Tariffs need more than tinkering
In a rare if halfhearted acknowledgment of the truth, President Trump this week allowed for the possibility that his scattershot trade war is hurting the country he famously claims to put first. The president paused or halted tariffs on select products from a list of about $300 billion in annual imports from China, he said, “just in case they might have an impact on people.”
Given Trump’s tendency to insist on the benefits of trade warfare and deny its repercussions for U.S. businesses and consumers, an incurable optimist might hope this foretells a rethinking of his counterproductive approach. Unfortunately, though, the partial retreat appeared designed to avoid the most painful shortterm costs without addressing the flawed strategy responsible for them.
The Office of the U.S. Trade Representative said Tuesday that the 10% import tax scheduled to take effect next month, announced not two weeks earlier, would be postponed until Dec. 15 for select goods, including some shoes and clothing, cell phones, laptops, gaming systems, and “certain toys.” And just in case the revised timing and identified products didn’t make Trump’s attempt to play Santa Claus clear, he told reporters he wanted to ensure that the tariffs “won’t be relevant for the Christmas shopping season.”
The trade office added that some imports would be spared entirely based on “health, safety, national security and other factors.” In a testament to the absurd extent of the trade war, the goods deemed deserving include Chinesemade Bibles, shipping containers and “certain fish.”
The rollback was enough to soothe the stock market a day after the Dow Jones industrial average’s steepest plunge of the year. But the economic weaknesses rattling investors here and abroad remain. That is due in no small part to the trade hostilities the Trump administration has provoked.
U.S. stocks’ latest dive came after the bond market’s longterm interest rates fell below shortterm yields, a reliable omen of past recessions. Compounding global concerns, China’s manufacturing growth hit a 17year low last month, the German and British economies shrank during the second quarter, and other leading economies in Asia and Latin America are believed to be in or at the brink of recession.
While China’s unfair trade practices are a matter of consensus, the administration’s attempts to bring Beijing in line have so far gone nowhere. The president’s undisciplined approach hasn’t helped persuade Xi Jinping’s government to make serious concessions. Neither have his hostile relations with longstanding allies who share the United States’ traditional interest in the international order. The result is an escalating test of wills between the world’s two largest economies, with no end in sight and accumulating casualties.
The New York Federal Reserve has estimated that the 25% tax already imposed on $250 billion in Chinese imports is costing American households an average of $830 a year, a figure that would be pushed past $1,000 by the additional tariffs scheduled. The costs fall disproportionately on certain sectors, among them “our great American Farmers,” as Trump tweets at them, who saw China cease all purchases of their products this month. The country was the thirdlargest foreign market for California growers last year, consuming more than a tenth of exports of such top crops as almonds and wine.
Trump’s trade war footing looks more misguided in light of his all too conciliatory stance on prodemocracy protests in Hong Kong. The president is negotiating matters of principle while engaging in a risky standoff over matters that should be negotiated. No holiday from this wrongheaded strategy can be long enough.