This article is from the source 'nytimes' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at https://www.nytimes.com/2017/07/07/us/politics/trump-steel-tariff.html
The article has changed 4 times. There is an RSS feed of changes available.
| Version 0 | Version 1 |
|---|---|
| U.S. Trade Partners Watch Warily as Trump Considers Steel Tariffs | U.S. Trade Partners Watch Warily as Trump Considers Steel Tariffs |
| (35 minutes later) | |
| WASHINGTON — The Trump administration is expected any day now to make its long-awaited decision over whether to slap tariffs on steel imports. Doing so would be a provocative move that could simultaneously lift the spirits of President Trump’s most ardent supporters while angering trade partners. | WASHINGTON — The Trump administration is expected any day now to make its long-awaited decision over whether to slap tariffs on steel imports. Doing so would be a provocative move that could simultaneously lift the spirits of President Trump’s most ardent supporters while angering trade partners. |
| The tariffs could very well provoke a global trade war that could make all sides poorer. | |
| It’s an unusual time for a protectionist retreat by the United States as a number of major industrialized countries work on their own free trade pacts. This week, Europe and Japan reached a landmark free trade agreement before the G-20 summit and Mexico and China, two of the United States’ largest trading partners, have been mulling their own deal. | It’s an unusual time for a protectionist retreat by the United States as a number of major industrialized countries work on their own free trade pacts. This week, Europe and Japan reached a landmark free trade agreement before the G-20 summit and Mexico and China, two of the United States’ largest trading partners, have been mulling their own deal. |
| Mr. Trump and his economic team delayed a decision on steel in recent weeks as the president weighs conflicting counsel from factions of his nationalist and globalist advisers. | Mr. Trump and his economic team delayed a decision on steel in recent weeks as the president weighs conflicting counsel from factions of his nationalist and globalist advisers. |
| For weeks, trade lawyers, industry leaders and members of Congress have been anxiously awaiting the recommendation from the Department of Commerce. They see it as a moment that will illuminate whether Mr. Trump is ready to make good on his campaign promises to protect flagging American industries with tariffs. Among those most on edge are economists, many of whom have been uneasy about Mr. Trump’s unorthodox views on trade because they have seen the damage from such actions before. | For weeks, trade lawyers, industry leaders and members of Congress have been anxiously awaiting the recommendation from the Department of Commerce. They see it as a moment that will illuminate whether Mr. Trump is ready to make good on his campaign promises to protect flagging American industries with tariffs. Among those most on edge are economists, many of whom have been uneasy about Mr. Trump’s unorthodox views on trade because they have seen the damage from such actions before. |
| They hope the president is bluffing. | They hope the president is bluffing. |
| “If he actually pulls the trigger, it could be highly disruptive to world trade,” said Stephen Moore, a Heritage Foundation economist who advised Mr. Trump’s presidential campaign and helped craft his economic plan. “It’s not even going to really work in terms of helping American workers.” | “If he actually pulls the trigger, it could be highly disruptive to world trade,” said Stephen Moore, a Heritage Foundation economist who advised Mr. Trump’s presidential campaign and helped craft his economic plan. “It’s not even going to really work in terms of helping American workers.” |
| In April, Mr. Trump signed an executive order calling for a sweeping investigation by the Department of Commerce into whether steel imports were harming national security. Employing a rarely used section of the Trade Expansion Act of 1962, the findings would give the president backing to impose import restrictions or tariffs on foreign-produced steel. | In April, Mr. Trump signed an executive order calling for a sweeping investigation by the Department of Commerce into whether steel imports were harming national security. Employing a rarely used section of the Trade Expansion Act of 1962, the findings would give the president backing to impose import restrictions or tariffs on foreign-produced steel. |
| The United States imported 30.1 million metric tons of steel last year, making it the world’s largest steel importer, according to the International Trade Administration. Canada, Brazil and South Korea are the three biggest exporters to the United States. | The United States imported 30.1 million metric tons of steel last year, making it the world’s largest steel importer, according to the International Trade Administration. Canada, Brazil and South Korea are the three biggest exporters to the United States. |
| To those Trump advisers who are fearful about the fallout of steep steel tariffs, history is the most compelling argument for holding their fire. In 2002, another Republican president took action to protect the steel industry in the face of excess production of steel around the world. It did not end well. President George W. Bush imposed tariffs of up to 30 percent on most types of steel imported from Europe, Asia and South America for a period of three years, ostensibly to give the domestic industry time to stabilize. | To those Trump advisers who are fearful about the fallout of steep steel tariffs, history is the most compelling argument for holding their fire. In 2002, another Republican president took action to protect the steel industry in the face of excess production of steel around the world. It did not end well. President George W. Bush imposed tariffs of up to 30 percent on most types of steel imported from Europe, Asia and South America for a period of three years, ostensibly to give the domestic industry time to stabilize. |
