The Great American Tariff Scam: Starring Donald Trump as the Savior Who Sells You Out
It’s not just bad economics. It’s a calculated con that’s costing us jobs, factories, and our future…
Today’s Daily Take is written by my old friend and former BBC reporter Greg Palast, who in addition to being in a brilliant journalist also has a solid academic background in statistics, economics, and math. I think you’ll find it fascinating. (His Substack newsletter Greg Palast Investigates is here.)
Stay with me, and I’ll explain these weird, weird facts:
Trump’s tariffs on foreign steel increased the amount of steel imported. Despite Trump’s tariffs, total steel imports are up 3.6% year to date compared to 2024 according to the American Iron and Steel Institute.
Trump’s tariffs have reduced American steel production. Adjusted year-to-date output through May 24 was 36,287,000 net tons, down 0.5 percent from the same period last year.
Trump’s tariffs on steel have raised prices on American goods from cars to computer mainframes. NUCOR, America’s largest steelmaker, raised its prices a stunning 38.5%, from $675/ton to $935/ton in the past year to March 2025. As steel is central to US production in all industries, these hikes are a big factor in inflation, adding 1.7% to prices throughout the economy, according to a Yale University study. This will cost the average American family $2,800 if the tariffs continue through the year.
And the biggest shocker: Trump’s tariffs are costing American steel jobs. Despite Trump’s punitive tariffs, steel employment in the USA has flatlined and massive layoffs have been announced. In March, with Trump imposing the highest tariffs in a century, Cleveland-Cliffs, one of America’s largest steel producers, announced over 1,200 steelworkers will be laid off in Michigan and Minnesota.
As I’ll explain, steel employment is diving, not despite the tariffs, but because of the tariffs.
I’m motivated to write by Donald Trump’s sickening PR stunt at a US Steel plant in Pennsylvania last week. I’m looking at Trump’s big belly and red tie posing with steelworkers in hard hats and coils of rolled steel around them. He’s not the first president to use steelworkers as a prop, but the first to do so while economically spitting in their faces.
The United Steelworkers asked me to investigate, so…
In 1977, a United Steelworkers of America official asked me, a young economist, if his union should join the call for tariffs on Japanese steel imports.
Hey, it made perfect sense: If tariffs raised the price of imported steel, then it’s a no-brainer that US buyers would replace the foreign metal with steel made in the good old USA.
But Steelworkers aren’t idiots. They didn’t see any new jobs happening. “Oil Can” Eddie Sadlowski, the beefy leader of the Steelworkers’ Great Lakes region, with the biggest slice of the country’s steelmaking capacity, had hunted me down at the University of Chicago Economics Department. He asked me why, though given new tariff protection, US Steel Corporation was cutting jobs at the Southworks, Chicago, and Gary, Indiana, steelworks.
I dug in. The numbers were clear as a bell. Every time the US put trade restrictions on Japanese steel, American steel production fell and employment dropped with it.
Like, huh?
As a forensic economist (a detective with a graduate degree), I quickly found the perpetrator: US steel industry price hikes.
Here’s how it works: Every time the US raises tariffs on steel, American companies, not having to face competition from lower prices from abroad, simply hike their own prices through the roof.
This year, the American Iron and Steel Institute expects manufacturers, protected by tariffs, will raise the price of hot rolled steel by a stratospheric 18.75%!
Prices rise and US production goes down. General Motors, for example, will replace steel with plastics or simply sell fewer cars.
American steel companies don’t care. The number of tons they sell may fall, but their profits take off. It’s the steelworkers, with steel shipments down, who get laid off.
Remember, steel companies are not in the business of making steel, they are in the business of making profits.
The only reason Trump’s tariffs haven’t tanked steel industry employment is, according to industry analysts, because of President Biden’s trillion-dollar infrastructure program.
So, I’m not shocked that Trump’s tariff terrorism on steel imports has cost American steel jobs…and it will get worse.
Photo Op from Hell
So, with his steel tariff madness backfiring, Trump did what every huckster politician has done for decades: create a phony photo op. You’ve seen it before. A bunch of blue-collar workers in hard-hats and high viz vests applauding some duplicitous politician standing in front of a bunch of coils of rolled steel. They’re saving jobs at this plant!
Well, thanks, Donald, that Pennsylvania mill wasn’t in jeopardy until you, Donald, blocked Nippon Steel from investing in the plant so it could stay open.
