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Trump’s Protectionist Rube Goldberg Machine

The Trump administration is offering some countries a reprieve from US import tariffs in exchange for self-imposed export quotas, while allowing domestic producers to apply for tariff exemptions. Because this approach will weaken competition and cause delays, the predictable result will be higher costs and reduced quality control.

WASHINGTON, DC – To avoid the Trump administration’s 25% tariff on imported steel, some countries have agreed to accept export quotas on 59 varieties of steel products. At the same time, the administration has declared that US manufacturers that use steel as an input may apply for tariff exemptions from the Department of Commerce if they are unable to source the specialized products they need domestically.

Trump would like to think that forcing quotas on exports and providing exemptions to domestic importers is good for the United States both politically and economically. Nothing could be further from the truth. Politically, the Trump administration has already done serious damage to America’s international standing by justifying tariffs against allies’ exports on the grounds of “national security.”

But the economic fallout of Trump’s tariffs has been no less alarming. US manufacturers that rely on steel inputs are already facing higher costs, and could soon face shortages, with the price of steel in the US having risen 50% above that in China or Europe. In fact, citing higher costs, the iconic motorcycle company Harley-Davidson recently announced that it was moving some of its production out of the US, to avoid the European Union’s retaliatory tariffs.

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