DV Journal

When U.S. Sen. Dave McCormick was the Under Secretary of the Treasury for International Affairs during the George W. Bush administration, he was a free trader and a tariff foe.

Fast forward to the Trump administration 2.0, and the freshman Republican now favors tariffs as a tool, but only if used thoughtfully and sparingly.

“The reality of what’s happened is that we have a fundamentally unfair trading regime with the European Union, with Mexico, with Canada, with China, particularly—they’re the worst offenders,” McCormick, 59, told the DVJournal podcast.

“So, essentially, what President Trump said is he wants to have fairness: fair trade, not free trade. And what that means is using reciprocal tariffs as a mechanism to make sure we have fairness. Now, in the best of circumstances, some may disagree with this…What that means is you use the leverage of reciprocal tariffs to lower tariffs on the other place so nobody has bad tariffs. Now that is the best alternative, in my opinion.

But if you can’t have that alternative, if the European Union is not going to be fair and allow Pennsylvania beef to come in or manufacturing, then you can level the playing field with tariffs.”

He noted that his hometown, Bloomsburg, is the home of MaGee Carpet Mill, a carpet manufacturer that once employed a couple of thousand workers. Now there are only 200.

“Because of unfair trading across different industries,” said McCormick.

McCormick said he also supports trade protections for industries essential to America’s national security, like steel, semiconductors and pharmaceuticals.

“You’ve got to have semiconductors here,” he said. “The whole economy depends on it.”

But for other industries, “I don’t think we should be overly protectionist,” said McCormick. “But for the strategic ones we’ve got to have here at home, and we’ve got to have fairness.”

McCormick also mentioned one of his books that’s “crazy good,” called “Superpower in Peril.”

“It talks about how to take free market principles and integrate them with the populism of the moment for policies for America,” he said.

A century ago, the creation of U.S. Steel kickstarted a period of prosperity and manufacturing in Pennsylvania. In recent decades, that prosperity dimmed in some communities. Luckily, a new investment deal brokered by the Trump administration with Nippon Steel promises to revitalize U.S. Steel and the American steel industry at large.

Founded in 1901, U.S. Steel became the largest American business and the world’s first one-billion-dollar company. From its founding, the company began making steel in Pennsylvania’s Mon Valley. The company became so ubiquitous in American culture that many people simply referred to it as “The Corporation.” U.S. Steel was used to build American skyscrapers, bridges, stadiums and infrastructure still used today.

At the height of its success, U.S. Steel employed 340,000 Americans. Thousands of workers relied on the company for a steady paycheck to provide a home and feed their families, including Pennsylvanians from Pittsburgh and the Mon Valley.

Today, global trends have hurt U.S. Steel. Once the world’s largest steel producer, the company now ranks 24th globally. Trade practices and disinvestment have hurt the former industrial giant, with U.S. Steel now employing only 22,000 people.

However, U.S. Steel’s struggle is not irreversible. A new landmark partnership with Nippon Steel would provide the boost U.S. Steel needs to return to its former glory and become an American manufacturing powerhouse. Nippon has pledged to invest billions in U.S. Steel and supply advanced technologies to the company’s facilities. It is pledging not to lay off American workers, and its investments may create opportunities for new jobs here in Pennsylvania. With this deal, U.S. Steel will go from 24th in the world to being part of the world’s third-largest steel company.

Nippon already has a proven record of investing in American companies, including here in the Keystone State. In 2011, a Nippon firm partnered with the Pennsylvania company Standard Steel and invested $220 million. By 2022, the company turned a record profit. Nippon is one of many friendly Japanese companies that have worked with the United States to invest dollars and technology into American industries to help them better compete against our Chinese rivals. Put simply, Japan is a foreign partner we can trust.

Strengthening American partnerships is more important than ever to protect our national security and check China’s influence. We are in an age where China attempts to manipulate foreign markets and trading practices to hurt American companies. To counter those practices, we must give American companies the resources they need to compete.

With his new tariffs on steel, President Donald Trump has already provided American steel companies with well-needed relief and time to strengthen domestic industry. More work is needed. This U.S. Steel-Nippon partnership aligns with President Trump’s policies and would help an iconic American steel company become a dominant global player again. It is the only deal on the table that would allow the United States to compete with China’s steel industry.

We are at a crossroads for American manufacturing and steel production. Will we allow an iconic American company to struggle or will we welcome historic investment that brings back America’s industrial strength?

President Trump can right yet another wrong by President Joe Biden and restore American steel to greatness in the process. In doing so, he will once again demonstrate his commitment to the American working class and strengthen American industrial power for decades to come.

