Posts Tagged ‘Dave Reichert’

Another Sad Day For U.S. Trade, Relations With The World

June 1, 2018
I analyze export-import data, connecting it to trade policy, life  Opinions expressed by Forbes Contributors are their own.

President Trump pumps his fist to the crowd as he arrives at Ellington Field Joint Reserve Base in Houston, Texas on Thursday. (Photo by JIM WATSON/AFP/Getty Images)

Forbes

The good news is that people are talking about trade. It makes a guy like me a little more topical at dinner parties.

The bad news is, we are talking about trade for all the wrong reasons.

The most recent affront is President Trump’s indefensible decision Thursday to impose steel and aluminum tariffs on national security grounds against countries previously treated like allies, countries that have largely fought on our side in the last two world wars as well as a several countries that didn’t but that have been among our most loyal friends for more than half a century.

Let’s remember where this started: China was “dumping” too much steel and aluminum on world markets, depressing prices.

There have been other poorly reasoned moves, and I will get to some of those, but let me start by saying that I have tried to give President Trump the benefit of the doubt since he took office. Every president deserves that.

So, I tried. When I could, anyway.

It didn’t start well. On his first full weekday as president, Trump withdrew the United States from the Trans-Pacific Partnership and I just couldn’t find anything good to say. To date, that remains  the worst, most consequential policy decision he has made.

Some of his critics will argue that pulling out of the essentially voluntary Paris climate accords was worse, leaving the United States as the world’s only country not part of it, while still others will point to the more recent decision to walk away from the Iran peace accords, even though Iran was in compliance. A few might nominate the decision to move the U.S. embassy from Tel Aviv to Jerusalem.

Trust me, it’s the T.P.P. decision. That was an important free trade agreement seven years in the making, one that sought to dilute rising Chinese influence. All the other nations that were part of the negotiations have subsequently signed it.

But there have been instances where I have been able to give the president the benefit of the doubt, even as fellow proponents of increased trade have not.

When Trump said he wanted to renegotiate the North America Free Trade Agreement, after calling NAFTA the worst treaty ever during the campaign and subsequently vowing to walk away from it on numerous occasions, the approach was and remains un-presidential but I didn’t think it was a terrible idea to take another look at a treaty that had been in place for a quarter century. A lot has changed since the first President Bush negotiated the treaty and his successor, President Clinton, pushed it across the finish line with the help of Republicans in Congress. So, I reasoned, why not update it?

Today, as the NAFTA negotiations appear stalled due largely to one or two largely unpalatable U.S. positions, Trump announced that tariffs on steel and aluminum go in place against Canada and Mexico.

On China, when he complained about intellectual property issues and the nation’s continued reliance on the “developing nation” crutch, I had no objections. Reasonable complaints, I thought. Yesterday, the White House announced, as previously threatened, that it will be placing 25% tariffs on at least $50 billion in Chinese imports. The stated purpose is to reduce the U.S. trade deficit, rather than push toward protecting intellectual property rights.

When he got into a verbal scuffle with Canada’s president, Justin Trudeau, over whether the United States had a trade deficit with Canada or not, I took Trump’s side even though he somewhat inexplicably chose to admit he didn’t really know. Although the slings and arrows directed northward have been more benign than to most U.S. allies, Trump included Canada in the steel and aluminium tariffs. I don’t see that helping in the NAFTA negotiations.

When he questioned why automobile tariffs between the United States and Germany are not equal, I thought it a reasonable question (though wondered if the answer is more complex). Germany, our No. 3 market for auto exports thanks to Mercedes manufacturing in Alabama and BMW manufacturing in South Carolina, is now subject to the steel and aluminum tariffs as are the rest of the European Union nations. Those cars, as they rely on foreign steel but made by American workers, will now be more expensive.

Egged on by a trade triumvirate that is as decidedly opposed to trade as any in the post-World War II era, Commerce Secretary Wilbur Ross, U.S. Trade Representative Robert Lighthizer and Director of Trade Policy Robert Navarro, Trump is now lighting a match to the world order that has, while imperfect, done more to improve the human condition more rapidly, than at any time in history. Remember, the first two are long-time advocates of defending the U.S. steel industry from foreign competition through government intervention while the latter is an avowed and unapologetic China basher.

One of the president’s few cordial relationships with a head of state to date has been with Japanese Prime Minister Shinzo Abe. The steel and aluminum tariffs against Japan went into effect today.

W e are increasingly isolated as a nation by a president who came to politics as a builder and developer and now does little more than demolish. He has no plans to build. He talked of being opposed to multilateral deals and preferring bilateral treaties but there are no negotiations underway. Think I’m too harsh? Quick, name the United States’ strongest ally. Sure, Israel’s Benjamin Netanyahu is often in agreement with the president but the roster gets pretty thin from there.

If this isn’t a trade war, it’s pretty close to one. And if it is, there’s no one on our side. I wish I could be more optimistic.

https://www.forbes.com/sites/kenroberts/2018/05/31/another-sad-day-for-u-s-trade-relations-with-the-world/#7b47b04b501c

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Trump’s Steel Destruction

June 1, 2018

He starts a needless trade war with America’s best friends.

Canadian Prime Minister Justin Trudeau speaks during a news conference in Ottawa, Ontario, May 31. He said: “These tariffs are totally unacceptable.”
Canadian Prime Minister Justin Trudeau speaks during a news conference in Ottawa, Ontario, May 31. He said: “These tariffs are totally unacceptable.” PHOTO: PATRICK DOYLE/ASSOCIATED PRESS

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.