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Summary

“The actions we are taking today are not a matter of choice; they are a matter of necessity for our security” declared President Trump last week, as part of his announcement on a new set of tariffs targeting the import of steel and aluminum. The announcement, coming just hours after a number of countries signed onto the Trans-Pacific Partnership, of which we are no longer a part of, is yet another step towards his campaign promise of a protectionist resurgence of American manufacturing. The tariffs, which would target steel by 25% and aluminum by 10%, are allegedly a response to a Department of Commerce report from last December, calling attention to the national security threat posed by our reliance on foreign steel production. The White House announced that temporary exceptions would be made for our neighbors in Canada and Mexico, pending upcoming discussions on the amendment of the North American Free Trade Act (NAFTA). These two countries provided a quarter of US steel imports and 42% of aluminum imports last year. Despite the small amount of steel we actually receive from China, they have been designated as the primary target behind this global tariff, due to their alleged unfair trading practices, such as overproduction. China currently produces almost as much steel in a month as the US produces in a year. The countries who would be primarily affected by this decision, however, are Brazil, South Korea, and Russia.

This latest tariff has proved extremely controversial, even among those who often support Trump’s policies. 107 Republican lawmakers signed a letter asking for Trump to reconsider his decision, and the President’s chief economic advisor, Gary Cohn, resigned after failing to prevent this move. “There are unquestionably bad trade practices by nations like China, but the better approach is targeted enforcement against those practices”, said Republican Majority Leader Paul Ryan, “Our economy and our national security are strengthened by fostering free trade with our allies and promoting the rule of law”

Analysis

It’s no surprise that the newest tariffs would be unpopular to anyone not directly working in American steel or aluminum production. Trump’s stated reason for the tariff is that of national security, but the Department of Defense issued a statement which, while agreeing that unfair trade practices could pose a risk to our security, declared that there is no danger of any failure to produce sufficient steel domestically to meet national defense requirements, and instead, once again, called for targeted tariffs. If the World Trade Organization agrees with many of the tariffs’ critics- that the purpose of the decision is to support American industry rather than secure our National Security- Trump will be forced to choose between rescinding his decision or causing a worldwide breakdown in global trading rules. The fact that Trump’s stated reason for providing exceptions to Canada and Mexico is due to NAFTA talks weakens any chance of passing this off as a national security measure. The risk of a trade war is high, with the EU releasing a list of American-made goods which would be penalized if the tariff went through.

It’s questionable whether the tariff would even be beneficial for domestic industries. If the US cannot fill the gaps in steel and aluminum production caused by reduced imports, the result will be considerably higher prices for steel and aluminum, which could have waves of impact throughout the economy, with higher costs passed on to American consumers. With so many allies offended, such a small likelihood of boosting our economy, and so many ways this move could go wrong, this is truly right in line with Trump’s economic policy so far.

Engagement Resources

  • Read an Assessment of the Potential Impact on American Labor: This piece, published by the Nation, contests the suggestion that this tariff would even be beneficial for American steel workers.
  • Read a Summary of Trump’s Use of Tariffs: This summary, published by USResist, indexes Trump’s use of tariffs to exert global influence.
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