After announcing plans to impose a 25 percent tariff on imported steel and a 10 percent tariff on imported aluminum, President Trump tweeted that “trade wars are good and easy to win.”
I have protectionist sympathies and I believe manufacturing still matters. The decline of steel and aluminum manufacturing in the US has had a devastating effect on many communities– such as Ashtabula and Youngstown, Ohio.
I’m not sure how good or winnable trade wars are, but there’s no doubt that countries which export steel to the US will retaliate in kind– making it harder to sell American-made products and agricultural goods to other countries. And US manufacturers which use steel and aluminum will face higher costs.
So it’s entirely likely that these tariffs will cost more American jobs than they create or save.
It probably didn’t help Trump’s case when his multi-millionaire Secretary of Commerce Wilbur Ross tried to explain to ordinary working folks how little the cost of a can of Campbell’s soup would go up as a result of the tariff.
It’s important to make a distinction between free trade and fair trade. I am a proponent of the latter. That is, countries which protect workers’ rights– including the right to organize independent trade unions– deserve more favorable treatment on trade than countries which don’t. China and (as Bernie Sanders noted) Vietnam come to mind.
Trump doesn’t seem to care about this distinction. In fact his administration has been steadily undermining the rights of American workers.
The largest single exporter of steel to the US is Canada– which in fact has stronger labor laws. By contrast:
Although China is the world’s largest steel exporter, it is only the 11th-largest source country to the U.S., accounting for just 2 percent of total U.S. imports last year.
And now Trump seems to be itching for a trade war with countries in Europe– including Germany, where manufacturing unions are much more powerful than they are in the US.
President Trump warned on Saturday that he would apply higher taxes on imported European cars if the European Union carried through on its threat to retaliate against his proposed stiff new tariffs on steel and aluminum.
“If the E.U. wants to further increase their already massive tariffs and barriers on U.S. companies doing business there, we will simply apply a Tax on their Cars which freely pour into the U.S.,” Mr. Trump wrote on Twitter from Florida, where he was spending part of the weekend. “They make it impossible for our cars (and more) to sell there. Big trade imbalance!”
It was the latest indication that Mr. Trump, despite pressure from foreign allies and American business leaders, is standing by his decision to impose a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports from all countries. The action is likely to be signed this coming week.
After Mr. Trump announced the penalties on Thursday, European Union leaders warned that American goods like Kentucky bourbon and Harley-Davidson motorcycles, many of them with roots in the home states of key Republican leaders, would be treated “the same way” if the steel and aluminum tariffs were enforced. Officials from Australia, Canada and other American trade partners also made retaliatory threats.
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The European Union levies a 10 percent duty on cars made in the United States, and the United States levies a 2.5 percent duty on cars produced in Europe. While the president threatened unilateral action, his ability to change the tariff, which was decided in complex international negotiations, might be limited without taking the major step of pulling out of the World Trade Organization.The auto industry is a complex target for the president — European automakers have plants in the United States and employ thousands of Americans, and United States automakers do sell large numbers of cars in Europe under brands unfamiliar to Americans. In addition, among some Europeans, American cars are seen as less desirable than those from Europe or Japan.
There’s a case to be made for both the US and the EU to do away with their tariffs on car imports. But as he does with many other things, Trump sees trade as a zero-sum game. If you win, we lose, and vice versa.
Update: And then there’s the real possibility that Trump’s announcement on tariffs was the result of a temper tantrum.
