8 March 2018   Leave a comment

US President Trump has formally announced that the US will impose tariffs on imported steel and aluminum.  I am not sure what the President signed today, but presumably it is a finding that the tariffs are being imposed to protect US national security.  That authority comes from Section 232 of the Trade Expansion Act of 1962.  The Commerce Department has submitted reports to the President that these imports do in fact jeopardize US national Security.  The information provided by the White House, however, does not provide specific terms of the President’s order.

First, the information emphasizes the need to protect jobs in both industries.  There is a national security aspect to employment in certain industries:  trained workers need to be available in case of a national security.  But the information briefing emphasizes the economic aspect of protecting jobs:

“The tariffs on steel and aluminum are anticipated to reduce imports to levels needed for these industries to achieve long-term viability.

“As a result, these industries will be able to re-open closed mills, sustain a skilled workforce, and maintain or increase production.

“The strengthening of our domestic steel and aluminum industries will reduce our reliance on foreign producers.”

Second, Canada and Mexico will be exempted from these tariffs, pending a renegotiation of the North American Free Trade Association (NAFTA).  These two countries account for 27% of US steel imports and 42% of aluminum imports.   It is hard to argue that Mexico and Canada pose a national security threat to the US and the size of the imports from these countries suggest that it would be very difficult to have a sizable impact on the economic viability of the two industries.

 

                  This chart shows aluminum imports into the United States.

 

Third, the economic viability of these industries does not depend upon tariffs.   The jobs losses in the steel and aluminum industries are more closely associated with automation, not imports.  Additionally, aluminum smelters in the US have largely disappeared (there are only two left in the US) because of the environmental damage they cause (the same reason why there are so few oil refineries in the US).

Fourth, it is hard to imagine that US trading partners will not respond to these tariffs.   The 11 countries who along with the US forged the Trans-Pacific Partnership until Mr. Trump withdrew US participation have announced that they are going to go forward with the trade pact and will invite China to join.  The US will be shut out of the agreement which will certainly have a negative impact on US industries.

Fifth, Mr. Trump singles out China as the biggest offender in the world trading system.  Yet Mr. Trump’s actions do not address China’s behavior in any way.  As The Economist notes:

“But anti-dumping and countervailing duties have already shut most Chinese steel out of the American market. And the tariffs will alienate WTO members with which America might otherwise make common cause. In December 2017 America, the EU and Japan released a joint statement saying that they would work together to combat “market distorting and protectionist practices”—by which they meant “China”. That looks harder now. To add to the incoherence, America is no longer pursuing a WTO case against Chinese aluminium subsidies started by Barack Obama’s administration in 2017. Instead of helping keep China’s rise within the rules, Mr Trump is providing a distraction from it.”

Finally, the whole trade issue has not been framed in a way that accurately informs good decision-making.  Much of Mr. Trump’s rhetoric is based upon selective interpretations of data that is complex and hard to document with hard evidence.  The Washington Post has published a very good article on other ways to interpret the debate over the US trade deficit. 

 

One of the most ambiguous developments in world politics is the advent of what we loosely call “cyberwarfare”.   Did Russian meddling in the US presidential election of 2016 constitute what we have called in the past as an “armed attack” justifying acts of self-defense?  Ryan Goodman has published an interesting essay on the ambiguities of interpreting cyberwarfare in the traditional framework of world politics.  The essay is a very thoughtful one raising serious problems if one were to regard cyberwarfare in the same terms as traditional uses of “force”.

Posted March 8, 2018 by vferraro1971 in World Politics

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