OPED: Trump just poured ice water on economy in service of trade war
Macroeconomic Advisers, a research firm focused on the U.S. economy, reported Wednesday that the U.S. trade deficit in goods was “much narrower than expected,” implying “substantially more” U.S. exports in the second quarter. So it revised its projection for economic growth sharply upward, to a robust 3.6 percent increase in GDP.
Achieving and sustaining that kind of growth is a key goal for President Donald Trump. So naturally, on Thursday the Trump administration took a dramatic step to disrupt U.S. exports and pour ice water on the economy.
That would be imposing 25 percent tariffs on steel imports and 10 percent tariffs on aluminum imports from every major (and minor) metals-producing country around the world except Argentina, Australia and, in the case of steel, Korea, effective Friday. The move turns a threat and negotiating ploy into an action, which will bring real consequences in the form of retaliatory tariffs on U.S. exports. And it won’t be on U.S. steel and aluminum – it will be on Harley Davidson motorcycles, California almonds, Levis and Jack Daniels.
On the plus side, if unemployment ticks back up, the Federal Reserve won’t feel as much pressure to raise interest rates.
This isn’t just America First – this is America Alone. Imposing tariffs against a specific country that’s been bending global trade rules can make sense, and there’s a process for doing that under the trade agreements the U.S. has signed (and, ahem, championed). But claiming that imports from around the world are damaging national security? That’s raw protectionism, and previous efforts along those lines simply haven’t worked. See, just for example, President Reagan’s steel and aluminum tariffs and President George W. Bush’s steel tariffs.
And even if the tariffs manage to shift some jobs and production back to the United States, as may be happening with solar panels, they still act as a tax on consumers and a drag on the economy. That’s why the real issue isn’t jobs created within the targeted industry, but net jobs created (or lost) by all sectors affected.
Once you start down the road of protecting a domestic industry for national security reasons, it’s hard to stop. And the message it sends to world leaders is that they should ignore the trading rules the U.S. worked so hard to spread – because we’re ignoring them. That includes NAFTA, by the way, which we are in the middle of renegotiating. Talk about bad faith.
— Jon Healey is the deputy editorial page editor for the Los Angeles Times.