President Donald Trump said he wanted to help create jobs for Americans by placing levies on imported solar panels and washing machines, but he may regret his actions if history is any guide.
“Both of his immediate predecessors made similar tariff decisions early in their presidencies and came to regret them,” the Financial Times reported. “Studies have shown they likely caused the loss of more jobs than they saved.”
President George W. Bush slapped levies on foreign-made steel and President Barack Obama imposed tariffs on Chinese-made tires – actions that each president took only once because the economic costs outweighed the benefits.
Bush’s 2002 steel tariffs raised prices and may have led to the loss of about 200,000 jobs and $4 billion in wages at smaller factories that used steel, according to an estimate cited by the newspaper. The job losses were greater than the total employment of the U.S. steel industry, which has been in steady decline in the post-war era.
Obama’s move to slap a tariff of as much as 35 percent on Chinese tires helped save 1,200 jobs — at a cost of $900,000 each, the Peterson Institute for International Economics estimated in a 2012 study. Retailers also cut more than 2,500 jobs because of higher prices, the report said.
Trump’s tariffs on solar panels have led to complaints from businesses that install the equipment on buildings. The solar industry argues that Trump is trying to save 1,000 jobs for people employed by U.S.-based manufacturers that are actually foreign-owned. Meanwhile, 20,000 jobs are at risk in a growing industry that thrives on cheap imports.
The Trump administration last week said China and Russia have shown no intention of living up to WTO rules and Washington shouldn't have supported their membership in the global trade group.
"The global trading system is threatened by major economies who do not intend to open their markets to trade and participate fairly," U.S. Trade Representative Robert Lighthizer said in reports to Congress. The reports included grievances over allegedly unfair trade practices by Beijing and Moscow.
China's exports to the U.S. surged 15 percent last year, pushing the Asian country's trade surplus with the U.S. to a new record.
Trump this week said he doesn’t want a trade war with China, although he blamed the country during his presidential campaign for stealing American jobs and destroying the manufacturing industry.
Trump also has been careful about renegotiating the North American Free Trade Agreement, despite earlier threats to abandon the deal.
A full withdrawal likely would send the stock market into a tailspin, undermining one of the bright spots of the Trump economy. The Dow Jones Industrial Average has risen more than 30 percent in the past 12 months on optimism about Trump’s tax cuts and rollback of regulations.
“There's a potential blowup in the stock market if we leave NAFTA,” Larry Kudlow, the Reagan administration economist who also advised the Trump campaign, said last week. “We're talking agriculture. We're talking car parts. We're talking trucking, transportation, energy."
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