Ronald Reagan’s comments about tariffs ring true about the US steel industry today

This speech from Ronald Reagan was prophetic.

One of the direct beneficiaries of Trump 1.0 tariffs was the US steel industry as he blocked off competition. Today, he put on fresh 25% tariffs on all imported US steel.

These comments from Reagan from April 1987 ring true:

You see, at first, when someone says, “Let’s impose tariffs on foreign
imports,” it looks like they’re doing the patriotic thing by protecting
American products and jobs. And sometimes for a short while it works —
but only for a short time. What eventually occurs is: First, homegrown
industries start relying on government protection in the form of high
tariffs. They stop competing and stop making the innovative management
and technological changes they need to succeed in world markets. And
then, while all this is going on, something even worse occurs. High
tariffs inevitably lead to retaliation by foreign countries and the
triggering of fierce trade wars. The result is more and more tariffs,
higher and higher trade barriers, and less and less competition. So,
soon, because of the prices made artificially high by tariffs that
subsidize inefficiency and poor management, people stop buying. Then the
worst happens: Markets shrink and collapse; businesses and industries
shut down; and millions of people lose their jobs.The memory of all this occurring back in the thirties made me determined
when I came to Washington to spare the American people the
protectionist legislation that destroys prosperity. Now, it hasn’t
always been easy. There are those in this Congress, just as there were
back in the thirties, who want to go for the quick political advantage,
who will risk America’s prosperity for the sake of a short-term appeal
to some special interest group…

The US steel industry hasn’t gotten more competitive since tariffs.

Last year, Nippon Steel tried to enter the US by purchasing US Steel and investing massively to make it more competitive. What happened? US steel producers banded together and lobbied the government to block the merger and keep out a real competitor. Sadly, that worked.

Trump has promised subsidies.

It’s now an industry that’s beholden to government largess that has no reason to compete, exactly how Ronald Reagan saw it happening.

This article was written by Adam Button at www.forexlive.com.