Trade-bashing is bad for U.S. consumers
This editorial appears on Bloomberg View:
Until now, the defining feature of Trump trade policy has been a worrisome yet vague recklessness. The U.S. Commerce Department’s ruling on Boeing’s dispute with Bombardier shows the harm that comes when the administration gets specific. The rules that regulate trade can’t work without restraint and a commitment to a liberal economic order. President Donald Trump’s administration lacks both.
Boeing’s complaint charges that the Canadian and British governments are subsidizing a new passenger aircraft in contravention of trade rules and that Bombardier is “dumping” it (selling it below cost) in the U.S. market. This week’s preliminary finding proposes an absurdly high tariff — more than 200 per cent — as a remedy for the subsidy complaint.
If the final rulings, expected next year, affirm this judgment, the U.S. is in effect banning Bombardier’s plane from its market. Already, the threatened action wounds the company severely, putting many jobs at risk immediately in Canada and the U.K, and even in the U.S. (where parts are made). Retaliation is likely, threatening a mutually destructive spiral of protectionist action. The future of the North American Free Trade Agreement would be again cast into doubt.
Smart trade policy puts consumers’ interests above producers’ interests. Competition is good for consumers — but producers don’t like it, and will try to limit it where they can. If governments forget this, and put themselves at the service of producers, competition, innovation and living standards are all in jeopardy.