Globalization's Road to Modern Day Steel Tarrifs

Globalization has opened up many pathways for trade, but that has come with repercussions. Americans are no longer just competing with each other; they're competing with the rest of the world. One concern that has appeared because of such interactions with other nations is regarding trade deficits. Open markets are meant to help everyone, however, it seems like there is no balance when it comes to how much we trade with others and how much they trade with us. In attempts to respond to the trade deficit the United States has with China, the government has enacted a steel tariff. 

Tariffs in general are indirect taxes on the people through certain goods that they purchase. In this case, it is a 10% tax on aluminum and a 25% tax on steel. This has led to steel prices that are twice as much as they currently are and theoretically, a protection of American steel and aluminum industries. 

After the enactment of the tariff, it has become apparent the situation isn't so simple. China has enacted it's own tariffs on soybeans, cars, planes, etc in response to the United State's actions. Additionally, the tariff has harmed other industries in the nation that use steel and aluminum. For example, many farmers are struggling because the tools they use are now more expensive. What started out as a way to protect certain industries has lead to a ripple effect that affect others that rely on aluminum and steel. Trade Partnership predicts that there will be an estimated net loss of 146,000 jobs because the tariffs will decrease the jobs in other industries without providing an equal number of jobs in the steel and aluminum industry. 

The issue lies in the fact that Americans believe that trade deficits are bad when they really aren't. The United Kingdom is an example of a nation with a large trade deficits that still has a strong economy. In reality, a trade deficit does not directly correlate to a weak economy. Furthermore, the shrink that we see within industries such as steel and aluminum isn't because of globalization or trade deficits. Rather, it is a product of the progress that has occurred within the United States. Jobs that used to exist in these industries are being taken over by automation and made easier by technology. As such, because the industries themselves have become more efficient, fewer people are needed to keep them running. 

It is important for us the realize that economics is all about give and take. While the steel and aluminum industry is shrinking, it doesn't necessarily mean that Americans are losing jobs. Instead, it just means that jobs are being diverted to other industries that are flourishing as our nation grows. What steel and aluminum tariffs have done is harm the everyday person in the United States without actually addressing the root cause of job loss. While it is true that Americans are losing their jobs, simply said, tariffs are not the solution, and we must seek an answer that addresses the actual issue. 

SOURCES : 

http://fortune.com/2018/03/06/trump-steel-aluminum-tariffs-cost-jobs/

https://www.reuters.com/article/us-usa-trade-steel-agriculture/trade-war-backfire-steel-tariff-shrapnel-hits-u-s-farmers-idUSKBN1HK0GV

http://www.politifact.com/punditfact/statements/2018/mar/08/noah-smith/has-automation-driven-job-losses-steel-industry/

https://www.foxbusiness.com/politics/trumps-steel-tariffs-causing-unintended-consequences-for-manufacturers

https://www.statista.com/statistics/256666/the-20-countries-with-the-highest-trade-balance-deficit/