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Trade protection is another of those temporary government programs

Summary:
As Milton Friedman noted, there’s nothing so permanent as a temporary government programme. Our example today is the trade protections upon steel. The UK imposes tariffs upon certain grades of steel because some Johnny Foreigners have the temerity to try to sell to British customers at prices British customers would like to pay: Britain's steel industry is braced for a decision on the UK’s tariff protections as soon as this week – potentially opening the floodgates to a wave of cheap imports. Industry insiders fear that Liz Truss, the International Trade Secretary, is set to follow a preliminary decision that recommends the removal of a large number of products from so-called import “safeguards”.Such a move risks exposing domestic manufacturers to excess production at bargain prices which

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As Milton Friedman noted, there’s nothing so permanent as a temporary government programme. Our example today is the trade protections upon steel. The UK imposes tariffs upon certain grades of steel because some Johnny Foreigners have the temerity to try to sell to British customers at prices British customers would like to pay:

Britain's steel industry is braced for a decision on the UK’s tariff protections as soon as this week – potentially opening the floodgates to a wave of cheap imports.

Industry insiders fear that Liz Truss, the International Trade Secretary, is set to follow a preliminary decision that recommends the removal of a large number of products from so-called import “safeguards”.

Such a move risks exposing domestic manufacturers to excess production at bargain prices which they cannot match, experts have warned.

Clearly this would make all consumers of steel better off and we just cannot be allowing that to happen, can we? And yes, the costs of this do fall on steel consumers. One analysis of US tariffs put in place during the Bush administration showed that the job losses among steel using companies were higher than the total number of jobs in the US steel industry.

The protective measures were brought in under EU rules three years ago but were transferred into UK law after Brexit. They were originally brought in amid ratcheting trade tensions, with the US introducing similar measures for its own steel industry.

However, the UK legislation is now about to lapse, requiring a decision on whether they should be retained or dropped.

We’re in favour of sunset clauses on much regulation. This being a good example why. Since 2017 - or even 2018 if we’re to be picky about “three years” - the global steel price has about doubled. Neither rebar nor hot rolled coil are quite the correct measure but they are indicative. The ability of Johnny Foreigner to steal the crusts from the mouths of the waif-children of Good British Steel Workers has somewhere between halved and vanished over that period of time. And yet the insistence is that the temporary measures must be continued. Because those Good British Steel Workers rather like being able to overcharge for their output at the expense of everyone else in the country.

As Friedman said, nowt so permanent as a temporary government programme. Trade restrictions, once introduced, gain a constituency vehemently against their relaxation. The answer, of course, is not to introduce trade restrictions and where we have them, abolish them.

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Tim Worstall
Tim Worstall is a British-born writer and Senior Fellow of the Adam Smith Institute. Worstall is a regular contributor to Forbes and the Register. He has also written for the Guardian, the New York Times, PandoDaily, the Daily Telegraph blogs, the Times, and The Wall Street Journal. In 2010 his blog was listed as one of the top 100 UK political blogs by Total Politics.

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