on naive nostalgia. But these tariffs could also come at a tremendous cost.
Should Trump move ahead with his plans to place a 25% tariff on imported steel and a 10% tariff on imported aluminum, the European Union has promised to retaliate. The EU will hit the heart of U.S. exports with a $3.5 billion hit list of tariffs on products like Harley-Davidson motorcycles, Kentucky bourbon, and blue jeans.
Jean-Claude Juncker, president of the European Commission, made remarks to the German news media in reaction to the EU’s proposed tariffs.
He said the EU tax plans haven’t been finalized but would treat American goods “the same way” that European products would be handled should Trump’s metals tariffs go through.
Juncker went on to mention that retaliatory measures taken by the EU would conform to the rules set by the World Trade Organization (WTO).
This was not the only denunciation in response to Trump telling industry executives on March 1st about the metals import penalties.
Heated criticism and backlash poured in from governments, lawmakers, metals-makers, and labor unions from all around the world.
Steffen Seibert, a spokesman for Chancellor Angela Merkel of Germany, said last Friday that the German government “rejects” the tariffs. He added that such measures could lead to a global trade war, which wouldn’t “be in anyone’s interest.”
Hans Jürgen Kerkhoff, president of the German Steel Federation, said last Friday:
These measures clearly violate the rules of the World Trade Organization. If the E.U. does not react, our steel industry will pay the bill for U.S. protectionism.
Simon Clarke, a member of the British Parliament and vice chairman of the All Party Parliamentary Group on Steel and Metal Related Industries, tweeted last Friday, “Tariffs are the worst possible option for the world economy and a major threat to U.K. steel in particular.”
Roy Rickhuss, general secretary of Community Union, a British labor union, also took to Twitter to denounce Trump’s move, “Donald Trump is putting jobs at risk on both sides of the Atlantic. Thousands of steelworkers across the country voted for Brexit on the promise it would deliver a new era of international trade.”
The global reactions hinted at a looming trade war should Trump decide to follow through with his tariff plans.
Also on March 1st, Trump Tweeted, “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.” He later added, “If you don’t have steel, you don’t have a country!”
The White House has said the details of the proposed tariffs have yet to be worked out. So, until they have, the rest of the world will anxiously await Trump’s final decision.
Officials around the world have voiced their varying degrees of dismay since the proposal was unveiled on March 1st.
In response to the threats made by world leaders, Trump reaffirmed his position and said the U.S. could also impose a 25% tax on European cars.
But no final decision will be made until sometime next week.
Could this really be the start of a modern tit-for-tat trade war?
From the start of his presidency, Trump has promised to put America first. And he’s since followed suit with tax cuts and deregulations.
But Trump says he’s doing this to fulfill a campaign promise that he made to blue-collar workers to bring good jobs back to the U.S.
Some aluminum and steel industry executives are thrilled at the notion of the metals tariffs. Many have said they’ll start hiring for $60,000-a-year jobs as soon as the paperwork is signed.
Trump’s tariffs are hefty and, in many ways, unprecedented.
Every foreign country that sends steel and aluminum to the U.S., including Canadian firms, would be forced to pay. And they’re not too happy about this notion.
The move is a political and economic gamble for Trump.
And if it backfires, Americans could face higher prices on everything from cars to beer.
But if he manages to bring back a lot of steel jobs, Trump could be an even bigger hero to the American middle class.
That’s all for now.
Until next time,
John Peterson
Pro Trader Today