Trump’s Tariffs Are Self-Impoverishing
Reprinted with permission from Creators.
Perfection is a rare achievement in Washington, so give Donald Trump credit for the trade policy he unveiled last week to put new tariffs on imports of steel and aluminum. It is perversely flawless in its disregard for factual reality, U.S. trade law and economic logic. It is all flies and no ointment.
The policy has two rationales, one official and one unofficial, which are alike in being either terribly misguided or consciously fraudulent. In reality, it is classic special-interest pandering, fleecing the many to enrich a favored few.
The official White House justification is that slapping new duties on these foreign metals is essential for our national security. Steel and aluminum are needed for military hardware, it argues, and we don’t want to be dependent on our potential enemies or other unreliable nations to supply them.
But putting tariffs on all imports to prevent dependence on China or Russia is like throwing away your library card to avoid bad books. It would make more sense to focus on the guilty countries rather than deploy a sprayer that also soaks the innocent.
The national security risk is minuscule, though. Imports make up only one-third of the steel we use, and the Pentagon requires less than 3 percent of our domestic output. No enemy has us over a barrel, because we buy steel from 110 different countries.
Most of what we import comes from allies and friends, including Canada, South Korea and Mexico, which would have no reason to cut us off in a crisis. If China stopped shipping to us, friendlier countries would leap to grab the business.
Likewise with aluminum. Domestic firms provide for one-third of national consumption — and only 5 percent of the total supply is needed for the military. Nearly half of our imports come from Canada. China and Russia account for just one-fifth.
Perhaps because the national security excuse is so flimsy, those defending the tariffs offer another one: that China is overproducing steel and unloading it at cut-rate prices on the U.S. market. Trump has made this claim many times, and Rep. Tom Reed, R-N.Y., echoed it in an interview with NPR: “When you have a country like China that is dumping steel … that is not sustainable.”
The flaws in this argument are many. Chinese steel exports, far from rising, fell by 30 percent last year. Commerce Secretary Wilbur Ross, the Financial Times reported, reached an agreement with Beijing to cut its capacity, only to be spurned by Trump.
The U.S. has laws against dumping — selling foreign goods below “fair value” — and the federal government often uses them. There are 29 special tariffs already in place on Chinese steel products over supposedly unfair practices.
The law defines “dumping” so liberally that it isn’t hard to prove. But Trump is not willing to settle for enforcing the law. He wants to go after foreign steelmakers whether they are playing by the rules or not.
Why? To raise the prices American companies can charge here at home so they make more money and employ more workers, in order to secure their allegiance in future elections.
The tariffs would undoubtedly hit consumers and companies that use steel and aluminum for their products. But the administration dismisses the burden. Ross said the change would add less than a penny to the cost of a can of soup and about $175 to the price of a new car — a “trivial effect.”
He has a point, but it only illustrates the genius of Trump’s scam. If I took a dollar out of every bank account in the country, I’d be very rich, and most of the victims wouldn’t miss it. That doesn’t mean they would be unharmed.
Spreading small costs over a large number of people to deliver large rewards to a tiny group is the textbook definition of special interest legislation. Trump proposes to use his power to line the pockets of steel and aluminum companies and workers, who number less than 150,000, with money taken from hundreds of millions of other people.
It’s a form of intentional self-impoverishment. To counter the U.S. levies, European Commission President Jean-Claude Juncker said the EC might impose new tariffs on American motorcycles and bourbon. “This is basically a stupid process,” he said in exasperation, but “we can also do stupid.”
Oh? Trust me, Jean-Claude: In this contest of stupidity, you’re out of your league.
Steve Chapman blogs at http://www.chicagotribune.com/news/opinion/chapman. Follow him on Twitter @SteveChapman13 or at https://www.facebook.com/stevechapman13. To find out more about Steve Chapman and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.