President Donald Trump won Pennsylvania by historic numbers with more than 3.5 million votes, more than any other presidential candidate in Pennsylvania’s history. He won because he pledged to restore our steel industry to greatness and make our economy stronger than ever before. I have full faith in President Trump to make good on that promise, but I also want to make sure he has the full picture of what his supporters like me are experiencing on the ground here.

President Trump placed tariffs on various imports, including foreign steel from Canada, China, and other countries. I’m friends with steelworkers who have been through a lot of hard ups and downs. They’ve seen the Pennsylvania steel industry both thrive and struggle, and they’ve watched as politicians talk a big game about protecting their jobs without enough action behind their words.

President Trump’s tariffs could change that, but only in the short-term. Protectionist tariffs might work when they’re targeted and temporary. However, it’s important that President Trump knows that Pennsylvanians will eventually get caught in the crosshairs of economic inefficiencies and trade wars, ultimately hurting our citizens in the long-term. Tariffs as a short-term, targeted economic tool can help drive essential investments that make our industries competitive, but in the long-term make Americans less prosperous.

Pennsylvania steelworkers are the backbone of our economy. Iron and steel mills in the state are directly responsible for more than 30,000 jobs. The Pennsylvania steel industry generates $55.3 billion in economic activity. We should do everything we can to promote the industry and those jobs, and I can see why temporary and targeted tariffs on foreign steel, could serve that purpose. But since the tariffs have gone into effect, many negative economic effects have already arisen, and other countries have retaliated with tariffs of their own. Pennsylvania has taken a huge hit, and it could get worse.

A recent analysis found Pennsylvania businesses could have $5.3 billion in added costs as a result of the tariffs – and that’s not including the effect of retaliatory tariffs. Small businesses in Pittsburgh, including a local grocery store and a gift shop, recently talked to the Post-Gazette about how their costs have already gone up and could force them out of business. Rapidly changing tariffs on the auto industry have Pittsburgh-area auto dealers scrambling to adjust to rising costs. And according to industry experts, Pennsylvanians are going to see some of the worst increases in gas prices because we get so much of our refined gas and crude oil from Canada.

But that’s not all. Now that other countries are putting tariffs of their own on American goods, Pennsylvanians are seeing even more impacts. Just recently, dairy farmers in the Susquehanna Valley warned that new retaliatory tariffs from China will drive down demand and lower the value of their products. Like the steel industry, the nearly 5,000 dairy farms are responsible for a significant number of jobs and generate nearly $12 billion in economic activity. Farming generates $133 billion to the state’s economy every year, much more than the steel industry.

Family owned farms, construction, restaurant and small retail businesses are just as important as the steel industry, but they’re taking the brunt of the trade war. However, it doesn’t have to be that way. If tariffs are used at all, they should be used in a more targeted and temporary way. We need to use a scalpel, not a sledgehammer. We don’t need a 25 percent tax on virtually all imports. We can support Pennsylvania’s steel industry without sacrificing the rest of our economy.

President Trump is trying to make good on a campaign promise – a promise that helped him earn 3.5 million votes, including mine. I want to help him do that, which is why it’s important to make sure he has the full picture on the ground here. We don’t need to fight an all-out, no-holds-barred trade war to save the steel industry. Especially not when the rest of the state suffers the costs. I have faith that President Trump will find a reasonable middle ground and use a narrower approach with tariffs moving forward.

Since resuming office, President Trump has not for one minute parted from his promise to leverage tariffs to ignite a new “golden age.” At times, he seems to be working continually to stimulate major trading partners into arrangements that make America great again. However, anyone attempting to follow the bouncing tariff proposals may get dizzy. What is the president trying to do, and why does it seem so hard to make final decisions?

To whatever degree the tariffs are about controlling access to America’s economy and securing something in return, a fluid situation will result. Trump’s expensive bargaining chip may also require him to navigate a strange political alliance — one that frequently forms when the government puts its thumb on the scale of business matters.

In February, Trump announced 25 percent tariffs on all goods from Mexico and Canada and a 10 percent added tariff on China. Days later, after outcries, the tariffs were delayed and coverage modified. More recently, we were told that tariffs would be expanded to more nations — perhaps all nations — with each border tax charged equal to what they charge America.

A “sauce for goose is good for the gander” approach might spur agreements to bring down tariffs, which could be positive. However, there are more questions to consider before drawing that happy conclusion.

Is this primarily an effort to leverage trade partners to reduce the entry of fentanyl and other illegal drugs? To protect U.S. industries from low-cost foreign competition? To re-industrialize America? To garner revenues that help balance the budget? All this and more?

