President Donald Trump’s proposed tariffs on steel and aluminum imports are “straight up stupid,” a top economist told CNBC on Friday.
Trump’s tariffs announcement Thursday night has been broadly condemned by both sides of the U.S. political spectrum and the international community at large.
“This is just straight up stupid,” Adam Posen, president of the Peterson Institution for International Economics, said Friday. “This is fundamentally incompetent, corrupt or misguided.”
Posen, who served at the Federal Reserve Bank of New York in the mid-1990s, currently sits on the panel of economic advisers to the U.S. Congressional Budget Office.
The president’s protectionist move, which would impose a 25 percent levy on all steel imports and 10 percent on aluminum, has garnered widespread criticism, with trade partners of the U.S. already threatening to retaliate. Downstream producers of steel and aluminum products — including cars, planes and consumer products — say it will jack up their costs, and experts fear a trade war that could harm global growth.
U.S. automaker and plane manufacturer stocks opened sharply lower during Friday morning trading, as did stocks for metals producers in Europe and Asia.
“Steel is just a tiny input in the U.S. gross domestic product (GDP) — which is why it’s so crazy. You mess up your entire trading system for an industry that has a total of 80,000 jobs.” 2015 census data showed roughly 140,000 Americans employed in steel mills, contributing $36 billion to the national economy.
By comparison, steel-consuming industries, which experts believe will be hardest hit by the tariffs, employ 6.5 million Americans and add about $1 trillion to U.S. GDP, according to the census.
Trump, who campaigned on the promise of reviving long-suffering U.S. industries, argued the move will protect American jobs.
The U.S. imports 30 percent of its steel. Once a bastion of steel production, shifts in global trade and automation saw hundreds of thousands of steel jobs eviscerated from the 1970s onward. The steel industry has long called for a clampdown on imports and global steelmaking overcapacity, and is now lauding Trump’s decision.
Steel and aluminum shares jumped sharply Friday morning, with some companies seeing share price increases of up to 9 percent.
