President Donald Trump is poised to make good on his threat from last year to employ an obscure trade trade provision to slap hefty tariffs on steel and aluminum imports to the United States.
On Thursday morning the president, who has made no secret of his desire to implement more protectionist trade policies, posted a tweet that hinted at the action to come, saying steel and aluminum manufacturing in the U.S. had been “decimated by decades of unfair trade and bad policy.”
Starting next week, the Commerce Department will impose tariffs of 25 percent on imported steel and 10 percent on imported aluminum for a “long period of time,” according to a White House briefing.
The announcements came after reports of morning infighting between free trade and protectionist faction’s in the White House, with the former warning that using national security as the rationale for levying tariffs could lead to widespread retaliation that could negatively impact American industries ranging from agriculture to technology.
Other free-trade-espousing experts agreed. “It will open a Pandora’s box — protecting an industry based on national security concerns is a rarity,” said Dan Ikenson, director of the Cato Institute’s trade policy studies center. Both the reported percentages are higher than those suggested by the Commerce Department in a report it issued last month. In its February report, the Commerce Department put forth the idea of across-the-board steel and aluminum tariffs at up to 24 percent and 7.7 percent, respectively, or steeper tariffs against individual exporting countries.
Robert Scott, senior economist at the left-leaning Economic Policy Institute, said tariffs that failed to distinguish between trade allies and countries, like China, the U.S. has accused of illegal trade practices, could make achieving resolutions to trade disputes more difficult.
“The best of options is higher tariffs on steel from unfair traders and quotas on everyone else,” he said. “The advantage to that approach is it would allows us to work with other countries to impose similar tariffs on these unfair traders,” he said.
Getting this kind of international buy-in would help achieve better global price parity, he said, but laying down a one-size-fits-all tariff would give our closest trading partners like Canada and Mexico — two major exporters of steel to the U.S. — little incentive to initiate trade actions at the our behest.
Analysts on both the right and the left warned that the planned tariffs would have unintended consequences that could hurt the very industries Trump campaigned on protecting.
“Immediately the steel and aluminum using industries in the United States are going to see their costs of production go up and they’ll also have trouble competing with their foreign competition because foreign manufacturers will be able to charge lower prices,” Ikenson said. “This is disconcerting because there’s a lot at stake.”