Another day, another set of U.S. government data showing that, so far, claims that President Trump’s metals tariffs are devastating steel- and aluminum-using industries and triggering virulent inflation have no basis in fact other than a few anecdotes.
The latest figures come from the Labor Department and they show changes in the nation’s producer prices – that is, inflation (or the lack thereof) in what businesses pay for the goods and services they buy in order to turn out their final products, as opposed to inflation in the prices that consumers pay for their own purchases.
Conveniently, the monthly Producer Price Index (PPI) release comes with tables that show in considerable detail exactly where and how much prices have changed since April – the first full month following the imposition of the first set of metals tariffs. So nothing could be easier than to look at this morning’s report and see that from May through August (the time period covered), prices of steel mill products have grown sequentially by 1.9 percent, 1.6 percent, and 2.6 percent, respectively. That’s higher than producer price increases for the economy as a whole. But the numbers don’t exactly scream “raging inflation.”
That goes double for aluminum mill products. After rising by 2.1 percent between May and June, they actually dropped in each of the next two months – by three and 2.1 percent, respectively.
As a result, it shouldn’t be the least bit surprising that there’s been no major producer price inflation for any of the metals-using industries tracked by the Labor Department during this period. Here are some representative numbers:
May-June June-July July-August
metal containers 0.6 percent 0.4 percent 0.4 percent
hardware 0.2 percent 0.5 percent 0.0 percent
fabricated structural 0.9 percent -0.6 percent 0.2 percent
bolts, nuts, screws, -0.5 percent 0.5 percent 0.6 percent
rivets, & washers
non-fluid power 0.2 percent 0.1 percent 0.3 percent
ball & roller bearings 0.0 percent 0.2 percent 0.6 percent
machine shop -0.1 percent 0.6 percent 0.0 percent
motor vehicle parts -0.1 percent 0.2 percent -0.1 percent
The only evidence for a significant tariff impact comes from the year-on-year price changes. For aluminum mill products in August, it was 14 percent, for steel mill products 18.6 percent. These figures are not seasonally adjusted, unlike most of the above numbers, which are. But they’re very steep nonetheless. So is this the real evidence for the “devastating tariffs” argument?
No. And here’s why. A year ago, steel and aluminum products were being massively dumped into the U.S. market. That is, thanks to foreign government subsidies, they were artificially low, and by definition had little or nothing to do with free market forces. Naturally, metal-users liked this situation. But is this how we want the American economy to run? On the basis of addiction to foreign government decisions?
Moreover, the monthly numbers indicate some fading even of these price spikes.
As noted above, nothing could be easier than to look up these data – and report on them in news stories. But since other official numbers making clear that tariff fears so far have been nothing-burgers have been studiously ignored by the Mainstream Media, the case for optimism concerning producer prices looks less than convincing.