Imagine that you and I are in a rowboat. I commit the stupid act of shooting a hole in my end of the boat. Would it be intelligent for you to respond by shooting a hole in your end of the boat?
Or, imagine I were a politician and told you that the Russian, Chinese, Korean, Brazilian and German governments were ripping off their citizens by, on the one hand, taxing them to provide subsidies to their domestic steel industries and, on the other, erecting tariff barriers forcing them to pay higher prices for products containing steel. Would you deem it responsible or intelligent of me to propose retaliatory tariff policy, whereby Americans are ripped off until Russia, China, Korea, Brazilian and German governments stop ripping off their citizens?
Both of these scenarios are applicable to the Bush administration's 30 percent steel tariffs imposed last year. Those tariffs caused the domestic price for some steel products to rise by as much as 40 percent. The clear beneficiaries of the Bush steel tariffs were steel industry executives, stockholders and the approximately 1,700 steelworkers whose jobs were saved.
Tariff policy beneficiaries are always visible, but its victims are mostly invisible. Politicians love this because the beneficiaries know for whom to cast their ballots and the victims don't know whom to blame.
According to a study by the Institute for International Economics, saving those 1,700 jobs in the steel industry cost American consumers $800,000 in the form of higher prices for each steelworker job saved. That's just the monetary side of the picture. According to a study commissioned by the Consuming Industries Trade Action Association, higher steel prices have caused at least 4,500 job losses in no fewer than 16 states