Carney: One Year After Steel and Aluminum Tariffs, Still No Signs Tariffs Hurt U.S. Workers

If a cliche dies in the forest and no one reports it, has it really died?

Over the last two years there have been an uncountable number of reports that the Trump administration’s trade policies would hurt American workers. One widely reported study even claimed that for every one job created by the tariffs on steel and aluminum tariffs, five jobs would be lost. A study commissioned by Koch Industries claimed last year that tariffs would throw 2.75 million American out of work.

Here’s a pretty typical story from MarketWatch:

Back when economists such as Paul Krugman and Mark Zandi feared that Donald Trump’s election would make markets sell-off en route to a recession, they typically argued that tax cuts would goose the economy early in Trump’s term, but protectionist trade policies would spoil the party in the end.

Now we may get to see if they were right…

“It’s the worst possible nightmare for the economy,” said Economic Outlook Group chief economist Bernard Baumohl, with perhaps a touch of hyperbole. More expensive steel in the U.S raises costs for companies making cars, homes, office buildings and more — and could push inflation up above 3% by 2019 or 2020, he argues. “More workers in the U.S. make products that are made from steel, than make steel itself.”

That was from March of 2018.

We’re now just over the one year mark since the Trump administration began raising tariffs, first on metals and later on China. And we have our answer to Market Watch’s: there are no signs that tariffs are hurting U.S. workers either by raising unemployment, triggering layoffs, or raising prices.

Inflation undershot the Federal Reserve’s target last year. In the most recent report, the consumer price index gained 2.1 percent year-over-year. There’s no evidence of tariffs raising consumer prices generally. And inflation expectations recently hit a 50-year low.

The best and most timely data we have on layoffs in the U.S. are the weekly jobless claims. And these have shown no signs of tariff related layoffs. In fact, they have been at or near historic lows.

This week was no different. The number of Americans filing applications fell by 5,000 to a seasonally adjusted 211,000 in the week ended March 23, according to the Labor Department. Economists surveyed by Econoday expected 225,000 new claims last week.

Not only that, prior claims data was revised down. The prior week’s claims, initially reported at 221,000, came in at 216,000.

While the weekly jobless claims data is dutifully reported by the financial media, they are otherwise ignored. As a result, outlets such as the New York Times still print headlines claiming “Trump Tariffs Threaten U.S. Jobs.”

Claims data can be volatile from week to week. But the four-week moving average of claims also declined this week. And it has been remarkably steady, even while the government partially shut down for 35-days. The volatility of jobless claims has virtually vanished because claims have been so consistently low.

Unfortunately, I doubt we’ve seen the last article claiming tariffs are costing U.S. jobs. Apparently one of the rules of financial journalism in the Trump era is to never let the facts stand in the way of the narrative.