Prices of Iron and Steel, and Trade Policy

PPI for iron and steel (blue), and import price for iron and steel (brown), both in logs 2018M03=0. NBER defined recession dates shaded gray. Orange denotes imposition of Section 232 tariffs. Source: BLS via FRED, NBER, and author’s calculations.

Obviously, the weights and definitions differ between the two indices, so the the two series are not strictly comparable. However, to the extent that the import price indices do not include tariffs, the evolution of the gap between the two series indicates the impact of tariffs. This is suggestive that eliminating the Section 232 tariffs would provide a one-off reduction in inflationary pressures.

AAF estimates the consumer cost of the Section 301 and Section 232 tariffs at about $51 billion (loss of consumer surplus is different from net welfare loss).

Removal of the steel and aluminum tariffs would likely result in a one-time drop of a 1 percentage point in the PPI, while removal of the China tariffs would result in a one time drop in the CPI of about a quarter percentage point, according to Russ/PIIE.