Locke backs letter to feds opposing higher steel tariffs

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  • The John Locke Foundation has signed onto a letter to federal officials opposing new steel tariffs. An Ohio corporation and the United Steel Workers are petitioning to raise tariffs on tinplate steel.
  • A coalition of more than two dozen free-market groups and individuals warns that increased tariffs would raise consumer prices and harm the economy.
  • Prices of canned items could jump by 19-30%, according to estimates.

The John Locke Foundation has signed on to a letter opposing new American steel tariffs. A coalition of more than two dozen free-market groups and individuals sent the letter Friday to the U.S. commerce secretary and the chairman of the US International Trade Commission.

The letter notes “strong opposition” to a petition from an Ohio corporation, Cleveland-Cliffs, and the United Steel Workers of America. The petition targets imported tinplate steel. It seeks to hike tariffs “by up to 300 percent on eight of our trading partners.”

“Historically, steel tariffs have acted as an artificial tax and invariably when applied have resulted in higher prices of consumer goods while reducing GDP, stifling wages, eliminating jobs, creating economic uncertainty, and reducing business investment,” the letter stated. “We expect no less a pitfall of maladies from the tariffs proposed in the petition before you.”

“Currently U.S. steel producers provide slightly less than half of the tinplate steel domestic can manufacturers require, making imported tinplate steel absolutely essential to our economy and supply chain,” the coalition wrote. “Higher tariffs will result in greater costs for can manufacturers who are already paying among the highest prices for tin mill steel and are currently impacted by Section 232 tariffs and quotas. If their foreign suppliers are burdened with additional tariffs, U.S. can manufacturers will have no choice but to raise prices on their customers who package their products in tinplate cans, who likewise will have to pass these higher costs to consumers.”

“An economic study released by the Juday Group notes that Cleveland-Cliffs’ can tax would raise prices on canned items by 19-30 percent, or up to 58 cents per canned item,” according to the letter. “At a time when Americans are struggling through the worst bout of inflation in 40 years — on grocery items especially — that has significantly reduced their purchasing power, double-digit price increases on some of our most basic necessities and food staples would be especially tragic for the poor and the elderly living on fixed incomes.”

The letter warns US Commerce Secretary Gina Raimondo and International Trade Commission Chairman David Johanson of potential unintended consequences.

“Cleveland-Cliffs attempts to justify their petition on the grounds that imported tinplate steel is targeting American jobs, yet according to a Trade Partnership Study, for every steelworker job they claim to be protecting there are 600 union and non-union jobs in other industries that could be eliminated if their petition is granted, up to 40,000 total,” the coalition explained.

The coalition explains how the petition would lead to concentrated benefits for one business and dispersed costs for other companies and consumers.

“A cost-benefit analysis of this petition shows all of the advantages accruing to Cleveland-Cliffs’ profits and to their union for protectionist job security while the rest of America would pay the price through higher prices at the store, job losses, possible supply-chain shortages, and an overall weaker economy,” according to the letter. “Note also that no other U.S. maker of tinplate steel has joined in the petition, underscoring just how enormously lopsided this proposal is in favor of just one company at the expense of 130 million U.S. households.”

“While the economic devastation of Cleveland-Cliffs’ petition is inarguable, their petition itself is unwarranted and falls far short of producing sufficient evidence that would justify the enormously harmful outcome they seek,” the coalition wrote.

“We understand and appreciate both the seriousness and thoroughness by which you must conduct this investigation, but we cannot help but caution you to the significant harm that would befall our economy, still struggling to recover from the devastation of COVID, as well as to over 300 million U.S. consumers who will pay the price and bear all of the burdens of the consequences should this exceptionally dubious request be granted,” the letter added.

Senior Vice President Brian Balfour signed the letter for Locke. Other groups endorsing the document include Americans for Tax Reform, National Taxpayers Union, Taxpayers Protection Alliance, Americans for Prosperity, Citizens Against Government Waste, Heartland Institute, Independent Women’s Forum, and Consumer Action for a Strong Economy.