While manufacturing's share of gross domestic product has declined steadily from 27% in 1960 to about 13.7% today, total U.S. employment has grown with population over the same term and in the last quarter reversed a slight, two-year decline. With good fortune, job growth will now be sustained. But steel tariffs imposed by President Bush in March 02 and lifted last December harmed the economy badly, in my view the single most important factor to sustain recession and depress job resurgence.
Steel consuming industries have been harmed by those protectionist duties that nearly caused trade war with Europe, were declared illegal by World Trade Organization to which the U.S. subscribes, and will fester because the U.S. steel producers, integrated mills especially, continue to balk at becoming efficient. All using sectors have been hurt over the last two years. Reinforcing steel costs have risen 70% and structural steel costs are up 33%, increasing installed costs 7% to 10% and total construction up about 1.5%. Cold rolled flat steel prices have risen about 30% and so raises total product cost in lighting and appliance over 15%. The tariff of up to 30% on ten categories of imports allowed domestic producers to increase prices an aggregate 45% over two years ago. This unreversed price hike hit automotive parts suppliers hard; before the tariff they imported only 5% of steel ($5.4 billion in 2002) but the tariff let domestic makers raise prices on the 95% of domestic production used by these parts makers. So as of a few months ago, U.S. manufacturers had 12.8 million (M) employed in steel consuming jobs, 2.1 M automotive related, but only 226,211 jobs engaged in steel production. Over the 2002-03 years during a recession, it was bad policy to harm fifty workers in order to prop-up one (see table).