Why Trump’s tariffs are upsetting everyone
President Trump left this weekend’s Group of Seven economic powers summit in a petulant snit, tweeting en route to Singapore like a scorned adolescent while doing his best to harm relations with America’s most trusted allies.
This destructive feud with Canada and other friends came in part because they are pushing back against his protectionist trade policies, particularly his tariffs on steel and aluminum.
The tariffs aren’t any more popular at home than they are abroad. Several Senate Republicans are pushing a measure that would roll them back. And Charles and David Koch, the billionaire brothers who support numerous GOP causes and candidates, are pouring money into anti-tariff advertising and lobbying campaigns.
None of this should come as a surprise, as the tariffs are colossally stupid and counterproductive. Among other things, they will:
❚ Harm workers. Tariffs on steel and aluminum might help those specific industries. But they harm the much larger industries — such as automobiles and aerospace — that use steel and aluminum in their fabrication processes. These industries will now be less competitive than their overseas rivals because their input costs are higher.
The tariffs, first announced in March but with wide exemptions that have been rescinded, add 25% to the cost of steel and 10% to the cost of aluminum. They are likely to have an outsize impact on the auto parts industry, with car makers ordering more of their parts from abroad to avoid the steel tariffs.
❚ Hurt consumers. Make no mistake about it, tariffs are taxes. They require people to pay more for everything from cars to kitchen appliances. Auto industry analysts estimate these will add $300 to the price of a car. A proposed 25% tax on imported vehicles would add even more misery.
❚ Make America less secure. To justify these tariffs, Trump has cited national security concerns. But how does picking a fight with America’s most important geopolitical allies make any sense from a security point of view? It does just the opposite, in fact.
The tariffs are already inviting allies' retaliation against American-made products such as bourbon and motorcycles. Perhaps Trump’s tactics will ultimately result in the easing of some trade barriers against U.S.-made products. But history shows that trade wars are easier to get into than out of.
Trump complains about Germany’s manufacturing export economy without coming to grips with what is behind it. It is not tariffs but a society-wide commitment to manufacturing that makes its economy work. Its educational system and major corporations work hand-in-hand to train and retrain workers. Its banks pour capital into manufacturing in much the same way that American venture capital firms pour money into tech.
There is a reason why key allies, Republicans, Democrats and American companies are upset with Trump’s tariffs. They are as misguided now as they were during the Great Depression.