Simon Lester explains in a column for the Cato Institute why a trade war would stand in direct contradiction to President Trump’s desire to “drain the swamp” in Washington.
On Thursday, President Trump made a trade policy announcement, of sorts, with all his usual clarity. Before an audience of steel and aluminum executives, he said he would impose tariffs of 25% on steel and 10% on aluminum, and that these tariffs would last “for a long period of time.”
This is about as far from draining the swamp as trade policy could possibly get. Trump is going directly to special interests (i.e. business executives), and giving them favors at the expense of the rest of the country. …
… Part of the challenge for the administration will come from the pushback the tariffs are sure to get from U.S. trading partners, from Congress, and from U.S. businesses that use steel and aluminum. Key U.S. allies have already indicated that they will retaliateimmediately.
A predictable target for this kind of retaliation is U.S. agriculture, which our trading partners often single out when responding to protectionist U.S. actions. Members of Congress from farm states will likely be put under pressure to fight back against these tariffs.
Also caught in the crosshairs will be U.S. industries. Many U.S. producers, such as car makers, which accounted for 26% of demand for steel in the U.S. in 2017, use these products as inputs in their finished products, and when tariffs are imposed and lead to increased prices, their competitiveness suffers. It may be that the biggest impact from these tariffs is to put U.S. producers at a disadvantage in comparison to their foreign competitors, which means job losses here in the U.S.(jobs in U.S. industries that use steel or inputs made of steel outnumber jobs in steel production by roughly 80 to 1).