These things matter, but let’s consider another possibility: The tariff movement is mainly about Trump, a modern colossus who stands empowered and athwart U.S. entry points. One who, rattling the keys to the world’s largest legally safe consumer market, uses tariffs as a lever to change how the world works. Perhaps tariffs are, in a sense, tribute.

Economic theory can reveal a lot about political behavior, including how a president enjoys enough support to wield a policy that, all things equal, costs Americans quite a bit of money.

In the case of federal regulations like these, my 1983 Bootlegger-Baptist theory of regulation has been called on by regulatory scholars to explain features of the NAFTA trade deal and the Clean Air Act; OSHA safety standards, interstate trucking regulation, and the Pure Food and Drug Act; regulation of genetically modified organisms; gambling legislation; blood donation; the 1990s tobacco settlement; and pending AI regulation.

The theory gets its name from regulating the Sunday sale of alcohol in American states and cities. This tends to occur when two distinct groups join the cause: Bootleggers (who enjoy a day without legal competition) and traditional Baptists (who have argued that consuming alcohol is immoral). Both favor Sunday closing laws but for decidedly different reasons.

Time and again, when a regulation is proposed, one group takes some moral high ground. The other — maybe bootleggers, legal businesses better positioned to navigate a new regulation than their competitors, or industries protected by tariffs — laughs all the way to the bank.

Meanwhile, politicians can appeal to moral sympathies with a sincere smile while caring for well-heeled bootleggers.

In today’s tariff conversation, “Baptists” may make strong and sympathetic moral arguments about reducing drug deaths, improving federal revenues, and generating a more level international playing field. Each point is richly supported by public interest groups.

The obvious candidates for the “bootlegger” camp are the industries tariffs protect. Tariffs reduce their competition and enhance their profits. Others might include wealthy taxpayers who see their future bills lightened by an alternative form of government revenue. Some bootleggers might even put on Baptist clothing, perhaps sincerely, as they call for higher tariffs — but the profit motive remains.

Finally, there’s Trump, the politician-broker who, as gatekeeper, gains tribute — call it political currency — from both groups. The president may believe tariffs are a moral imperative and see himself playing a major Baptist role. Like countless politicians before him, he is also the chief enabler of the bootlegger.

To secure a position that is not in the immediate best interests of U.S. consumers, Trump can lean on an invisible network of bootleggers and Baptists.

The European Union, which has dismally failed to foster a business climate where tech companies can thrive, is now aiming to cripple America’s tech leaders, potentially landing a body blow to the broader U.S. economy. More distressing is that the EU is being aided and abetted in its regulatory attacks by the Federal Trade Commission.

The EU and the United States have often squared off on economic issues.

For 17 years, under four presidents, two Democrats and two Republicans, the EU and the United States were involved in a high-profile fight over aircraft manufacturing. The EU has strenuously objected to provisions in the Inflation Reduction Act, which President Biden championed. Other areas of disagreement have included agricultural products, steel, aluminum and even hard liquor.

But the mother of all EU attacks on U.S. businesses has been launched as the European Commission begins enforcing the Digital Markets Act and other measures against large U.S. tech companies. Except for one Chinese company, all the EU targets are from the United States: Alphabet (Google), Amazon, Apple, Meta (Facebook and Instagram), and Microsoft.

Among those raising protests toward the EU is a bipartisan group from the House of Representatives, 12 Democrats and 10 Republicans.

The group wrote to Biden on December 15, expressing “grave concern” as “the recent decisions by EU authorities pose serious potential damages to America’s competitiveness and security interests.” They also call out Europe’s parochial interests, saying, “The EU’s ‘digital sovereignty’ agenda has repeatedly applied one set of rules to American companies and a different, more favorable set of rules to European and foreign firms, including Russian and Chinese firms.”

Former president Barack Obama also warned against the EU’s abuse of power.

In 2015, Obama took the EU to task for having a dismal tech sector and trying to compensate for that by taking down America’s tech leaders. President Obama said, “We have owned the internet. Our companies have created it, expanded it, perfected it in ways that they can’t compete. And oftentimes what is portrayed as high-minded positions on issues sometimes is just designed to carve out some of their commercial interests.”

Unfortunately, the FTC, led by its stridently progressive chair, Lina Khan, has been working quietly with EU regulators instead of standing up for U.S. companies. Khan has made several trips to Europe to meet with regulators and address the International Competition Network, an international regulatory group.

The EU has the administration right where it wants it for taking on U.S. tech companies.

For example, on March 30, 2023, there was a meeting between Khan, the U.S. Justice Department’s Antitrust Division Assistant Attorney General Jonathan Kanter, and Margrethe Vestager, the executive vice president of the European Commission, which enforces EU rules.

Vestager said, “Today’s meeting has proven once again how fruitful it is to keep engaging in close cooperation between the European Commission and the US competition authorities.”

