How are those steel tariffs working out?

Now that 25% steel tariffs have been in place for nine months, what have been the consequences?  WSJ reports that so far the only major change has been that domestic steel companies are making higher profits.  There has been hardly any decrease in steel imports.

This has happened for two reasons.  First, it takes a lot of time to ramp up U.S. steel production; you cannot open new plants or reactivate closed plants overnight.  Second, no one knows how long the tariffs will last.  Without being political, any neutral observer would see that U.S. economic policy can change quickly and unpredictably.  If you were CEO of a company such as Nucor, would you bet your company's future on expanding domestic production behind a tariff wall that could vanish before or right after the next election?

The tariff raised prices of imported steel by 25%.  Domestic steel producers have raised their prices the same amount and, voila, higher prices generate larger profits.  If the tariffs are perceived to be long lasting, companies will invest and create more jobs.  But the tariffs could vanish as part of some bigger deal with China or Mexico.  Imports have not increased because domestic production has not changed.

Bottom line: the tariffs have resulted in higher prices for US steel consumers, higher profits for US steel producers and no change in wages and employment for steel workers.