| 2024: | 3,990 tons |
| 2017: | 5,050 tons |
*BEA for U.S. GDP adjusted for inflation in 2017 dollars (Table 1.1.6), and the U.S. Geological Survey’s Mineral Commodity Summaries (“apparent consumption”) for steel and aluminum use.
WHAT THEY MEAN:
The Trump administration’s explanations for its tariff binge shift and vary. (“Foreigners ripping us off,” “fentanyl,” “trade balance,” “reciprocity,” etc.) But they often converge on an assertion that higher trade barriers would make U.S. manufacturing grow, and that the harms of higher tariffs –lost wealth, foreign retaliations against American farm products and manufactures, depressed family living standards — are less than this future benefit. (lllustrative comments below from Cabinet Secretaries Bessent & Lutnick.) Outside the administration, Shawn Fain, president of the venerable United Auto Workers union, makes a similar claim, advocating trade collaboration with Mr. Trump in the Washington Post last January on the grounds that higher tariffs would mean fewer imported cars, more U.S. car production, and presumably, more auto-plant hires and dues-paying UAW members.
Autos are very pertinent this month. Despite the financial-market plunges and fading GDP outlook accompanying the Trump administration’s Canada and Mexico fiasco, it still appears to envision putting tariffs on cars — as well as medicines (both prescription and over-the-counter), semiconductors, building materials, and various other things — in April. So is Mr. Fain right about what might happen afterwards? We’ll start with the people who get the final say — Americans thinking about buying cars this year — and draw from recent heavy-industry tariff experience to inform an answer.
The day the Post published Mr. Fain’s article, Deloitte released a January 2025 poll of Americans on car ownership. Two points jump out: (i) 69% of Americans hope to pay less than $50,000 for their next car, and (ii) 44% of Americans aged 18 to 34 years are willing to give up auto ownership altogether in favor of “Mobility as a Service.” (“MaaS,” meaning using a mix of ride-sharing, bicycles, public transit, taxis, and rental cars instead of buying a personal car.)
Now to the recent heavy-industry experience:
In March 2018, the first Trump administration raised tariffs to 25% on most steel and 10% on most aluminum. Between September 2018 and the summer of 2019, it added tariffs of 25% and 7.5% to most Chinese-made products. Both mostly stayed in place during the Biden era. Since then U.S. manufacturing output and job growth have slowed. The average post-financial-crisis, Obama-administration-policy year saw $41 billion in real-dollar manufacturing output growth and a net gain of 125,000 manufacturing jobs. Post-2018, the averages are $31 billion in real output growth and 40,000 net new jobs. Meanwhile, the Bureau of Labor Statistics’ count of specifically unionized manufacturing workers has dropped by 216,000, and the manufacturing share of U.S. GDP has shrunk by about a point:
| Manufacturing share of U.S. GDP, 2024**: | 10.0% |
| Manufacturing share of U.S. GDP, 2017: | 10.9% |
One can argue — in a miniature version of the broader claim that lost wealth and diminished family purchasing power are prices worth paying for the industrial-sector growth the administration is predicting — that somewhat smaller U.S. total manufacturing output is worth it to get larger steel and aluminum industries. But that didn’t happen either. Instead, steel production in the U.S. has fallen from 87.8 million tons in 2018 to 81 million tons in 2024, and primary aluminum production from 740,000 tons to 670,000 tons.
Why? The reason appears to be that industrial buyers now use less metal. The U.S. Geological Survey’s annual “Mineral Commodity Summaries” reports that from 2012 to 2017 the U.S. economy used 99 million tons of steel and 4.94 million tons of aluminum on average each year. From 2019 to 2024 — the six years since the tariffs, skipping 2018 since the tariffs came halfway through — the comparable averages were 94 million tons of steel and 4.37 million tons of aluminum. The 2024 totals were lower still, at 93 million tons of steel and 4.3 million tons of aluminum. So steel use dropped by about 5% and aluminum by 12%; both fell even faster relative to real GDP; and U.S. domestic production of these metals is down a bit rather than up.