To keep the United States on the sidelines as the EU goes after U.S. companies is a win for Vestager and the EU. To get U.S. support is a hefty bonus.

The stakes are high. Companies that fail to comply with the EU’s Digital Markets Act can face fines of up to 10 percent of their global revenues, or more than $150 billion from the five companies. This could hobble those companies in the United States, leading to retrenchments and even layoffs with cascading tech sector effects. It could also lead to stock market drops that harm tech-oriented portfolios and the broader equity markets.

Pandering to the EU to go after U.S. companies makes no sense. It needlessly cedes national sovereignty with no tangible benefits for the United States.

It is time for the FTC to disclose its largely secretive discussions with EU regulators, as many in Congress have already demanded. Furthermore, the FTC should cease and desist all interaction with the EU until further notice.

Progressive Democrats are demanding a ban on all U.S. oil exports, claiming it would drive down the price of gas at the pump. Nationalist Republicans are attacking the Biden administration for selling oil from the Strategic Petroleum Reserve on the open market, allowing millions of barrels to be bought by China.

But new research shows allowing U.S. oil and gas exports abroad leads to more wealth and work for Americans here at home.

The study, conducted by consulting and communications firm ICF on behalf of the American Petroleum Institute (API) and American Exploration and Production Council (AXPC), analyzed the six years since the ban on exporting U.S. crude oil was lifted in December 2015. The data showed enabling exports not only reduced global oil prices by an average of $1.93 per barrel but also added $161 billion to U.S. Gross Domestic Product (GDP) and added around 50,000 jobs to the economy.

“American energy leadership doesn’t just deliver significant benefits to Americans – fueling the U.S. economy and American jobs, delivering reliable energy, and helping put downward pressure on prices, but it also strengthens global security and supports our allies,” said API President and CEO Mike Sommers in a statement. “U.S. energy exports provide critical stability to the global market, support our allies across the world who depend on American energy to meet their needs, and strengthen American energy security here at home.”

If the United States is not exporting energy, Sommers argued, it leaves the door open for unstable nations or those with less stringent environmental standards to fill the void and reap the benefits.

“As this analysis shows, lifting the ban on crude exports in 2015 saved Americans money at the pump, supported thousands of good-paying American jobs, and reduced our country’s dependence on foreign oil,” said AXPC CEO Anne Bradbury. “At a time when Americans are hurting from the price at the pump, it’s clear that increasing the global supply of crude oil is critical to lower energy prices here at home and greater energy security around the globe.”

While the news may come as a surprise to some people and politicians, organizations including the Institute for Energy Research (IER) say this is precisely what needs to be done.

“In a basic economic sense, increasing the market for a product is likely to lead to increased production of that product,” IER Director of Policy Kenny Stein tells Inside Sources. “So, allowing U.S. oil to be sold to anyone at higher international prices naturally led to increased domestic investment and production.”

Additionally, a crucial problem with the crude oil export ban was U.S. refineries on the Gulf Coast were not designed to refine the types of light oil that were booming due to the hydraulic fracturing (aka “fracking”) revolution.

If the light oil could not be exported and domestic demand was limited, Stein said there was little incentive to continue investing in increased production.

“Lifting the export ban allowed domestic production to truly take off, turning the U.S. into a net oil exporter for the first time in more than 50 years,” said Stein. “Lifting the export ban should always have been considered a slam dunk policy move, all upside, and no downside, and this study shows that clearly.”

Linnea Lueken, Research Fellow with the Arthur B. Robinson Center on Climate and Environmental Policy at The Heartland Institute, said Biden administration policies are hurting, not helping prices.

“Recent restrictions on domestic oil and gas production, namely moratoriums on leasing and similar hostility have had the opposite effect,” said Lueken. “The U.S. is capable of being not only energy independent but energy dominant too.”

Environmental groups are not fond of natural gas or LNG exports. Organizations including Sierra Club have long argued that “natural gas production creates greenhouse gas emissions every step of the way” before it is ultimately consumed at, say, a power plant.

“Exported natural gas must be liquefied, kept cold, transported overseas, then regasified before it can be used,” wrote Sierra Club in a 2021 report. “All of these extra steps translate into CO2 emissions up to 21 percent greater than plain old natural gas.”

Still, supporters of natural gas say the U.S. is the best choice to go after these and other fossil fuels.

“Natural gas and LNG exports are particularly important to the U.S. economy,” said Lueken. “If production and exploration for oil and gas were allowed to continue the way it was before, and if an expansion of our export capacity was encouraged by removing unnecessary regulatory hurdles, we could also play a role in helping our European allies cushion the blow of potentially losing exports from Russia.”

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