Tags: tariffs | trump | china | aluminium | steel | imports

5 Bad Arguments for Trump's Tariffs

5 Bad Arguments for Trump's Tariffs
The United States Steel Corporation plant stands in the town of Clairton on March 2, 2018, in Clairton, Pennsylvania. (Spencer Platt/Getty Images)

Tuesday, 06 March 2018 01:02 PM Current | Bio | Archive

Defenders of President Donald Trump’s apparent decision to slap tariffs on imported steel and aluminum products have made several arguments for them. None of these arguments stands up to minimal scrutiny.

1) Laura Ingraham says “Bravo!” to the tariffs because they’re a way to “take on China’s trade and IP abuses.” But the tariffs aren’t directed at China, let alone at its intellectual-property practices. The tariffs Trump has been discussing would apply to imports from any country — and only 3 percent of our steel imports come from China.

You don’t have to take my word on it. Listen to Peter Navarro, the most vociferous protectionist in the White House. On CBS’s “Face the Nation” on Sunday, he explained flatly that the tariffs were not targeting China because “this is not a China problem.”

2) The Christian Science Monitor editorializes that Trump “deserves a hearing” because his tariffs are all about the deep human longing for reciprocity. Other countries have blocked access to our products while we give their companies access to our consumers. We need “a new norm of fairness.” Trump himself has been tweeting about reciprocity in recent days.

But this justification doesn’t line up with what Trump says he will do. The tariffs would apply to imports from every other country in the world, regardless of their trade practices. Besides, other countries’ tariffs on American steel are generally low, especially when compared with Trump’s 25 percent tariff.

3) The tariffs are being imposed under a provision of law that authorizes them for the purpose of national security. But that’s a smokescreen. U.S. production of steel has been fairly stable for decades. (The industry is not “dead,” as Trump asserts.)

Secretary of Defense Jim Mattis, while trying to sound supportive of Trump, has recommended taking more targeted action on steel and waiting on aluminum, warning about “the negative impact on our key allies” of the more sweeping action Trump wants. He also says that the military needs only 3 percent of U.S. production of steel and aluminum. If the tariffs were motivated by national-security concerns, Trump wouldn’t be saying they will stay until the North American Free Trade Agreement is renegotiated.

4) Perhaps, then, the tariffs are needed to reduce the trade deficit? Navarro and Commerce Secretary Wilbur Ross have claimed that the trade deficit itself subtracts from GDP. They mean it literally. GDP is calculated by adding consumption, investment, government spending and net exports. Since net exports are exports minus imports, it may seem as though imports and trade deficits reduce GDP.

But that’s a misunderstanding of the formula. Imports are included in consumption, investment and government spending; they are subtracted just to keep them from being counted as part of our economic output. And leaving aside simple accounting mistakes, there’s no correlation between trade deficits and economic growth.

5) In White House meetings, Trump has reportedly described these tariffs as part of his “economic nationalism.” But any nationalism worthy of the name has to involve the pursuit of the interests of the nation taken as a whole, rather than of particular companies.

The White House is barely even trying to make the case that the tariffs will benefit the economy overall. That would be a hard case to make, since industries that use aluminum and steel, and will be hurt by the tariffs, are much larger and employ more Americans than the industries that will now enjoy greater protection.

Trump announced the tariffs after hearing from executives of companies that will be protected. “Cronyist” is a better word for this kind of economic policy than “nationalist.”

But while protectionism tends to promote corruption, a desire to please the CEOs of steel and aluminum companies is almost certainly not what is driving the Trump administration’s trade policy. What’s driving it, rather, is a set of ideas about trade that Trump and some of his advisers have long held.

Many of them genuinely think that trade deficits are dangerous, that free-trade deals have hurt our economy, and so on. These ideas are, unfortunately, bad ones, and there’s no good argument for the policy that is resulting — which is why we are hearing such confused defenses of Trump’s planned tariffs.

Ramesh Ponnuru is a Bloomberg View columnist. He is a senior editor of National Review and the author of “The Party of Death: The Democrats, the Media, the Courts, and the Disregard for Human Life.” To read more of his reports — Click Here Now.

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Defenders of President Donald Trump’s apparent decision to slap tariffs on imported steel and aluminum products have made several arguments for them. None of these arguments stands up to minimal scrutiny.
tariffs, trump, china, aluminium, steel, imports
Tuesday, 06 March 2018 01:02 PM
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