Did You Know? Job Losses After Imposed Tariffs on Imports of Steel (Video Transcript)

Did you know that the last time the United States imposed tariffs on imports of steel, it led to job losses? On March 1, 2018, the Trump administration imposed a tariff of 25% on imports of foreign steel into the United States. The goal was to protect American steel-making jobs. Will it work? The evidence of history suggests that while it might protect American steel producers, the gains in employment are likely to be very small and will be offset by job losses elsewhere in the economy. The last time America imposed a tariff on steel imports was in March 2002 when the Bush Administration placed tariffs of 8% to 30% on imports of foreign steel.

The Bush Administration abandoned the tariffs in December 2003 after the World Trade Organization ruled them to be in violation of WTO rules. Academic studies found that while steel production in the United States rose slightly during the period when the tariffs were in effect, steel employment did not. Moreover, the tariffs raised the cost of steel in the United States by between 30% and 50% and resulted in 200,000 job losses among steel-consuming industries, including automobiles, construction, and appliances.

Multiple Choice #1: In 2008, the Trump Administration imposed 25 percent tariffs on imports of foreign steel into the United States. Which statement is true?

A) The Trump administration is following Adam Smith's philosophy of the invisible hand.

B) The Trump administration is adopting a laissez-faire approach to trade.

C) The policy is attempting to influence what U.S. citizens and companies buy from foreign countries.

D) The policy is designed to allow the invisible hand rather than government policy to determine trade flows.

E) The Trump administration is pursuing a policy of free trade.

Multiple Choice #2: The 2018 tariffs on imported steel implemented by Former U.S. President Trump are the first such tariffs since those implemented in 2002 by Former U.S. President Bush. The 2002 tariffs slightly increased U.S. steel production, yet significantly raised the cost of steel in the United States. Which statement best describes the Trump administration's philosophy regarding the benefits of trade?

A) Former U.S. President Trump views trade as a zero-sum game. Former U.S. President Trump believes trade is superior to foreign investment.

B) Former U.S. President Trump believes higher economic growth is associated with a more open economy.

C) Former U.S. President Trump views trade as a positive-sum game.

D) Former U.S. President Trump's policy is in line with Adam Smith's theory of absolute advantage.

Multiple Choice #3: Based on the information provided in the video transcript, which philosophy best describes Donald Trump's perspective on trade between nations?

A) Former U.S. President Trump agrees with David Ricardo's theory of comparative advantage.

B) U.S. trade policy under Former U.S. President Trump is pro-free trade.

C) Former U.S. President Trump supports Adam Smith's theory of absolute advantage.

D) Under Former U.S. President Trump, the United States is moving toward unrestricted free trade.

E) Former U.S. President Trump has a mercantilist philosophy toward trade.

Multiple Choice #4: Former U.S. President Trump claims the 25 percent tariffs on imported steel are necessary to protect U.S. steel jobs. Which is a potential outcome of his policy?

A) U.S. steel companies will quickly become more efficient as compared to their foreign competitors.

B) Foreign steel companies will see a rise in their exports to the United States.

C) Employment in the U.S. steel industry will rise sharply.

D) U.S. consumers will pay higher prices for domestic steel than they would for imported steel.

E) U.S. steelworkers are more efficient as compared to foreign steelmakers.