It's infrastructure week! Happy infrastructure week, everybody! Again!
President Donald Trump burnished his tough-on-trade image last week by declaring he would impose tariffs on U.S. steel and aluminum imports. But the move could undermine another part of his “America First” economic agenda: Rebuilding U.S. infrastructure.
Tariffs on imported aluminum and steel could drive up the cost of infrastructure investments, accentuating price pressures already brought on by a growing global economy.
Not to get crazy technical here, but the problem is that infrastructure—say, bridges—is generally made of lots of lots of steel, and so raising the price of steel means that bridges built out of lots and lots of steel are going to cost more money. We could get out the flowcharts for this one but our posterboard budget went way over what with explaining "paying hush money to cover up your affair with a porn star is bad," so you'll just have to trust us on this one.
The short version is that in an "unglued" Donald's attempt to retaliate against the news cycle in general, he chose an option that will directly hinder many of his own professed policies.
“The problem is that the steel-producing sector is a small share of the economy while steel consumption is present almost across the board,” [Gregory Daco, chief U.S. economist at Oxford Economics] said. “The construction sector is certainly a big consumer of steel and that is one of the paradoxes of this type of policy: You think you’re really helping the economy but in the end you’re shooting yourself in the foot because the pain you inflict on the consuming sectors is greater than the benefit you’re giving to the producing sector.”
This is why Republican legislators are, even after ignoring nearly every other pronouncement and fiasco coming out of the Trump White House, suddenly stirred to action: higher prices across wide portions of the U.S. economy are not the path to happy constituencies. And this is presuming that the tariffs don't instigate new trade wars, which is not necessarily a wise presumption.
Steel tariffs could also hit energy producers and hurt the administration’s goal of making the U.S. energy independent, industry groups say. Much of the steel used in pipelines is imported and domestic manufacturers don’t produce enough to meet the industry’s need, according to the Association of Oil Pipe Lines.
That might be the case, but there is little to no evidence Donald Trump—or, in fact, any of the B-tier conservative visionaries that scuttled into the White House on his coattails—sincerely gives a damn either about rebuilding American infrastructure or making the U.S. energy independent. Those are lovely campaign slogans for the rubes, but the Trump "infrastructure" plan in practice has never amounted to anything more than privatization coupled with unspecified magic.
So raising the price of a key infrastructure input does not generally matter; it's not like there were any new Trump-backed projects in the works to begin with. It’s even possible that Trump will back down on the tariffs in a few months, complete with an announcement of pretended-at victory, after both the lobbying phalanxes and furious Republican lawmakers explain to him that his “position” on trade isn’t what he currently thinks it is.