“Trade wars are good, and easy to win.”
No, Mr. President. On both counts.
President Donald Trump last week announced a plan to impose tariffs of 25 percent on imported steel and 10 percent on imported aluminum. While this plan would probably help American steelmakers and aluminum manufacturers by making their products more competitive, it would hurt many more American manufacturers and consumers.
“While I am a strong supporter of your administration’s pro-growth policies and energy dominance agenda, imposing broad tariffs on steel risks unintended consequences that could jeopardize America’s resurgent oil and natural gas industry,” Dan Eberhart, CEO of Canary, an oilfield services company, wrote in a letter to the president, which was obtained by NBC News, the network reported Monday.
Eberhart joins a growing list of longtime Trump allies trying to influence the president before he signs off on the tariffs.
“At Canary, we use as much domestically produced raw materials as possible, but in many cases, there’s not enough high-grade steel in the United States to meet demand,” he wrote to Trump. “We spend more than $10 million a year directly or indirectly on imported steel; tariffs will add $2.5 million to our costs and result in us purchasing more finished products from abroad and doing less of (our) manufacturing at our U.S. facilities.”
The press office of our own congressman, House Speaker Paul Ryan, circulated a CNBC report Monday that tied a morning dip in the Dow Jones Industrial Average to Trump’s announcement last week of the new tariffs (the Dow regained its losses and moved into positive territory in the hours after the article was published).
“We are extremely worried about the consequences of a trade war and are urging the White House to not advance with this plan,” said Ryan’s press secretary, AshLee Strong. “The new tax reform law has boosted the economy, and we certainly don’t want to jeopardize those gains.”
Meanwhile, the Club for Growth, an organization with close ties to the billionaire Koch brothers, slammed Trump’s plan as both a philosophical and an economic failure.
“The idea of imposing steel or aluminum tariffs of any kind is an affront to economic freedom,” Club for Growth President David McIntosh said. “We urge the Trump administration not to impose tariffs that could threaten to undo the historical economic growth the tax cuts and the president’s deregulatory agenda have unleashed.”
Last week, the Heritage Foundation, a leading conservative think-tank that has largely been supportive of Trump’s agenda, criticized the move, too.
“Restricting imports under the guise of national security will increase prices of these basic commodities for numerous U.S. manufacturers and consumers, and put millions of American jobs at risk,” Tori Whiting, a Heritage research associate, wrote. “It is not in the interest of the U.S. economy, or the ‘forgotten men and women’ of America, to restrict these vital imports.”
When nearly everybody who was with you in your first year as president aligns against you on a big proposal in your second year, the proposal is probably a bad idea.
We recognize that U.S. steelmakers are at a disadvantage when it comes to competing with China, which has a nationalized steel industry that enables it to flood the market with steel and aluminum products below cost. We’re not enthusiastic about the long-term implications of being at the mercy of potentially hostile people that could put our steel industry out of business.
But we’re not fans of tariffs, as we believe free trade encourages healthy competition and keeps prices low for consumers. Trade wars, far from being good or easy to win, encourage tit-for-tat retaliation: Countries will respond to our tariffs by slapping tariffs on our products, making it less likely that people in South America, Europe, Asia or Africa will buy American products.
If, as President Trump’s longtime allies suggest, his tariffs spark a trade war which has a detrimental effect on the U.S. economy – such as a recession or a depression — the trade war itself can have a lasting effect that hinders a recovery in trade: In other words, as with shooting wars, people in other countries remember who started the trade war.
The bad outweighs the good here, Mr. President. Don’t undo the positive effects the deregulation and tax cuts have had on the U.S. economy by taking us into a trade war.