Former WH economists argue steel tariffs would hurt US economy, diplomatic ties

Former WH economists argue steel tariffs would hurt US economy, diplomatic ties
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Fifteen former Democratic and Republican White House economists are urging the Trump administration to forego imposing tariffs on steel imports over national security concerns.

The group of White House Council of Economic Advisers heads said levying taxes on steel coming into the United States would cause economic harm and generate diplomatic tensions.

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The Trump administration is soon expected to announce a decision as to whether steel tariffs are needed under Section 232 of a 1962 trade law that provides the president with the power to slap tariffs on imported steel over national security concerns.

“We urge the administration not to take this action," the economists wrote in a letter to President TrumpDonald John TrumpAmash responds to 'Send her back' chants at Trump rally: 'This is how history's worst episodes begin' McConnell: Trump 'on to something' with attacks on Dem congresswomen Trump blasts 'corrupt' Puerto Rico's leaders amid political crisis MORE on Wednesday.

The economists noted that while U.S. steel imports come from more than 110 countries and territories much is sold to the United States by important allies such as Canada, Brazil, South Korea and Mexico.

“The diplomatic costs might be worth it if the tariffs generated economic benefits," the economists wrote.

"But they would not. Additional steel tariffs would actually damage the U.S. economy. Tariffs would raise costs for manufacturers, reduce employment in manufacturing and increase prices for consumers."

The letter, which was spearheaded by the conservative American Action Forum, was accompanied by an analysis that found steel tariffs would likely harm the U.S. economy by driving up domestic steel costs, for U.S. manufacturers, consumers and the nation's closest allies.

Overall, the analysis found that Section 232 investigations are rarely utilized and have resulted in only two prior import restrictions. 

Tariffs also would likely result in retaliation from U.S. trading partners such as China and the European Union. 

Officials from Canada, United Kingdom, the European Union, Germany and the Netherlands have expressed concern about the possibility that any new tariffs would disproportionately hit them. 

Last month, Canadian Prime Minister Justin Trudeau said he told Trump that Canada’s steel imports aren't a threat to U.S. security.

The economists argued that emergency steel tariffs put in place in 2002 under President George W. Bush didn't work to boost the economy or the manufacturing sector.

Bush lifted the tariffs a little more than a year later after a strong backlash that led to threats of retaliation from U.S. allies. 

The World Trade Organization then ruled against the steel tariffs. 

China’s overcapacity of steel has been the biggest source of angst. But moves by the Obama administration last year made it harder for Beijing to sell cheap steel here. 

The United States already has more than 150 countervailing and antidumping duties on steel imports, some as high as 266 percent, the economists said.

During the campaign, Trump condemned China's unfair trade practices and vowed to bolster U.S. manufacturing by imposing tariffs on foreign steel.

A Commerce Department report was expected by the end of June but has been delayed because talks are ongoing at the Pentagon over the potential effects of new steel tariffs.

Commerce Secretary Wilbur RossWilbur Louis RossThe Hill's Morning Report - Trump seizes House impeachment vote to rally GOP DOJ, Commerce slam House Dems contempt vote as 'political stunt' White House blasts 'shameful and cynical' Barr, Ross contempt vote MORE said last month that Trump intends to take “bold action” on steel imports that threaten U.S. security.

The signers of the letter include: Obama administration: Jason FurmanJason FurmanTrump looks for longer boost from economy US economy grew at 3.2 percent in first quarter, exceeding expectations The Hill's Morning Report - Dems contemplate big election and court reforms MORE, Alan Krueger, Austan Goolsbee and Christina Romer; George W. Bush administration: Ben Bernanke, Edward Lazear, Glenn Hubbard, Greg Mankiw, and Harvey S. Rosen; Bill ClintonWilliam (Bill) Jefferson ClintonMilitary spending has many points of contention: Closing overseas bases isn't one of them More adult Twitter users follow Obama than Trump: survey Pro-impeachment Democrats wary of Al Green's floor vote push MORE White House: Martin Baily, Joseph Stiglitz and Laura Tyson; Michael J. Boskin, from the George H.W. Bush administration; Martin Feldstein from Ronald Reagan's administration and Alan Greenspan, who served under Gerald Ford.