Here’s the story. As soon as he got into office, Trump scuttled a deal for Nippon Steel to buy out US Steel’s owners and put $14 billion into refurbishing their ancient factories. Trump scuttled the Nippon “White Knight” bid — on which he’s now done another TACO and reversed himself. (For the uninitiated, TACO stands for “Trump Always Chickens Out.”)
Basically, Trump told the steelworkers, “Praise me! I put out the fire and captured the arsonist! True, I’m the arsonist, but be grateful that I’ve stopped him.”
[By the way, it was Senator John Fetterman (D-PA), not Trump, who squeezed the billion-dollar commitment out of Nippon. Notably, Fetterman literally lives across the street from one of the US Steel mills.]
Who profits?
Is the President crazy, or is there something else going on?
I notice that two of the largest owners of US Steel are Stephen Schwarzman’s Blackstone Group and vulture capitalist Dan Loeb’s Third Point. Both are big Trump donors. Is protecting steelworkers the priority — or enriching Trump’s rich buddies?
According to a report commissioned by the US Defense Department, with the in-your-face title, “Trump’s Tariffs Enrich Steel Barons at High Cost to US Manufacturers and Households,” Trump’s 25% steel tariffs in his first term added $270,000 to steel industry profits for each steel job “saved.”
Let me remind you that 225,000 Canadians belong to the United Steelworkers of America, brothers in the US union.
Don’t be fooled — a lot of Trump’s policy-by-threat, including the latest 25% tariffs on Canadian steel, is part of his attack on union rights. If the Canadian steelworkers are forced to cut wages, Americans must follow. (I negotiated contracts for the Steelworkers, so I can tell you, that threat is real.)
And Trump added this scorpion into the soup: He was proud to have forced Nippon Steel to hire American managers and create a special board of the directors for US operations. In other words, he’s given back management to the very knuckleheads and hedge fund asset-strippers that gave us the disaster that is US Steel today.
Trump’s aluminum foil hat
Trump has also imposed 25% tariffs on aluminum imports. As John Cleese would say, “What is the POINT? What is the BLOODY POINT?”
The US simply doesn’t have the aluminum capacity to replace foreign imports because the main ingredient in aluminum is not ore but electricity. Aluminum bearing bauxite ore costs just $286 per metric ton of aluminum product, but the electricity required is a breathtaking $2,400 per ton. Canada has electricity up the wazoo, a crazy amount of hydroelectric power to produce aluminum at prices that keeps US car companies in business.
There is no practical alternative to foreign aluminum. The result, Alcoa (formerly, Aluminum Company of America) is watching the wheels fall off its stock price despite new tariff “protection.”
That’s just one example of why Trump’s magical thinking about tariffs has cost America 136,000 jobs in manufacturing compared to 2023.
Tariffs 101
Tariffs suck. But sometimes they are just and justified. Years ago, I investigated Walmart for the company’s use of Chinese prison labor to make their products. Using enslaved labor and child labor was practiced by Walmart’s contractors, principally in China.
See my Guardian article, What Price a Storegasm?, read here by the great, late Ed Asner.
As to China, Americans have a moral imperative to impose targeted tariffs: Can we, with any sense of ethics, brutalize a Uyghur prisoner just to get a $15 toaster? Tariffs to punish ugly abuses are the right thing to do — but there’s no pretending the toaster-making jobs will return to the US.
And we don’t want those jobs.
When Trump imposed tariffs on Chinese-assembled iPhones, China cancelled its Boeing airline orders. Trump wants to return to America jobs putting those little screws into iPhones (which pays roughly $2.88 an hour in China), and in return, we give up $25.34 per hour jobs on the Boeing shopfloor. This is the “art of the deal”? Thank the Lord that Boeing got its orders back after Trump did his Chicken Dance in record time and cut tariffs on China.
So, when the TACO truck arrives and out pops an orange blob of bloviating bigot, don’t be fooled by those most dangerous of words, “I’m Donald Trump, and I’m here to help you.”
Palast, an economist, investigated tariffs for the United Steelworkers of America. His Substack newsletter Greg Palast Investigates is here.
Louise’s Daily Song: “The Great American Tariff Scam”
The song that was inspired by this article is here.
My reading this article as an audio podcast is here.
My new book, The Hidden History of the American Dream, is now available.
You can follow me on Blue Sky here.
The website for my radio/TV program is here.
 | A guest post by
|
Thank you, again, for another enlightening article. How many steelworkers understand this fiasco?
Capitalism: it’s what’s eating your breakfast.