Trump's Tariffs Could Be Worse, But Are Still Pretty Bad
(Bloomberg View) -- Strange what qualifies as good news from the White House these days. President Donald Trump's order on tariffs was more limited than first threatened and reassuringly vague. So yes, it could have been worse.
Trump has given ground in the face of frantic representations from many Republicans and leaders of American business. "We're going to be very flexible," he says. His order sets a tariff of 25 percent on steel and 10 percent on aluminum -- but exempts Canada and Mexico (which together account for about a quarter of U.S. steel imports), pending talks to amend the North American Free Trade Agreement. And the president said that other U.S. allies could be exempted.
If the administration had stuck to its original proposal -- high uniform tariffs on all imports of steel and aluminum -- the harm to the U.S. and its allies would have been serious and immediate. Few, though, could mistake this shape-shifting nonsense for good policy.
Measured by the short-term economic impact, it's a lot better -- but it's still bad.
For one thing, the case-by-case approach can't easily be squared with the government's earlier national-security rationale -- which might have helped the plan conform to the letter (though not the spirit) of international trade rules. If the aim is to shore up U.S. steel-making for defense purposes, imports from friends such as Canada are a bigger problem than imports from countries such as China, because Canada sells the U.S. more than five times as much.
If this apparent non-compliance leads Trump to an outright repudiation of international rules, the longer-term consequences for global trade would again be grave. Maybe there'll be further efforts to dress up these new tariffs as conforming to the rules. But this will rightly be seen as bad faith. There's no disguising Trump's disdain for trade obligations -- or his view that the World Trade Organization has long worked against U.S. interests. That's his consistent message. And that's the ongoing threat to U.S. jobs and living standards.
The threshold for good news has indeed shifted. The U.S. was the architect and long the principal champion of the world's rules-based trading order, and Trump is happy to see that order unravel. At least, he isn't planning to do it right now.
--Editors: Clive Crook, Mary Duenwald
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