By Michael Lind, former economics editor at Commonplace

President Trump’s announcement of a 25% tariff on all steel and aluminum imports, including those from Canada and Europe, has been widely reported on in the press to shock and dismay. “EU leaders brace for US trade war ahead of ‘unlawful’ Trump tariffs,” reads one headline. “Trump’s tariffs ‘are irrational and will make America poorer,’”predicts former British Tory leader William Hague, while Mexico declares that it will fight the “illogical” tariffs.

Missing from much of the reporting and commentary is the fact that we’ve seen this before: the Biden administration last year raised tariffs on Chinese steel and aluminum 25%.

The Biden White House press release in May 2024 announcing the move—less than nine months ago—declared: “President Biden Takes Action to Protect American Workers and Businesses From China’s Unfair Trade Practices.”

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You didn’t know that? Do you know what else hasn’t been widely covered in the reporting about Trump’s steel and aluminum tariffs? The decision by India last December to consider a 25% tariff or “safeguard duty” on steel imports in India.

Also not emphasized in the press are all the other ways countries treat steel and aluminum: the European Union’s existing countervailing duties and counter-subsidy duties on particular kinds of steel from China, the U.S., Japan, South Korea, and Russia, for example; or the decision of the European Commission last summer to extend a steel import “safeguard measure” first adopted in 2018 until 2026, the maximum allowed for such measures under WTO and EU rules.

Or consider Europe’s planned launch of Carbon Border Adjustment Mechanism (CBAM), a protectionist measure designed to reverse deindustrialization that is disguised as a climate change policy. Other nations that have increased duties on Chinese steel imports in the last year include Brazil, Indonesia, Turkey—and Canada.

If you read the headlines in the mainstream press, you’re unlikely to learn the underlying cause of these protectionist actions: the decline in the price of steel caused by a global glut, which in turn is caused by China’s state-subsidized overproduction. An exception to the rule is The Economist, a reliably liberal globalist journal which nevertheless points out that the 35% surge in Chinese steel exports in 2023-24 dwarfs the combined annual steel output of the U.S. and Japan. The Economist notes “it is enough to build a thousand Golden Gate bridges.”

Left unsaid in these headlines is the fact that the U.S. share of global steel production has collapsed from half after World War II to less than 5% today.

Of the five major steel-producing nations—China, India, Japan, the U.S., and Russia—China alone produces more than half of the world’s steel output today with over a billion tons in 2023 compared to India’s 140 million tons, Japan’s 87 million tons, America’s 80 million, and Russia’s 87 million.

China is only four times as populous as the U.S., but produces more than ten times as much steel—while Japan produces more steel than the U.S., even though the U.S. has more than two and a half times as many workers. Meanwhile, in 2022 the U.S. was the world’s largest importer of steel made elsewhere, followed by Germany, Italy, Turkey, and China.

Properly understood, then, China has sought to deal with its overcapacity in steel production by dumping steel on world markets. This drives prices down, threatening steel-making countries around the world, which have responded with tariffs and countervailing duties. These national measures in response to the glut caused by Chinese dumping have knock-on effects—for example, when the U.S. imposes across-the-board tariffs on steel from Europe and Canada, which then vow to retaliate if their own steel producers are not allowed to fill the vacuum in the American market, instead of American steelmakers.

But a proper understanding of China’s export mercantilism and the worldwide response to it interferes with the narrative of the transatlantic centrist establishment responsible for media headlines. According to the narrative, the greatest threat to the world economy is not destructive Chinese mercantilism but irrational Trumpian protectionism. The similar protectionist measures imposed by Biden are air-brushed away and memory-holed, so that Trump can be portrayed as an atavistic throw-back to the Republican isolationists of the 1920s and 1930s, whose support for the Smoot-Hawley Tariff of 1930, which, we are supposed to believe, so enraged Adolf Hitler that he seized power in Germany and conquered Europe and much of Russia. If only Hitler had been mollified by low U.S. tariffs!

The absurd claim that American tariffs, rather than German imperialism, caused World War II is only one geopolitical argument made against efforts to protect or restore American manufacturing. Another common argument is that we cannot protect and promote American industry at the expense of Europe, Canada, Japan, or South Korea because they are our military allies.

This is a bizarre argument, if you think about it: we must bribe our military allies into letting us protect them at our own expense by sacrificing our own industrial producers to theirs. This made no sense during the Cold War, and it makes no sense today. As long as they needed American protection against China in Asia and Russia in Europe, fear would drive our Asian and European allies to seek military alliances with the U.S. regardless of our trade policy. If their response to American protectionism is to cut deals with China and Russia, then we can conclude that in fact they do not view China and Russia as security threats, and we can save taxpayer money by ending our one-way security guarantees to them.

Yet another element of the neoliberal establishment narrative is to equate companies with countries. This works to the benefit of multinational corporations that offshore production from the U.S. to other nations to take advantage of labor arbitrage, regulatory arbitrage, or tax arbitrage.

Consider the question of Canadian steel and aluminum. The Canadian business journal The Logic points out that most major Canadian steel and aluminum producers are subsidiaries of foreign companies:

Stelco is a subsidiary of Cleveland-Cliffs, which is American; the former Dofasco belongs to ArcelorMittal, which is headquartered in Luxembourg. Algoma Steel is a publicly traded company based in Sault Ste. Marie, Ont., that has passed in and out of private hands. Other players include U.K.-based Evraz, which has a plant in Regina… Canadian aluminum production is mostly in Quebec, with one plant in British Columbia, and it’s almost all in foreign hands. Five of the country’s nine aluminum processors are run by Rio Tinto (British-Australian) and three by Alcoa (American). The ninth, a major producer in Sept-Îles, Que., is a standalone run by Alouette Aluminum—a consortium that includes Rio Tinto, plus companies from Austria, Norway and Japan. Investissement Québec owns 6.7 per cent.

The phenomenon repeats in Mexico, where the top five steel producers are Altos Hornos de Mexico (AHMSA), Ternium Mexico, DEACERO, Grupo Simec, and ArcelorMittal Las Truchas.

AHMSA and DEACERO are companies that originated in Mexico. But Ternium is a multinational firm formed in 2005 by the consolidation of Hylsa of Mexico, Sidor of Venezuela, and Siderar of Argentina; SIMEC is a British company, part of the Gupta Family Alliance; and ArcelorMittal is a multinational corporation headquartered in Luxembourg, with facilities in Europe, Asia, and North America, including a joint venture with Nippon Steel in Calvert, Alabama.

The loss of much former American steel and aluminum manufacturing to Canada, like the growth of steel production in Mexico, is the result of strategic decisions by multinational corporations most of which are not based in Canada or Mexico. According to the narrative, however, when corporations offshore manufacturing that was formerly done in the U.S., this is win-win “free trade” that reflects the iron law of “comparative advantage,” but when the same mobile multinational corporations are incentivized by subsidies or pressured by tariffs to reshore production on American soil, this is irrational and immoral zero-sum protectionism by morons who fail to understand Econ 101.

To be sure, particular trade policies by the Trump administration can be criticized. But instead of reasoned debate, we get recitation of the narrative. Despite the fact that Biden built on and extended some of the economic-nationalist policies undertaken by Trump in his first term, the Democratic-leaning establishment press went easy on him, sparing their readers the Smoot-Hawley comparisons and lectures about comparative advantage.

But now that Trump is back, the narrative has returned. So expect every trade policy of the Trump administration—including many which might have been adopted by a Kamala Harris administration—to be greeted by the usual free-market globalist suspects with the usual rhetoric. The “Blame America First Band” is back together.

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The ‘Blame America First Band’ Is Back…