Steel Blues

Well we're living here in Allentown
And they're closing all the factories down
Out in Bethlehem they're killing time
Filling out forms
Standing in line
--Billy Joel

Yesterday, after President Trump indicated that a big tariff on steel imports was coming, stock markets drained a couple percent. This morning Trump followed up with comments that trade wars are 'good' and 'easy to win.'

When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!

— Donald J. Trump (@realDonaldTrump) March 2, 2018

Even the ghosts of Smoot and Hawley might be raising eyebrows at that one.

Of course, we have come to learn that it can be a bad idea to take the president's blurts at face value. He floats revocable thoughts in the spirit that all issues are fluid and negotiable.

The spectre of escalating trade wars is disturbing nonetheless. ZeroHedge observes that the last time significant tariffs were slapped on steel (under President Bush), stock markets sank about 30% over the course of the next year.

The graph appearing in this analysis shows that the Bush steel tariff did little to protect domestic steel jobs. In fact, US steelworker jobs are down nearly 60% since 1990. However, over that same time period, steel production is up about 8%. That's an increase in productivity of over 150%.

Societies benefit from such productivity increases. Not from policies that slow such productivity increases down.