Effects of Steel and Aluminum Tariffs on Jobs
Introduction
In 2018, the U.S. started applying tariffs on specific aluminum and steel imports. The tariffs were expected to affect several stakeholders in the United States economy despite the same tariffs being beneficial to domestic aluminum and steel industries. Additionally, various industries, such as construction and manufacturing industries, were to be affected. Further, we will look at tire tariffs, which saved a few jobs at a high cost. This paper aims to explore the effects of the tire, steel, and aluminum tariffs.
Short and Long Term Effects of Steel and Aluminum Tariffs on Jobs
Different countries have imposed tariffs on imported products and services. There are various long term and short term impacts on employment-based on steel and aluminum tariffs. In the short run, the tariffs would impact and raise the annual steel and aluminum employment level in the United States. This increase would be more than 26000 jobs yearly in this sector within one and three years. However, during this period, the rest of the economy would suffer since these tariffs could reduce the net employment by more than 473000 jobs throughout the rest of the economy. Therefore the short term impact on tasks based on aluminum and steel tariffs within the country will be negative. There is a small number of jobs gained based on the duties compared to the jobs lost that are 16 jobs are lost for each aluminum or steel position gained. Thus on the long term effects, these changes in the short run could profoundly affect the economy negatively by increasing the unemployment rate within the country(Francois, Joseph, Laura, 2018). Specifically, in the United States, every state undergoes an overall loss of jobs and feels the impact in the short and long term.
Impacts of Tire Tariffs on Economy Overall
There are various aspects of the economic impacts caused by tariffs on tires. Since the duties could make jobs reduce in a country, the GDP will be profoundly affected by this. However, the tariffs on tires would lessen the demand for the imported tires but also increase the need for the tires produced domestically. Therefore this means that the tariffs on tires could as well increase not reduce the aggregate demand. Thus the dragged demand on imported tires due to tariffs will be counterbalanced by the increased demand on domestic produced tires rather than the imported ones. Therefore the negative impact on the economy is attributed to the adverse effects on the jobs. But not the aggregate demand of the tires in the country. The GDP of the country will not reduce at a high rate since the tariffs are small relative to the overall economy (Hufbauer & Lowry, 2012).
It is evident that tariffs increase the prices and therefore reduce the availability of the products and services for the consumers and businesses. This, as a result, leads to reduced employment, lower economic output, and lower-income. Raised aluminum, steel and tires tariffs could eventually make the price of these goods to hike. This would make the consumers dig deeper into their pockets. The after-tax value of capital income and labor will be reduced due to higher consumer prices caused by tariffs. For instance, in March 2018, the Us government imposed 25 percent on imported steel and 10 percent on imported aluminum (Timmons, Heather, 2018). However, more than a year, later on, May 2019, the U.S. administration lifted tariffs on steel and aluminum on Canada and Mexico. This reduced the revenues collected through the tariff while they had already negatively impacted the economy from March 2018 to May 2019. Therefore the tariffs are not effective in changing the economic performance of a country.
From a global perspective, these tariffs are likely to cause an unambiguous wellbeing loss due to the mislocation of resources. Although the U.S. domestic aluminum and steel jobs would increase, it will come at higher costs. Additionally, the tire tariffs negatively affected the well-established trade theory. Lastly, imposing taxes that restrict global trade for the gain of a few are detrimental to the wellbeing of the world and the country itself.