Trump’s Trade Gimmickry
The imbalances and inequities generated by the global economy cannot be tackled by protecting a few politically well-connected industries, using manifestly ridiculous national security considerations as an excuse. Such protectionism is a gimmick, not a serious agenda for trade reform.
CAMBRIDGE – US President Donald Trump’s bark on trade policy has so far been far worse than his bite. But this may be changing. In January, he raised tariffs on imported washing machines and solar cells. Now, he has ordered steep tariffs on imported steel and aluminum (25% and 10%, respectively), basing the move on a rarely used national-security exception to World Trade Organization rules.
Many commentators have overreacted to the possibility of tariffs, predicting a “trade war” and worse. One expert called the steel and aluminum tariffs the most significant trade restrictions since 1971, when President Richard M. Nixon imposed a 10% import surcharge in response to the US trade deficit, and predicted that, “It will have huge consequences for the global trading order.” The Wall Street Journal wrote that Trump’s tariffs were the “biggest policy blunder of his Presidency” – a remarkable claim in light of the administration’s missteps over Russia, the FBI, North Korea, immigration, taxation, white nationalism, and much else.
The reality is that Trump’s trade measures to date amount to small potatoes. In particular, they pale in comparison to the scale and scope of the protectionist policies of President Ronald Reagan’s administration in the 1980s. Reagan raised tariffs and tightened restrictions on a wide range of industries, including textiles, automobiles, motorcycles, steel, lumber, sugar, and electronics. He famously pressured Japan to accept “voluntary” restraints on car exports. He imposed 100% tariffs on selected Japanese electronics products when Japan allegedly failed to keep exported microchip prices high.