US President Donald Trump continues to deliver on his campaign promises today as he announced plans for global trade tariffs to “be very fair” and “protect the American worker.”
At issue are taxes on steel and aluminum imports – 25% and 10% respectively – from a long list of foreign countries, both friendly (EU) and not-so-much (China).
Trump’s idea is to level the American trade playing field by discouraging economically the foreign exporters who take business from domestic and allied producers.
Eight years of President Barack Obama resulted in major trade capitulations, including the Trans-Pacific Partnership or TPP. In order to get that invitation-to-import legislation passed, Obama passed the Trade Promotion Authority, granting Congress only a yes or no vote on trade deals.
Although Obama’s 2008 campaign position opposed and promised to withdraw from the North American Free Trade Agreement (NAFTA) if Mexico and Canada refused to renegotiate its terms – he didn’t follow through after either of his elections. The Hill reported that trade with Mexico has tripled under NAFTA.
Trump is now undoing the free and easy open-door trade rules bequeathed by his predecessors. Naturally, bold and decisive action like this is drawing fevered criticism, not only from affected countries abroad, but elected representatives right here at home.
Profits of doom predict a horrific trade war, with the US versus the world. However, this is an unlikely scenario, which may be why Trump’s top economic adviser and opponent of trade restrictions, Gary D. Cohn, said on Tuesday that he was resigning, according to The New York Times. It would be oh so embarrassing to be proved wrong on this, wouldn’t it?
The principal reason a trade war is unlikely is that other countries, by and large, just don’t have that much to offer the US that we can’t produce ourselves. From World’s Top Exports, here is the Top 10 List of US imports, which totaled “$2.409 trillion worth of goods from around the globe in 2017, up by 3.6% since 2013 and accelerating by 7.2% from 2016 to 2017:”
- Electrical machinery, equipment: US$356.8 billion (14.8% of total imports)
- Machinery including computers: $349.1 billion (14.5%)
- Vehicles : $294.6 billion (12.2%)
- Mineral fuels including oil: $204.2 billion (8.5%)
- Pharmaceuticals: $96.4 billion (4%)
- Optical, technical, medical apparatus: $86.2 billion (3.6%)
- Furniture, bedding, lighting, signs, prefab buildings: $67.2 billion (2.8%)
- Gems, precious metals: $60 billion (2.5%)
- Plastics, plastic articles: $54.9 billion (2.3%)
- Organic chemicals: $46.1 billion (1.9%)
Another way to look at world trade is to cast a glance down Wikipedia‘s list of the United States’ largest trading partners. The European Union (EU), China and Canada top this list.
So when the EU threatens to stop sending us their T-shirts, bed linen, chewing tobacco, cranberries and orange juice – oh yes, and a bit of steel – it’s a bit of a yawner, and certainly anti-climactic.
EU leaders know that their threats of a trade war are weak, to say the least. After Trump tweeted a defense of his tariff plan, calling it “good and easy to win,” Donald Tusk, president of the European Council, responded with a tweet of his own, advising that, for the EU, trade wars were “bad and easy to lose.”
To reassure US allies that their flow of American dollars is free from constrictions and constraints, Trump proposed during a presidential Cabinet meeting that our best friends (Canada, Mexico, and Australia, notably) be exempt from paying any import taxes.
It is important to understand, as revealed by The New York Times, where our POTUS is going with these proposed trade sanctions:
“The United States is the world’s largest importer of steel, and while many of Mr. Trump’s arguments have focused on cheap steel from countries like China, the European Union as a whole is the single biggest exporter of steel to the United States.”
The Guardian indicated that the Trump administration would devote “the next 15 days to negotiate exemptions with allies.”
Although rebuilding US manufacturing, after decades of erosion and decline, won’t be easy, it is worthwhile. National industry – “making things ” – is the core of a strong domestic economy.
After Trump announced his tariff proposal on March 1, 2018, US Steel stock rose a healthy 6%. As critics fear a total American economic collapse, one analyst for Forbes opined:
“Visions of President Trump’s two ’emergency’ tariffs [on steel and aluminum] causing the strong, broad U.S. economy to stall or go into recession are wrong. Likewise, the U.S. stock market is robust, and having just been through a correction, should retain its bullish stance.”
President Trump, using his typically straightforward language, was quoted by The Guardian article cited above:
“Steel is steel. Without steel, you don’t have a country.”
Are you tired of cheap Chinese goods littering store shelves and garbage dumps? Do you remember, and can you imagine, a country where, when you turned over an item in a shop, it invariably said, “MADE IN THE USA?”
Pride and prosperity are the direct benefits of trade agreements that favor, rather than punish, the citizens of These United States.
Commander-in-Chief Trump understands that an international trade war would move full speed ahead toward revitalizing our anemic domestic production!
More jobs and more money: what’s not to like?