Trump urged to not im­pose emer­gency tar­iffs on steel

The Hamilton Spectator - - BUSINESS - DON LEE WASH­ING­TON — Tri­bune Wash­ing­ton Bu­reau

Fif­teen for­mer top White House economists, from both po­lit­i­cal par­ties and dat­ing back to the Ford ad­min­is­tra­tion, are urg­ing Pres­i­dent Don­ald Trump not to go through with plans to im­pose tar­iffs on steel im­ports in the name of se­cu­rity.

In an ex­tra­or­di­nary let­ter Wed­nes­day to Trump, these for­mer chairs of the White House Coun­cil of Eco­nomic Ad­vi­sors say they rep­re­sent a wide range of po­lit­i­cal and eco­nomic views but are of one ac­cord in op­pos­ing Trump’s plan to slap new tar­iffs on im­ported steel.

The Trump ad­min­is­tra­tion is un­der­tak­ing a review of the is­sue, which would pro­vide a ba­sis for the pres­i­dent to levy new tar­iffs on the grounds that for­eign steel presents a threat to Amer­i­can se­cu­rity in­ter­ests.

Such tar­iffs would not only come with diplo­matic costs, as most im­ported steel comes from im­por­tant al­lies, but they also would ac­tu­ally damage the U.S. econ­omy, these economists write.

The U.S. al­ready has many du­ties on a va­ri­ety of steel im­ports that were found to have been dumped into the U.S. at un­fair prices or re­ceiv­ing gov­ern­ment sub­si­dies. The ad­di­tional tar­iffs that Trump is con­tem­plat­ing, the let­ter states, “would raise costs for man­u­fac­tur­ers, re­duce em­ploy­ment in man­u­fac­tur­ing, and in­crease prices for con­sumers.”

“We urge you to avoid a pol­icy that would likely in­cur greater eco­nomic and diplo­matic costs than any con­ceiv­able na­tional se­cu­rity gain,” it says.

Most economists are not in favour of pro­tec­tion­ist poli­cies. Still, the let­ter is highly un­usual in that such a siz­able num­ber of prom­i­nent economists, who sel­dom agree on ma­jor pol­icy is­sues, would join in rais­ing op­po­si­tion to a po­ten­tial pol­icy ac­tion by a sit­ting pres­i­dent.

The list of sig­na­to­ries in­clude two for­mer chairs of the Fed­eral Re­serve — Ben Ber­nanke, who served in the Ge­orge W. Bush White House, and Alan Greenspan, the chair of the coun­cil un­der Ger­ald Ford in the mid-1970s. Oth­ers who penned their name on the one-page let­ter in­clude Nobel laureate Joseph Stiglitz of Columbia Univer­sity and Laura Tyson of the Univer­sity of Cal­i­for­nia at Berke­ley, both of whom ad­vised Bill Clin­ton, and con­ser­va­tive economists Glenn Hub­bard of Columbia and Greg Mankiw of Har­vard.

Janet Yellen, the cur­rent Fed chair, was not asked to sign.

The White House and the Com­merce De­part­ment, which is pre­par­ing the re­port on steel im­ports and na­tional se­cu­rity, did not im­me­di­ately re­spond to re­quests for com­ment.

Veteran trade an­a­lyst William Rein­sch, who is a fel­low at the Stim­son Cen­ter, said he could not re­call a time when so many economists had joined in such a let­ter ad­dressed to the pres­i­dent. Even so, he doubted that it would have much ef­fect.

“This is the eco­nomic es­tab­lish­ment that he en­joys thumb­ing his nose at,” Rein­sch said. “I don’t think he’ll be in­clined to take their ad­vice.”

At the same time, some of Trump’s own top ad­vis­ers in­side the White House are likely to be ad­vis­ing cau­tion against im­pos­ing sweep­ing mea­sures that could anger al­lies and risk a trade war. At the G20 sum­mit last week, Euro­pean Union of­fi­cials warned that such tar­iffs on for­eign steel would be met by swift re­tal­i­a­tion.

In 2002, Bush ap­plied emer­gency tar­iffs of up to 30 per cent on steel im­ports, but he lifted them 16 months be­fore they were to ex­pire. The World Trade Or­ga­ni­za­tion ruled that ac­tion il­le­gal and Europe threat­ened to re­tal­i­ate with tar­iffs of its own — on cit­rus from Florida, mo­tor­cy­cles made in Wis­con­sin and other U.S. goods.

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