President Donald Trump has demonstrated a penchant for shifting positions. He should do so on his proposed tariffs on steel and aluminum.
Last week Trump proposed a 25 percent tariff on imported steel and a 10 percent tariff on imported aluminum. The announcement seemed to catch many in his party and in his cabinet by surprise.
The announcement sent stocks tumbling as the Dow lost more than 600 points. Still, Trump is sticking to his position, tweeting on Monday that “trade wars are good, and easy to win.”
Trump indicated he might reconsider the tariffs for Mexico and Canada if those countries would sign off on a renegotiated North American Free Trade Agreement. According to the Global Trade Atlas, Canada is the top source of imported steel in the U.S., accounting for 16 percent. Mexico accounts for 9 percent of imported steel.
Trump’s tariff proposal drew sharp criticism from Democrats, Republicans and members of Trump’s own Cabinet.
“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 office said. “The new tax reform law has boosted the economy and we certainly don’t want to jeopardize those gains.”
One of Trump’s campaign pledges was to protect American steel worker jobs in the face of foreign competition, and, no doubt, the tariffs will benefit the metals industries.
But the tariffs will inevitably drive up costs for manufacturers who use steel, such as the auto industry and appliance makers. That will drive up consumer prices.
The Trade Partnership, an international trade and economic consulting firm, estimated that the tariffs would create more than 33,000 jobs in the metals industries. Meanwhile, the report said, the tariffs would result in the loss of more than 176,000 jobs at companies that rely on steel and aluminum in the manufacturing of their products. The net result is the loss of more than 140,000 jobs.
If Trump is using the tariffs as a negotiating tool to force Canada and Mexico to sign off on a new NAFTA deal that he deems more favorable to the U.S., it seems to be a misguided strategy.
NAFTA has been a net win for the U.S. Since the agreement was created in 1993, Canada and Mexico have become America’s top two trading partners and exports to those countries totaled $525 billion last year, up from $142 billion in 1993. It’s difficult to see the wisdom in launching a trade war with border countries that have become two of our strongest allies, especially when doing so will result in a net loss of American jobs.
On guns and immigration, President Trump demonstrated that he is quite capable of quickly reversing his position. He should do so on his ill-advised steel and aluminum tariffs.