Guns. Yeah... guns.
Published on March 23, 2018
President Trump shocked the world recently by calling for tariffs on steel and aluminum. His "bring it on" attitude towards a trade war incensed global leaders, and his own party. When America had tens of millions of unionized workers, Democrats loved tariffs. Tariffs limited global competition and protected union jobs. Back then, Republicans hated tariffs... and anything else... that expanded the size and power of government. Love 'em or hate 'em, everyone agrees that when you want attention from the global community, a tariff is a great way to do it!
But this is the 21st century. The world is global. Do we really want to start a trade war... over steel? The American steel industry started to disinvest back in the 1970's, decades before outsourcing was a thing. Since the 1970's, more has changed than just global economics. The technology of steel has also changed.
A century ago, the steel industry made iron from iron ore. Many tons of ore had to be mined to make just one ton of pig iron. Then, you needed two tons of coal-derived coke to transform ore to iron and iron to steel. For the more valuable forms of steel, you then have to add rare trace elements, such as manganese, chromium, and vanadium. In the pre-automation world of the mid-20th century, each of these steps took a lot of manpower, and that meant a lot of jobs.
Donald A. Coffin, Associate Professor of Economics at Indiana University Northwest, has this to say,
"As recently as 1969, employment in the steel mills accounted for nearly 30 percent of total local employment in northwest Indiana... By December 2002, those percentages had declined to 8 percent in northwest Indiana... the total value of steel output in 1969 was 2.1 percent (of GDP), while in 1998 steel output was... 0.4 percent."
New steel in America (and elsewhere) is largely recycled metal made in a very efficient electric furnace. Steel, just like coal, produces a mere fraction of the employment it once did, making a tariff on steel an odd choice. If you're going to start a trade war or even if you just want the world to think you want to start a trade war... shouldn't you pick a more likely target? I mean, if you really want to shake everyone up, why not choose...
Guns. Yeah... guns. In the mid-1980's, the US manufactured 3 million guns annually. Unlike the dramatic decline in steel, the annual production of American manufactured guns has risen, to 11 million
. It's a growing industry. But it's not necessarily a thriving industry.
Remington, one of the most storied gun manufacturers in the world, is facing bankruptcy. Uncertainty in the future of the gun industry has hurt their bottom line leaving a mountain of debt that may bury Remington. According to an article in Bloomberg,
Remington isn't alone. Strum Ruger, another of America's top 10 firearms manufacturers is having a difficult time with its investors, who are wondering if the golden age of gun sales is over and if it's time to pull out their money.
Yet, while American's gun industry struggles, imported firearms have had record sales
. In 2016 America imported just under 5 million firearms, with the most coming from Australia and Brazil.
How can President Trump and the NRA sleep at night knowing that America's small arms industry could be supplanted by foreign competition? One of the clauses that allow the President to unilaterally implement a tariff is national security. Every branch of the military, to say nothing of police forces and the national guard, need small arms. Sounds pretty critical to me! Is this the time to implement a tariff to help America's gun industry? Might I suggest that President Trump could...
BAN ALL GUNS IN AMERICA! Yes, that's right, Donald Trump should ban all guns... sorry! I meant to say "Tariff" all foreign made guns. According to the Firearms Industry Trade Association, firearms contribute $51 billion to America's economy
and more than 300,000 workers to our labor force. Compare that to just 80,000 workers in steel and iron mills
. Also, while all jobs are being automated to some degree, it is simply easier to automate away the type of jobs that are left in today's steel mills than it is to automate workers in the gun industry.
Domestic made guns are facing challenging times. Without competition from foreign manufacturers, Remington and other domestic gun makers might be able to recover and even grow. A first step might be a modest 50 to 100 percent tariff. The specific amount can be determined later, with input from the gun industry. The idea is simply to make imported guns price competitive with their domestically built counterparts. Domestic manufacturers would not just regain market share, but firms like Remington would be able to raise prices and start working down their debts.
How will the NRA react to a regulation that would increase domestic production AND improve profits for America's gun industry? Since it is arguable that the NRA has drifted from its original (and currently stated) purpose of providing training for gun owners, to becoming a trade association for the gun industry, they should see some value in a tariff. Even the NRA's most vocal 2nd amendment supporters support US-based manufacturing and "Made in America" efforts.
Of course, it will require some sacrifice. Reversing the financial problems in the gun industry will almost surely lead to a rise in the price of some types of firearms. Maybe just a little, maybe a bit more. But the whole idea of tariffs... on guns, Aluminum, cars, or imported apples... means that prices will rise as higher paid Americans replace lower paid workers in other countries.
What about gun control supporters? They should also support a tariff. Restrictions on foreign gun manufacturers and their replacement by domestic firms should lead to at least nominally higher prices. Even allowing for some growth for domestic manufacturers, total new gun sales might just slow down, or even shrink. From a gun control perspective, a tariff on imported guns would do more to reduce new guns sales than any action that state or Federal government has taken in this century.
It's a win-win... win! America's gun industry gets a second chance at life, total new guns sales can be reduced, and the American economy grows. There's always a reason to complain about a new government regulation, but a tariff on guns? What's not to love?