Story highlights Daniel R. Pearson: Donald Trump's desire to restrict steel imports will increase prices and hurt industrial jobs

Manufacturers are vulnerable to steel costs, which will cause a decline in construction projects and employees, he writes

Dan Pearson is a senior fellow at the Cato Institute, and served as chairman of the US International Trade Commission during the George W. Bush administration. The views expressed in this commentary are solely those of the author.

(CNN) President Trump and his trade policymakers have made no secret of their desire to restrict steel imports as part of their focus on US manufacturing. But the broad US manufacturing community will not be well-served by such a move. What those limitations will actually do is increase US steel prices above their already high levels.

Dan Pearson

Steel is already one of the country's most protected sectors. US law allows special duties to be assessed against imports that are priced at what the Department of Commerce has determined to be unfairly low levels. Over 200 anti-dumping and countervailing duty orders , which are intended to "protect" US producers from so-called unfair competition, currently constrain imports of steel and iron products from a long list of countries. The effect has been to raise US prices well above global levels to the great detriment of the large manufacturing and construction sectors in America that use steel to make higher-value products.

Although it may not be a wise approach to public policy, it's true that governments often pick winners and losers. Policies intended to help one group of constituents usually hurt another. So wouldn't tighter import controls on steel just shift money from steel consumers to steel producers, while having a more-or-less neutral effect on the economy overall? Unfortunately, no. The reason is that the steel-consuming sector is so much larger than the steel-producing sector.

How high do steel prices have to be to make President Trump happy? And how much unemployment is he willing to inflict on workers at steel-consuming firms? For a president who campaigned on a theme of bringing back American industrial jobs, this is a grand irony, indeed.

A July 24, 2017, report from SteelBenchmarker™ , a price reporting service serving the steel industry, shows the US price for hot-rolled band (hot-rolled steel in coils) to be $681 per metric ton, 38% above the world export market price of $491. The US price for hot-rolled band is even higher, by 19%, than the $573 price in Western Europe. Restrictive US import policies have forced steel prices to levels much above those enjoyed by manufacturers in a relatively high-cost economy such as Germany.

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