The president’s aluminum and steel tariffs draw both criticism and cheers, but this time there’s something different
On March 8 President Donald Trump signed orders to impose a 10 percent tariff on aluminum and 25 percent tariff on steel imported from all countries except Canada and Mexico.
This move doesn’t seem to appear popular with many people, including the GOP establishment, mainstream media, and possibly former White House Chief Economic Adviser Gary Cohn, who in president’s words is “seriously a globalist.” Cohn resigned last week.
“We are extremely worried about the consequences of a trade war and are urging the White House to not advance with this plan,” House Speaker Paul Ryan’s spokesperson said in a statement.
Senate Majority Leader Mitch McConnell (R-KY) toned down the concern in a measured way to reporters. “I think the best way to characterize where most Republican senators are right now, including myself, is genuine concern that this not escalate into something much broader.”
Paul Krugman, a Nobel prize-winner for his theory on global trade and a distinguished professor of economics, said in a March 8 New York Times article, “There’s near-universal consensus among both economists and business leaders that Donald Trump’s tariffs on steel and aluminum are a bad idea.”
Heads and Tails
President Trump’s policy has two sides to the coin. On one side, it is almost guaranteed to meet near-universal oppositions from establishment lawmakers, globalist business elites, and academia. On the other side, it is bound to be warmly embraced by working class Americans.
There is an exception this time: a global business executive joined the president’s call to right the wrong in America’s trade practice with foreign countries.
Last Wednesday, Tesla CEO Elon Musk responded to President Trump’s tweet with a call to action on China trade practice. Musk said he was “against import duties in general, but the current rules make things very difficult. It’s like competing in an Olympic race wearing lead shoes.”
Tesla sells its cutting-edge electric vehicles globally and has a production plan of selling 500,000 vehicles a year by 2018.
In his tweet, Musk expressed his frustration over the unfair trade practices of China. Musk said no “US auto company is allowed to own even 50% of their own factory in China, but there are five 100% China-owned EV auto companies in the US.”
Musk indicated what he wants is a fair and reciprocal deal, nothing more, nothing less. He said his company “raised this with the prior administration and nothing happened. Just want a fair outcome, ideally where tariffs/rules are equally moderate. Nothing more. Hope this does not seem unreasonable.”
Level Playing Field
Musk’s experience seem to echo the situation described by President Trump in his March 1 meeting with representatives from the steel and aluminum industries in the White House Cabinet Room.
“We have the big aluminum companies in the United States,” said the president. “And they’ve been very unfairly treated by bad policy, by bad trade deals, by other countries. They’ve been horribly treated by other countries, and they have not been properly represented. More importantly, because of that, workers in our country have not been properly represented.”
U.S. Steel CEO David Burritt and United Aluminum Corp. president John Lapides are among the industry representatives who attended the meeting with President Trump.
Lapides said, “We’re in a situation where competing unfairly has meant that there’s been capital depletion in our business, a lack of investment. And that lack of investment is reflected in a loss of jobs in America. And it’s all been a matter of unfair competition. And we need a level playing field, or we’re going to lose our manufacturing infrastructure and the national security issues that surround having a vibrant, capable manufacturing sector.”
Burrit concurred. “We are not protectionists. We want a level playing field.”
According to the White House statement, President Trump’s trade policy is based on three principles—free, fair, and reciprocal—and includes the following five pillars:
- Supporting our national security by ensuring economic security.
- Strengthening the United States economy so it benefits all Americans.
- Negotiating trade deals that result in prosperity for more Americans.
- Enforcing and defending trade laws so bad actors no longer take advantage of the US.
- Reforming the WTO to promote rules for efficient markets, expanded trade, and greater wealth for all nations.
The president didn’t seem to be too bothered by the trade war.
“When we’re behind every single country, trade wars aren’t so bad,” Trump said in a press conference last Tuesday at the White House with Swedish Prime Minister Stefan Lofven. “The trade war hurts them, not us.”