Don't 'do stupid' on tariffs
The last time a trade war happened in the U.S., things didn't go well for the economy. Will history repeat itself as Trump puts a tariff on steel and aluminum? Here are the facts. Just the FAQs
There's still time for Trump to get smart on steel and aluminum: Our view
After abruptly announcing plans last week to slap substantial tariffs on steel and aluminum imports, President Trump tweeted that "trade wars are good, and easy to win."
Actually, they're neither.
Perhaps Trump was absent from high school history class for the discussion of the infamous Smoot-Hawley Act, signed by Herbert Hoover in 1930 in a disastrous bid to "protect" the U.S. economy.
Hundreds of tariffs were hiked by 20%. International trade in U.S. goods fell by 40%. The Great Depression grew even more severe.
U. S. STEEL: Imports threaten our nation’s security
More recently, President George W. Bush imposed steel tariffs as high as 30% in 2002, raising prices for steel consumers. Several nations filed challenges with the World Trade Organization, which ruled against the United States. The tariffs were gone by the end of 2003.
Broad-based tariffs and trade wars are no better idea today.
President Donald Trump says "we're not backing down" on his push to impose tariffs on imported steel and aluminum despite criticism from fellow Republicans. (March 1) AP
The 25% tax on imported steel that Trump is weighing, along with a 10% levy on aluminum, would safeguard the 170,000 mill workers in those industries. But the levies would threaten the 6.5 million employees in industries, from automakers to can producers, that use these metals.
Beyond that, the planned tariffs could trigger an economy-busting trade war between America and its staunchest allies, including Canada and the European Union, that have already joined China in vowing tit-for-tat response.
"We can also do stupid," said European Commission chief Jean-Claude Juncker, threatening reciprocal tariffs on U.S.-made Harley-Davidsons, Levi's and Bourbon.
On Tuesday, Trump signaled his intention to move ahead on the tariffs, but there's still time to make his final decision — expected later this week or next — less dumb.
House Speaker Paul Ryan, normally a Trump ally, urged the president to make any tariffs more "surgical" and targeted, as did several leading Senate Republicans.
If Trump is intent on acting, the Commerce Department findings undergirding his decision offer several less onerous alternatives that could aid metals workers without disrupting the world economy. These range from setting global quotas on metal imports to exempting close trading partners such as Canada and Mexico, and key allies such as Germany, from the tariffs, which are being justified in the name of national security.
Trump could also hold off on imposing tariffs but use the threat of them as leverage in the ongoing efforts to renegotiate the North American Free Trade Agreement.
Free traders in the administration and on Capitol Hill continue to press their case, though the planned resignation of top White House economics adviser Gary Cohn suggests that the protectionists are prevailing for the time being.
If Trump finalizes his “loving” tariffs, he might well discover that trade wars, like shooting wars, are easier to get into than get out of.
If you can't see this reader poll, please refresh your page.