When I commented in March about President Donald Trump’s plan to impose tariffs on imported steel, I was hoping that he would back off from imposing tariffs on our allies. That is because the danger to our national security isn’t steel or autos made in Mexico, Canada, or Europe; rather, it is China’s rapacious assault on intellectual property and its “Made in China 2025” master plan for achieving world dominance in 10 crucial technologies.
For a few months, I got my wish. The president granted temporary exemptions to our allies. On June 1, however, President Trump imposed tariffs on steel and aluminum against our closest neighbors and oldest allies to match those he had already imposed on China and other non-Western countries.
Those new tariffs didn’t make much economic sense. The steel tariffs against Canada and Mexico were particularly puzzling. In the two most recent years, Mexico incurred a $3.6 billion steel trade deficit with the United States. Canada also has been running a steel deficit with the U.S. — a reported $2.06 billion last year.
Worse, as I and many other economists had warned, Trump’s tariffs have hurt many American businesses and workers. Hardly a day goes by without another report of an American company being negatively impacted by tariffs. Some, from specialty nail manufacturers to electronics assemblers, to textile workers, are no longer price-competitive in their sales markets because tariffs have increased the cost of imported inputs. Some agricultural producers have goods piling up in storage because retaliatory tariffs abroad have priced them out of formerly profitable export markets. Recognizing the losses his trade policies are causing farmers, Trump has promised $12 billion in emergency relief to those affected, further aggravating federal debt.
In the steel industry itself, the Competitive Enterprise Institute calculated that Trump’s tariffs on steel could ultimately result in a tradeoff of approximately 33,000 American steel jobs saved and a loss of 146,000 other American jobs. On an economy-wide basis, the U.S. Chamber of Commerce projected that a full-blown trade war could wipe out over 2.5 million U.S. jobs.
In March, President Trump tweeted that “trade wars are good and easy to win.” If victory in a trade war is defined as the U.S. suffering fewer economic casualties than the other side, yes, the U.S. might “win,” but that would be a hollow victory to Americans who would lose their jobs in a trade war.
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