Tariffs harming America’s reputation
President Donald Trump is waking up to the fact that trade wars are bad and hard to win.
As expected, the final version of the president’s order imposing tariffs on steel and aluminum imports is full of carve-outs for our allies and exemptions for U.S. companies to import the steel they need. Lobbyists will have a field day with this piece of Swiss cheese.
That won’t stop Trump from claiming he’s kept a campaign promise while his staff quietly implements the fine print to make sure enforcement is highly selective.
These so-called flexible tariffs are a classic Trumpian move, big splash but little substance. Also in classic Trumpian fashion, the tariffs set back our our country’s reputation while creating few new jobs.
Tariffs like these are antithetical to global cooperation, and their imposition, even in such an impotent way, symbolically strikes at the peace through prosperity doctrine conservatives have promoted since World War II. The tariffs will impose a $9 billion levy on the American people, 11 percent of which will hit Texas businesses, according to the conservative Tax Foundation.
That’s why true conservatives, such as House Speaker Paul Ryan, GOP Sen. Jeff Flake of Arizona and others, oppose the president’s plan and are considering legislation to rein Trump in.
“These so-called ‘flexible #tariffs’ are a marriage of two lethal poisons to economic growth — protectionism and uncertainty,” Flake said on Twitter. “Trade wars are not
won, they are only lost. Congress cannot be complicit as the administration courts economic disaster.”
Lobbyists are also worried about Trump’s move, at least until they get their exemptions.
“We remain concerned that implementing tariffs on specialty steel and aluminum, which many U.S. steelmakers do not supply in the quantities and timelines needed for projects, could harm America’s energy renaissance and jobs,” wrote Jack Gerard, president of the American Petroleum Institute, the oil and gas industry’s trade organization.
More disconcerting is the message it sends to the rest of the world about American global leadership. By abandoning the basic principles of free and fair trade, Trump is ceding leadership in global cooperation to others.
Ninety minutes before Trump signed the tariffs, Japan and 10 other nations signed the TransPacific Partnership, which the president abandoned on his first day in office. The TPP would have eliminated 85 percent of the tariffs placed on U.S. goods entering 11 countries with little or no cost to the U.S.
The TPP would also have modernized NAFTA, solving most of its problems. Canada, Japan and Mexico are replacing the U.S. as global leaders.
“From a Canadian perspective, there’s never been a better time to diversify,” Canadian Trade Minister FrançoisPhilippe Champagne told reporters in Chile. “The economic center of the world is shifting somehow towards Asia, so we need to be prepared.”
Chinese President Xi Jinping certainly hopes so. He travels the world promoting international trade. Just as the 20th century belonged to the U.S., Xi wants the 21st century to belong to China.
The Chinese parliament this month made Xi a modern-day emperor, clearing the way for Beijing to become far more aggressive competitor. And Xi has the U.S. exactly where he want us.
Trump talks tough on China, but if he employs blunt force tariffs, he will lose.
Americans depend on cheap, Chinese-made goods for every aspect of their lives, ranging from mobile phones, to auto parts to clothing. Levy tariffs on Chinese goods, and consumer inflation will skyrocket and stall the economy.
Trump’s tax plan, and his huge budget deficit, depend on China buying more U.S. debt, which is the real driver behind the trade deficit.
When the American government and consumers run up debt like there is no tomorrow, a trade deficit is necessary to finance it.
Trump’s nationalism plays well with his voters, but a globalist like myself has to ask why on earth he would anger and alienate our capitalist allies at a time when our communist rival is gaining influence? Shouldn’t we be strengthening political and economic alliances to counterbalance Chinese influence?
The better way to lower the trade deficit is to discourage debt, incentivize investment and boost innovation to effectively compete.
Before a shooting war, wise presidents rally together as many allies as possible, and when one begins, they keep the fighting to a minimum. If Trump wants to right the wrongs of the current global trade system, he should follow the same strategy and cut back on the blustery, and ultimately meaningless, gestures.
The world looks to America for leadership, not pugilism.