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Metal Tariffs Haven’t Cost Jobs (Yet)

Backers of the duties point out that jobs in metal-using industries are still growing 

Companies that turn metal into cars, cans, and other products have loudly complained that President Trump’s tariffs on imported steel and aluminum will harm them by driving up the prices they pay. The Beer Institute (a trade group, not a college, sorry) predicts that the aluminum tariffs will cost 20,000 U.S. jobs that depend on the beer industry. Ford Motor Co. Chief Executive Officer Jim Hackett told Bloomberg TV on Sept. 26 that the metals tariffs “took about $1 billion in profit from us.”

Funny thing, though. Employment in metal-using industries has risen since the tariffs went into effect last spring. Employment in fabricated metals products rose 1.44 percent from April through September, according to the jobs report from the Bureau of Labor Statistics released on Oct. 5. That compares favorably with the increase for overall manufacturing (0.70 percent) and the overall private sector (0.76 percent). In the machinery sector, another big consumer of metal, jobs increased by 1.29 percent over the period.

Those are the numbers. The question is what to make of them. To Alan Tonelson—who blogs on trade at RealityChek, supports the tariffs, and pointed out the data in a press release—they’re encouraging. “These jobs figures place [the] burden of proof on the pessimists,” he wrote. Even if it’s true that many metal consumers are still buying under contracts that precede the tariffs, he asks, “why would metals users keep hiring robustly if they were certain they’d face devastating price hikes down the road?”

Opponents of the tariffs say employment remains strong because the U.S. economy continues to thrive, but it’s just a matter of time until the tariffs bite. Dartmouth College economist Douglas Irwin speculates in an email that the jobs strength could be related to investment spending as a result of the December tax cut. Or maybe metals buyers are “substituting away from the higher-priced inputs,” or accepting lower profit margins to keep business, or even managing to pass along their higher costs. “We do know that they are lining up for exemptions from the tariffs, which implies that they are hurting in some way,” he writes. “Over 30,000 tariff exclusions so far!”

Stack-On Products, which makes safes for guns, is relocating manufacturing from the Chicago area to Juarez, Mexico, because of the steel tariffs, the Chicago Tribune reported. “Mr. Trump is part of this,” a company representative said. But such stories remain few and far between.

Trade Partnership Worldwide LLC, an economic consulting firm, predicted on June 5 that the metals tariffs would cost about 400,000 jobs on net, with an increase of 26,000 jobs in steel and aluminum production offset by a much bigger loss of jobs in metals-using industries and spillovers to the wider economy. So you might expect Laura Baughman, the organization’s president and a co-author of the report, to disagree with Tonelson’s numbers. Not so.

“I finally agree with him,” she says. On the data so far, that is. She says her projection was for one to three years. “It’s too early” to see the impact, she says. Layoffs will be a last resort for companies after they try other measures such as raising prices or getting employees to work fewer hours, she says, because “you don’t want to lose workers you’ve put a lot of training into.”

For now, though, Tonelson is crowing. Friday’s job figures “once again expose as nonsense the long string of news reports claiming that President Trump’s metals tariffs are already causing tremendous damage to American domestic metals-using industries,” he wrote on his blog.

    Bloomberg Businessweek Writer
    Peter Coy
    Bloomberg Businessweek Writer
    Peter Coy is the economics editor for Bloomberg Businessweek and covers a wide range of economic issues. He also holds the position of senior writer. Coy joined the magazine in December 1989 as telecommunications editor, then became technology editor in October 1992 and held that position until joining the economics staff. He came to BusinessWeek from the Associated Press in New York, where he had served as a business news writer since 1985.
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