The tariffs and other government distortions embedded in the Biden infrastructure package
The Biden administration’s infrastructure bill is supposed to bring new roads, bridges, fiber optic cable, and much more to a nation supposedly starved for all of it.
But as we noted earlier, the price tag for the infrastructure law doesn’t begin to account for other bad government policies that have real effects on prices.
Consider the costs of the steel that goes into the roads and bridges It’s more expensive, thanks in part to protectionism and tariffs:
…domestic steel prices are mentioned among the ballooning U.S. infrastructure construction costs (something we’ve highlighted at length), but the article neglects to mention how U.S. tariffs and “Buy America” requirements restrict supply, increase prices, and even lower quality. Indeed, while steel prices have generally increased around the world since last summer, these policies have helped make the United States a uniquely costly locale. And prices have continued to climb here in recent months – recently surpassing $2,000 per metric ton of hot‐rolled steel – while they’ve stagnated or even declined abroad.
And that’s just the beginning of the government-created distortions in the market:
…the United States currently imposes tariffs on numerous imported construction materials – tariffs that, as recent research from Lydia Cox of Harvard shows, can impose long‐term economic harms for industrial consumers even if the measures are quickly repealed. And the new infrastructure law contains several Buy America restrictions sure to inflate the prices of these and other critical materials even more.
But hey – it’s government work, so cost overruns, inefficiencies, plus a dose of grift and graft, are all accepted parts of the game.
Which is a reason why all of Mr. Biden’s infrastructure promises will deliver far less, at a far higher cost, than advertised.