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Economist Adam Posen: Trump Tariffs Are 'Straight Up Stupid'

(Niroworld/Dreamstime)

By    |   Friday, 02 March 2018 10:22 AM

President Donald Trump's proposed tariffs on steel and aluminum imports are "straight up stupid," a respected Peterson Institute economist claimed.

The proposed 25 percent levy on all steel imports and 10 percent levy on aluminum has garnered widespread international criticism, with U.S. trade partners and allies already threatening to retaliate.

"This is just straight up stupid," Adam Posen, president of the Peterson Institution for International Economics, told CNBC. "This is fundamentally incompetent, corrupt or misguided," he said.

Posen, who served at the Federal Reserve Bank of New York in the mid-1990s, currently sits on the panel of economic advisors to the U.S. Congressional Budget Office.

"Steel is just a tiny input in the U.S. gross domestic product (GDP) — which is why it's so crazy. You mess up your entire trading system for an industry that has a total of 80,000 jobs," Posen argued.

‘This is fundamentally incompetent, corrupt or misguided’: Economist on Trump tariffs

For his part, Trump struck a defiant tone on Friday, saying trade wars were good and easy to win, after his plan to put tariffs on imports of steel and aluminum triggered global criticism and a slide in world stock markets.

The European Union raised the possibility of taking countermeasures, France said the duties were unacceptable and China urged Trump to show restraint. Canada, the biggest supplier of steel and aluminum to the United States, said it would retaliate if hit by U.S. tariffs, Reuters explained.

Trump said on Thursday that tariffs of 25 percent on steel imports and 10 percent on aluminum products were designed to safeguard American jobs in the face of cheaper foreign products and would be formally announced next week.

“When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win,” Trump tweeted on Friday.

“Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!” he wrote.

The prospect of retaliation from Canada, China and Europe sent world stocks tumbling toward a 2.5 percent weekly loss as investors turned to traditional safe havens such as government bonds, gold and the Japanese yen.

Steel has become an important focus for Trump, who said he would restore the U.S. industry and punish what he sees as unfair trade practices, particularly by China.

While U.S. officials said some details of the tariffs still needed to be ironed out, White House spokeswoman Sarah Sanders said on Friday the levels of 25 percent for steel and 10 percent for aluminum were not expected to change.

“This is something he’s wanted to do for a while. Never say never, but I think he’s pretty committed to moving this forward,” Sanders told a press pool.

Republican U.S. senator Ben Sasse, who has been critical of Trump, said there were only losers in trade wars.

“Kooky 18th century protectionism will jack up prices on American families - and will prompt retaliation,” he said in a tweet.“Make no mistake, if the president goes through with this it will kill American jobs.”

The United States is the world’s biggest steel importer, buying 35.6 million tonnes in 2017. Canada is the leading supplier, accounting for 16.7 percent, followed by Brazil on 13.2 percent and South Korea on 9.7 percent.

Officials were unable to say immediately whether the tariffs would include imports from Canada and Mexico, Washington’s partners in the North American Free Trade Agreement (NAFTA) which is being reworked.
 

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Economy
President Donald Trump's proposed tariffs on steel and aluminum imports are "straight up stupid," a respected Peterson Institute economist claimed.
posen, trump, tariff, stupid, steel, aluminum
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2018-22-02
Friday, 02 March 2018 10:22 AM
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