Saturday, March 24, 2018 | 2 a.m.
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Nineteenth-century economist Henry George observed that “blockading squadrons are a means whereby nations seek to prevent their enemies from trading; protective tariffs are a means whereby nations attempt to prevent their own people from trading. What protection teaches us is to do to ourselves in time of peace what enemies seek to do to us in time of war.”
Tariffs, in other words, are a way of making economic war on ourselves.
International trade accounted for 16 percent of Nevada’s $152.8 billion state GDP in 2017, with imports and exports valued at $24.4 billion, according to data from the Census Bureau and the Bureau of Economic Analysis. Nevada has 22,472 people employed in industries that use steel and aluminum, according to the Bureau of Labor Statistics.
Those jobs and our economy are put at risk by President Donald Trump’s decision to impose tariffs on imported steel and aluminum.
But the nefarious effects of tariffs — really a tax on consumers — go far beyond the direct impact on particular industries or even on the people who lose their jobs.
Nevadans drive cars, drink beer and soda, eat soup that comes in cans, and use myriad other items certain to increase in price because of tariffs on steel and aluminum.
Beer Institute CEO Jim McGreevy called the tariffs “a $347.7 million tax on America’s beverage industry,” and said they would cost more than 20,000 jobs among brewery workers, bartenders, truck drivers and wait staff. Without meaning to, he described a sizable portion of Nevada’s workforce.
We also depend on construction. In Southern Nevada, we have $18.8 billion worth of projects in the works or in the planning stages. Higher prices for materials will drive up the cost of those projects, and potentially put some at risk.
Does the president understand this? Does he understand that he’s putting his own agenda at risk? What does he think higher steel prices will do to his infrastructure proposal? The steel that reinforces bridges will cost more. So will pipelines. So will a border wall, which would make it an even worse idea than it already is.
Of course, a select few will benefit. A Trade Partnership report says the tariffs would create 33,464 jobs in the iron, steel and aluminum industries — while killing 179,334 jobs in the rest of the economy. That’s a net loss of about 146,000 jobs. More than five jobs will be lost for each one gained.
Nevada has already been down this road with the imposition of tariffs on imported solar panels last year.
Like all tariffs, the 30 percent tax on solar panels and components is designed to create a handful of targeted winners, while everyone else loses. What is unique about the solar panel tariff is that its beneficiaries are not major economic forces with lots of political clout in the current administration. Solar had a friendlier audience when the Obama administration imposed a round of solar-panel tariffs on China in 2012 and Taiwan in 2014.
But those tariffs had virtually no impact on the U.S. solar industry, and Trump’s aren’t likely to either. Instead of an attempt to alter economic behavior, they seem to be what Varun Sivaram of the Council on Foreign Relations called “regulatory capture not to an industry but to an ideology” — one aimed at “upholding promises of America First protectionism.”
This is not a defense of the kind of solar-energy subsidies that state government is so fond of and which distort economic activity every bit as much as tariffs do. This is a defense of economic reality.
Tariffs are bad for the economy right now. They would rob hardworking Americans of many of the benefits of the tax reform legislation enacted at the end of last year. And they’re bad long-term because they stifle innovation. Why work to boost productivity or develop better products if the government is going to protect you from competition?
Solar power should rise and fall on its own merits, and so should steel and aluminum, without an unfair advantage provided simply because those industries happen to have friends in high places.
Juan Martinez is Nevada state director of Americans for Prosperity.