| The move was quickly challenged at the World Trade Organization, which later declared that the tariffs were illegal. The European Union was given the authority to impose $2 billion in retaliatory sanctions against American products. Europe threatened to target exports from states such as Michigan and Florida — crucial political battlegrounds — and 21 months after levying the tariffs, Mr. Bush backed down and rescinded them. Those who worked in the steel industry were angered that a president who had promised to protect them had buckled under international pressure. | The move was quickly challenged at the World Trade Organization, which later declared that the tariffs were illegal. The European Union was given the authority to impose $2 billion in retaliatory sanctions against American products. Europe threatened to target exports from states such as Michigan and Florida — crucial political battlegrounds — and 21 months after levying the tariffs, Mr. Bush backed down and rescinded them. Those who worked in the steel industry were angered that a president who had promised to protect them had buckled under international pressure. |
| Economists who were embroiled in that episode, and those who recall it ruefully see it as a cautionary tale for Mr. Trump. | |
| “There were many more workers who used steel to make things in the U.S. than who actually made the steel,” said Phillip L. Swagel, an economics professor at the University of Maryland who was a senior economist for international trade during Mr. Bush’s first term. “Many more communities have the potential to be affected by higher prices for steel.” However, the perceived political need to do something trumped economics. | “There were many more workers who used steel to make things in the U.S. than who actually made the steel,” said Phillip L. Swagel, an economics professor at the University of Maryland who was a senior economist for international trade during Mr. Bush’s first term. “Many more communities have the potential to be affected by higher prices for steel.” However, the perceived political need to do something trumped economics. |
| Studies conducted after the tariffs were lifted showed that while they were in place, they led to higher steel prices and job losses in other machinery and metal equipment sectors. Domestic steel makers also cut costs and consolidated. A report commissioned by the Consuming Industries Trade Action Coalition found that higher steel prices led to a loss of 200,000 jobs across the country in 2002 and $4 billion in lost wages. | Studies conducted after the tariffs were lifted showed that while they were in place, they led to higher steel prices and job losses in other machinery and metal equipment sectors. Domestic steel makers also cut costs and consolidated. A report commissioned by the Consuming Industries Trade Action Coalition found that higher steel prices led to a loss of 200,000 jobs across the country in 2002 and $4 billion in lost wages. |
| While the struggling steel industry is craving protection from global competition, other industries have warned of the potentially harmful ripple effects. In late May, the Truck and Engine Manufacturers Association warned in a letter to the Department of Commerce that steel tariffs would mean higher prices for their customers. | |
| “Protecting and providing for the defense of the United States is always of the highest priority,” the group wrote. “So too, however, is ensuring the strength and competitiveness of our national economy.” | “Protecting and providing for the defense of the United States is always of the highest priority,” the group wrote. “So too, however, is ensuring the strength and competitiveness of our national economy.” |
| Tariffs would also have a disruptive impact on global supply chains. It is possible that a blanket tariff could lead to a global glut of steel, as exporters around the world flood other markets to make up for the diminished market in the United States. | Tariffs would also have a disruptive impact on global supply chains. It is possible that a blanket tariff could lead to a global glut of steel, as exporters around the world flood other markets to make up for the diminished market in the United States. |
| Michael Strain, an economist at the conservative American Enterprise Institute, worries that retaliation from China and Europe to any steel tariffs would be particularly painful for American exporters and could lead to job cuts when Mr. Trump is trying to boost employment and labor force participation. | Michael Strain, an economist at the conservative American Enterprise Institute, worries that retaliation from China and Europe to any steel tariffs would be particularly painful for American exporters and could lead to job cuts when Mr. Trump is trying to boost employment and labor force participation. |
| While the steel industry, which Mr. Trump promised to revive, could benefit, other sectors such as construction and housing would likely suffer. Many of the workers in these industries and the consumers who purchase their goods are likely to be the types of moderate-income voters who backed Mr. Trump. | |
| “It will hurt the people it’s designed to help through higher prices,” Mr. Strain said. “Ultimately the economy will lose.” | “It will hurt the people it’s designed to help through higher prices,” Mr. Strain said. “Ultimately the economy will lose.” |
