This Trump policy didn’t work in his first term. He’s trying again.

Donald Trump announced Monday that the US will impose a 25 percent tariff on all imports of steel and aluminum. The president has a habit of declaring radical changes to trade policy, only to swiftly walk them back. Last week, Trump postponed his long-promised 25 percent tariffs on all imports from Mexico and Canada, after reaching agreements with both countries over border security. But there’s a reason to think that Trump’s steel and aluminum tariffs will stick: He implemented a nearly identical policy during his first term. In 2018, Trump imposed a 25 percent tariff on imported steel and a 10 percent tariff on imported aluminum, exempting only a small number of countries. A little over a year later, Trump granted extended exemptions to two of America’s top steel providers, Canada and Mexico. Trump’s commitment to re-running his experiment with large steel and aluminum tariffs is curious, since his first try yielded terrible results. It goes without saying that tariffs harm domestic consumers: Putting a tax on imported goods tends to make them more expensive. Sophisticated proponents of tariffs tend to acknowledge this, while insisting that the harm to consumers is outweighed by the policy’s benefits to domestic manufacturing and/or national security. This might be true of certain tariffs. But the data suggest Trump’s steel and aluminum duties harmed America’s consumers and manufacturers alike, while providing no obvious benefit to national security. According to one estimate from the Peterson Institute for International Economics, Trump’s metal tariffs — which were lifted by the Biden administration — were on track to cost American consumers and businesses roughly $11.5 billion per year. It is not entirely clear that this great sum bought the US significantly more steel jobs: Between January 2018 and October 2022, employment in America’s steel sector actually fell by 4.2 percent. It’s possible that job losses in steel would have been even higher, had the tariffs not been in place. The Alliance for American Manufacturing — a group that supported the tariffs — claimed in 2019 that they had saved or created roughly 12,700 jobs. And yet, if one takes that figure (as well as Peterson’s cost estimate) as gospel, Americans may have paid about $900,000 per steel job, far more than it would have cost to directly pay the salaries of each affected steelworker. The bigger problem with metal tariffs, though, is that far more American companies manufacture things out of steel than produce steel itself. According to one estimate, the number of Americans who work in steel-using industries outstrip those who work in steel production by an 80-to-1 margin. For steel users, Trump’s metal tariffs were all harm and no benefit: By increasing the cost of a key input — and inspiring retaliatory tariffs against American goods — Trump’s policy reduced US manufacturing employment, according to a 2019 study from the Federal Reserve. The study implies that Trump’s steel and aluminum tariffs cost the US about 75,000 manufacturing jobs. All this had little discernible benefit on national security. It is true that steel is a key input for military hardware and that China — a US adversary — produces more steel than we do. Yet the US imports about 80 percent of its steel from allied nations. And retaining the goodwill of such allies is likely more important (and realistic) than trying to domestically replicate the collective steel producing capacity of Canada, South Korea, Brazil, Mexico, and the European Union combined. In sum, if Trump is serious about his metal tariffs — and he certainly seems to be — Americans should steel themselves for rising prices and falling manufacturing employment.

What really matters

This Trump policy didn’t work in his first term. He’s trying again.