Essay

Trump's Steel Destruction Publication info: Wall Street Journal , Eastern edition; New York, N.Y. [New York, N.Y]01 June 2018: A.14.

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FULL TEXT So much for Donald Trump as genius deal-maker. We are supposed to believe his tariff threats are a clever

negotiation strategy, but on Thursday he revealed he's merely an old-fashioned protectionist. His decision to slap

tariffs on steel and aluminum imports from Europe, Canada and Mexico will hurt the U.S. economy, his own foreign

policy and perhaps Republicans in November.

In March Commerce Secretary Wilbur Ross dangled temporary exemptions to 25% steel and 10% aluminum tariffs

to extort trade concessions from U.S. allies. Mr. Ross withdrew the exemptions on Thursday, saying the U.S. "was

unable to reach satisfactory arrangements" with Canada, Mexico and the European Union. He means they didn't

unilaterally surrender.

Mr. Ross announced the tariffs under Section 232 of the 1962 Trade Expansion Act ostensibly to circumvent the

World Trade Organization. WTO rules let countries adopt tariffs to protect national security, but Canada, Mexico

and Europe are hardly a threat.

Canadian steel and aluminum are actually integral to U.S. national defense, as Commerce's Section 232 reports

acknowledge. Mr. Trump complained that Lockheed's F-35s cost too much, but now he's going to make U.S. fighter

jets and other weapons more expensive, which could give Russia an advantage in international arms sales.

Brilliant. Another irony is that Mr. Trump has denounced China for using national security as a pretext to promote

domestic industries like semiconductors. He's essentially doing the same.

American businesses rely on complex cross-border supply chains that take time and money to change. Most will

have to internalize the tariff costs, which will mean raising prices or hiring fewer workers and paying lower wages.

The tariffs also create uncertainty as businesses petition Commerce for product exemptions while delaying

investment. Note to Mr. Trump: Regulatory uncertainty was a big reason growth was so slow during the Obama

years.

Taxing steel and aluminum imports will make U.S. manufacturers less competitive. Prior to Thursday's

announcement, U.S. steel prices were up 40% this year and nearly 50% over the European benchmark. How does

punishing American manufacturers square with Mr. Trump's goal of making more cars in America?

Mr. Ross has dismissed the impact on consumers, but a 25% increase in input costs is nothing to sniff at.

Companies use imported steel and aluminum in everything from cars to beer cans to Hershey's kisses wrappers.

The Federal Reserve in April reported that a maker of tractor trailers said that it "can't raise prices as fast as

material costs." A toy manufacturer in the Northeast that uses a thin-gauge aluminum foil said the tariffs had

raised its prices three-fold.

Then there's the larger trade fallout, not least to Nafta. Canada provides 43% of U.S. aluminum imports -- more than

twice as much as China and Russia combined. Mexico and Canada together account for about a fifth of U.S. steel

imports compared to China's 2% and Russia's 9%. As Nebraska Senator Ben Sasse tweeted, "You don't treat allies

the same way you treat opponents." On trade Mr. Trump treats them worse.

Nafta is already in jeopardy due to excessive U.S. demands that include a wage mandate on autos and a five-year

sunset. Canadian Prime Minister Justin Trudeau said Thursday that he recently offered to visit the White House to

close a Nafta deal. But Vice President Mike Pence told him he'd have to accept a five-year Nafta sunset. Mr.

Trudeau rightly said no Canadian leader would agree to such a self-defeating provision.

Instead, other countries are retaliating. Europe has teed up tariffs of up to 50% on $3.3 billion of U.S. products

including bourbon, motorboats, cranberries and playing cards. Canada plans to hit up to $12.8 billion in products

including U.S. steel, yogurt, hair lacquers, beer kegs and sailboats. Mexico announced tariffs on U.S. steel, lamps,

pork, apples, grapes and cheese. Many items on the tariff lists overlap because they target states that Mr. Trump

won and House districts where Republicans have competitive races.

All of which means that President Trump's gambit could backfire politically. Mexico is America's biggest apple

export market. Washington Rep. Dave Reichert says apple and pear exports to Mexico increased by 70% after

Nafta. Wisconsin produces more than half of the nation's cranberries whose biggest export markets are the

Netherlands and Canada.

Democrats have bought billboards in California's Central Valley denouncing the impact of Mr. Trump's trade

policies on farmers. Even steel manufacturers will take a hit since Canada buys about half of U.S. steel exports

while Mexico imports about 40%. The steelworkers union supported an exemption for Canada.

Mr. Trump has been establishing a solid economic record with tax cuts and deregulation, but his escalating trade

war puts that at risk. He aspires to be Ronald Reagan but his tariff folly echoes of Herbert Hoover. DETAILS

Subject: Toy industry; Aluminum; International trade; National security; Tariffs; Costs; Steel

industry; Editorials

Location: Russia Canada Central Valley Europe Mexico Netherlands United States--US China

People: Trump, Donald J Reichert, David G Ross, Wilbur L Jr Trudeau, Justin Sasse, Ben

Pence, Mike

Company / organization: Name: World Trade Organization; NAICS: 928120; Name: European Union; NAICS:

926110, 928120

Publication title: Wall Street Journal, Eastern edition; New York, N.Y.

Pages: A.14

Publication year: 2018

Publication date: Jun 1, 2018

column: REVIEW &OUTLOOK (Editorial)

Publisher: Dow Jones &Company Inc

Place of publication: New York, N.Y.

Country of publication: United States, New York, N.Y.

Publication subject: Business And Economics--Banking And Finance

ISSN: 00999660

Source type: Newspapers

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Language of publication: English

Document type: Editorial, Opinions

ProQuest document ID: 2047940134

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Last updated: 2018-06-05

Database: Global Newsstre am