| On Friday, Cecilia Malmstrom, the European trade commissioner, warned the Trump administration against taking measures that would penalize European steel exporters. She declined to say what measures Europe would take in retaliation or what specific United States exports could face higher tariffs. | On Friday, Cecilia Malmstrom, the European trade commissioner, warned the Trump administration against taking measures that would penalize European steel exporters. She declined to say what measures Europe would take in retaliation or what specific United States exports could face higher tariffs. |
| “Barriers on steel imports would be very bad for the E.U., as European businesses and workers could be affected very heavily and jobs would be threatened,” Ms. Malmstrom said in an email. “As we haven’t seen the proposal yet, we will first have to check whether the measure is in compliance with W.T.O. rules.” | “Barriers on steel imports would be very bad for the E.U., as European businesses and workers could be affected very heavily and jobs would be threatened,” Ms. Malmstrom said in an email. “As we haven’t seen the proposal yet, we will first have to check whether the measure is in compliance with W.T.O. rules.” |
| “If global trade rules are not upheld, the E.U. will retaliate, but I cannot say now exactly how and when. We understand that the U.S. has concerns about overcapacity in China but we don’t think this is the right way to go, as you cannot fight protectionism with protectionism,” she added. | “If global trade rules are not upheld, the E.U. will retaliate, but I cannot say now exactly how and when. We understand that the U.S. has concerns about overcapacity in China but we don’t think this is the right way to go, as you cannot fight protectionism with protectionism,” she added. |
| Mr. Trump’s impulsiveness is another reason for worry. While Mr. Bush backed down after the W.T.O. verdict, a Trump administration with an “America First” mentality may be less amenable to a ruling handed down by bureaucrats in Switzerland. The fear is that Mr. Trump could abandon the trade organization entirely, essentially unraveling an institution that has been instrumental in lowering trade barriers over the past two decades. | Mr. Trump’s impulsiveness is another reason for worry. While Mr. Bush backed down after the W.T.O. verdict, a Trump administration with an “America First” mentality may be less amenable to a ruling handed down by bureaucrats in Switzerland. The fear is that Mr. Trump could abandon the trade organization entirely, essentially unraveling an institution that has been instrumental in lowering trade barriers over the past two decades. |
| “The big concern with the Trump administration is their commitment to the W.T.O. system and whether it bothers them to have the system weakened,” said Chad P. Bown, a senior fellow at the Peterson Institute for International Economics. | “The big concern with the Trump administration is their commitment to the W.T.O. system and whether it bothers them to have the system weakened,” said Chad P. Bown, a senior fellow at the Peterson Institute for International Economics. |
| So far Mr. Trump has lived up to his reputation for being unpredictable when it comes to trade. He threatened to terminate the North American Free Trade Agreement, before reversing himself and agreeing to renegotiate its terms. He withdrew from the Trans-Pacific Partnership, but Wilbur Ross, his commerce secretary, has since praised the defunct pact as a strong starting point for future negotiations. | So far Mr. Trump has lived up to his reputation for being unpredictable when it comes to trade. He threatened to terminate the North American Free Trade Agreement, before reversing himself and agreeing to renegotiate its terms. He withdrew from the Trans-Pacific Partnership, but Wilbur Ross, his commerce secretary, has since praised the defunct pact as a strong starting point for future negotiations. |
| Mr. Trump’s aides have offered mixed signals about how he will handle steel imports, suggesting on some occasions that he prefers a politically satisfying blanket tariff and at other times hinting that he will take a more targeted approach. The president offered little clarity on Monday, when he wrote cryptically on Twitter: “Don’t like steel & aluminum dumping!” | Mr. Trump’s aides have offered mixed signals about how he will handle steel imports, suggesting on some occasions that he prefers a politically satisfying blanket tariff and at other times hinting that he will take a more targeted approach. The president offered little clarity on Monday, when he wrote cryptically on Twitter: “Don’t like steel & aluminum dumping!” |
| Mr. Moore, the Heritage Foundation economist, said that during a visit to South Korea this week he found a palpable anxiety about the possibility of Mr. Trump imposing a hefty steel tariff. For a country that is the world’s third largest steel exporter, it would be a damaging proposition. | Mr. Moore, the Heritage Foundation economist, said that during a visit to South Korea this week he found a palpable anxiety about the possibility of Mr. Trump imposing a hefty steel tariff. For a country that is the world’s third largest steel exporter, it would be a damaging proposition. |
| But Mr. Moore was optimistic that Mr. Trump would ultimately settle on a more temperate and targeted approach, and that the threat of tariffs would win the United States concessions at the negotiating table, with the bluster leading to a better deal. | But Mr. Moore was optimistic that Mr. Trump would ultimately settle on a more temperate and targeted approach, and that the threat of tariffs would win the United States concessions at the negotiating table, with the bluster leading to a better deal. |
| “In the end I think Trump’s bark will be worse than his bite on trade,” Mr. Moore said, hopefully. | “In the end I think Trump’s bark will be worse than his bite on trade,” Mr. Moore said, hopefully. |