Now back to cars. A 25% tariff on cars in April might raise the cost of a new $50,000 car to $60,000. Meanwhile, tariffs on the many “inputs” that go into a car — metals, semiconductors, Internet routers, wiring, radios, shatterproof and mirrored glass, leather and vinyl for seat covers, etc. — would make it more expensive for U.S.-based factories to make cars, and also raise repair and tune-up bills. Taking Deloitte’s insights on the auto-buying public into account, the likely result is that (a) some of the 69% of Americans hoping to pay less than $50,000 for a new ride wouldn’t buy one, (b) used cars would grow more attractive compared to new ones, and (c) more young Americans would choose not to buy them at all.
In sum, it’s hard to see how Mr. Fain’s hopes could materialize. And it’s easy to imagine the opposite: higher car prices, quieter dealerships, fewer sales, and eventually fewer hourly-wage auto production jobs. So here’s an alternative suggestion for the UAW’s policy shop: rather than work with Mr. Trump to raise tariffs and car prices, ask the members for ideas on how to give young Americans the low-cost cars they seem to want.
* Using the BEA and BLS annual averages, more or less equivalent to the mid-year total.
** BEA’s ‘GDP by Industry’ data. These are complete through Q3 2024; and the manufacturing share was 10.0% in the second and third quarters. The first estimate for Q4 is not yet available until March, so the final annual share may be slightly above or below the current 10.0% estimate.
Our four principles for response to Trump administration tariffs, whether last week’s on Canada/Mexico/China, or the car/medicine/semiconductor proposal:
* Defend the Constitution and oppose rule by decree;
* Connect tariff policy to growth, work, prices and family budgets, and living standards;
* Stand by America’s neighbors and allies;
* Offer a positive alternative.
Cars:
Deloitte’s poll finds prospective buyers hoping for cheaper cars, and nearly half of young Americans wondering to get one at all.
… and UAW President Fain in the Washington Post on hopes for high-tariff cars.
Data:
BEA’s ‘GDP by Industry’ series.
BLS’ gloomy look at trends in union membership in 2024. See Table 4 for manufacturing — down 216,000 members since the 2018 tariffs, probably for many reasons but not a hopeful sign for tariff-enthusiasts — and other industry-by-industry figures.
Metals:
The U.S. Geological Survey’s Mineral Commodity Summaries 2025.
USITC’s estimates for the effects of steel, aluminum, and China tariffs as of 2021, including the cost burden (“nearly full pass-through” to consumers), and effects on other industries in for the metal tariffs — a $2.2 billion expansion (again as of 2021) of aluminum and steel output, offset by a $3.5 billion contraction in auto parts, machinery, tool-making, and other metal-using manufacturing industries. No estimate for construction, and note that while the metals section estimates both benefits for protected metal-producing companies and cost for metal-using industries, the China section does only the “protected and benefiting” side and therefore isn’t useful as a picture of the effect on manufacturing.
And, as promised, some then-and-now with Cabinet Secretaries:
Then: Here’s the Republican party platform promising lower prices a few months back:
“The Republican Party will reverse the worst inflation crisis in four decades that has crushed the middle class, devastated family budgets, and pushed the dream of homeownership out of reach for millions. We will defeat inflation, tackle the cost-of-living crisis, improve fiscal sanity, restore price stability, and quickly bring down prices.”
Now: As Trump administration officials propose tariffs on groceries, lumber and other home-building materials, medicines, cars, T-shirts, etc, Treasury Secretary Bessent (via Politico) now says Americans shouldn’t care about prices — “access to cheap goods is not the essence of the American dream” — and then mumbles a bit:
“Can tariffs be a one-time price adjustment? Yes.”
Also now: Meanwhile, two blocks down 15th Street, Commerce Secretary Lutnick says the following (again via Politico) about Trump administration amplifying steel and aluminum tariffs:
“When you imposed the tariffs the first time, you added 120,000 jobs,” Lutnick told Trump. “And since that time, [the tariffs have] been picked away and nicked away and excluded away, and we’ve lost 107,000 jobs. And remember, these aren’t just general jobs. These are steel workers in America.”
Fact Check: Per the Bureau of Labor Statistics’ “Employment, Hours, and Earnings” survey (in “durable goods manufacturing”) 83,300 people worked in iron and steel mills as of February 2018. The count has varied in a narrow band since then — 88,400 high, 78,100 low, 83,500 in January 2025 — with the low point in January 2021 as the Biden administration took over and COVID re-opening got underway. Nothing remotely like “120,000 jobs gained” happened, and “107,000 jobs lost” is impossible since it’s a bigger number than the total number of steelworkers.
Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.
Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.
Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.
Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.
