The stock market dropped 400 points Thursday after President Trump announced plans to place a 25% tariff on imported steel and a 10% tariff on imported aluminum. He says it’s necessary to protect the domestic steel and aluminum industries, and those industries not only account for many jobs but are also vital to the economy and national defense.
Coming on the heels of his openness to more gun laws, this gave ammunition to critics who warned he would abandon his conservative rhetoric once in office (although raising tariffs to protect the domestic steel industry was one of his campaign promises, so they can’t say it’s a surprise.) Supporters say it will help restore a free market by preventing foreign competitors from dumping below-cost steel and aluminum in America and driving US producers into bankruptcy.
Tariff policy isn’t something most Americans think much about, but the conservative commentariat is filled with folks who grew up in families where cursing the Smoot-Hawley Tariff Act was as much a part of Thanksgiving dinner as the turkey. That turkey of a tariff bill is widely blamed for worsening the Depression, making products more expensive for consumers, and sparking retaliatory tariffs on American goods, so that both imports and exports were reduced by about 60%. It also helped make “tariffs” one of the few dirty words conservatives will say.
On the other hand, Smoot-Hawley raised tariffs on thousands of imported products, quadrupling the tax rate on some, and raising the average tax rate on dutiable goods to nearly 60%. It’s yet to be determined whether Trump’s steel and aluminum tariffs will have much of an effect or set off a tariff war. The stock market’s reaction wasn’t exactly a vote of confidence. But those who are denouncing it as government micromanaging of the economy and a body blow to the free market capitalist system need to explain why that doesn’t also apply to the over 12,000 tariffs that are already in place, on everything from asparagus to leather shoes to live foxes.
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