PostEverything | Perspective
March 3, 2018 at 6:00 AM
After a year of hemming and fulminating, President Trump finally unleashed the trade war that he had been promising since his campaign — and indeed for years before that.
The stock market tanked on the news, and the commentariat exploded, with the bulk of the response negative.
Defending his supposedly pending decision to slap tariffs of 25 percent on imported steel and 10 percent on aluminum, the president on Friday morning tweeted, “When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win.”
Trump plans to rely on the almost-never-used Section 232 of a 1962 trade law that allows for executive action if the Commerce Department recommends that imports pose a threat to national security.
Numerous Republican senators have come out strongly against the idea, with the normally uber-conservative Patrick J. Toomey of Pennsylvania stating, “invoking national security as a means of imposing new, huge tariffs on all kinds of imported steel is a big mistake that will increase costs on American consumers, cost our country jobs, and invite retaliation from other countries.” Even Larry Kudlow, longtime Trump supporter, said the tariffs could cause “a major calamity” and called them a “bad omen.”
They may not be, though — because they probably won’t happen.
In the 13-plus months since Trump took office, there has been a wide gulf between the actions of the administration and his words, between the power the president believes he has and the power he has actually been able to wield.
He has been most successful to date in deregulating, which means not expanding the power of government. When he has attempted to act unilaterally, to define the powers of the presidency more expansively, he has met strong pushback from entrenched groups and institutions.
Look what happened with the travel ban: Unveiled soon after Trump took office, it was followed the next day by an emergency injunction from a district court, which began a long and tortuous journey of injunctions, rewrites, further injunctions and further rewrites, with a much-pared-down set of visa restrictions. It will now be heard by the Supreme Court this spring.
At each stage of the debate, which was over a handful of countries with relatively small populations that aren’t crucial to our economy, broad assertions of executive power were met by powerful legal and popular pushback, and the issue remains unsettled. Trump may ultimately get his way, but his exercise of power has hardly been easy or sweeping.
The border wall is another area of constant preening with little to show for it. Here, at least, Trump may have gotten some of his desired billions had he been willing to concede ground on his draconian immigration demands. Instead, the White House has pursued maximalist demands and gained minimal results with Congress, maintaining that chasm between assertions of power and the actual exercise of it. Even the repeal of the “dreamers” exclusion, which seemed so certain, has been halted by the courts.
The nation’s chief executive clearly has some latitude to slap tariffs on countries that the U.S. government says are illegal dumping low-cost goods or violating trade laws. In 2002, as many have now noted, President George W. Bush used section 201 of a 1974 trade law to place temporary tariffs on foreign steel under the argument that foreign competition was causing “serious injury” to a domestic industry. Those tariffs, like Trump’s proposal today, met with strong criticism, were ultimately rejected by the World Trade Organization and were removed by Bush in 2003, long before they were set to expire.
Trump and the Commerce Department have turned to a different statute and are basing their action on an expansive definition of national security, but there is no reason to believe that this will face any less resistance.
Legal challenges won’t be even the first wave of blowback. Because Trump appears to be contemplating broad tariffs rather than country-specific ones, every one of America’s trading partners could retaliate. Cars and grain are among the most substantial U.S. exports globally, and hence most vulnerable.
The European Union is already planning tariffs for Harley-Davidsons, bourbon and blue jeans — “iconic American products that just happen to be produced in the home states of the House speaker and Senate majority leader,” as Neil Irwin of the New York Times pointed out.
Will the workers and farmers of Michigan, Iowa, Wisconsin, Pennsylvania, Nebraska and Indiana be thrilled when they are paying more for a can of soup and selling less of their products abroad, leading to a glut of supply and then falling prices for the products they do sell?
For much of the 19th and 20th centuries, tariffs were a central U.S. preoccupation that pitted farmers against manufacturers, Wall Street against workers and the heartland against the coasts. Those chords are distant, but echoes remain today, with a handful of heartland industries that stand to gain from high barriers to foreign competition and a lot more that stand to lose.
Trump’s policies may seem outrageous, but they would have been mainstream (albeit contested) in 1900. Of course, the economy has changed dramatically since then, and globalization tethers prices to trade. How does the president think his new tariffs will play in Congress and statehouses, as voters spot higher prices and businesses grapple with botched supply chains?
Outside of the steel and aluminum industries, there is no natural constituency for these tariffs, other than those who see any assertion of American power, in any form, as a good thing. The “shake the fist” vote would applaud any unilateral American action that gives the world a middle finger, but the pocketbook vote is likely many times larger.
The naked assertion of executive power again shows Trump’s gift at putting himself in the center of any story. But there is a long road from trade-war tweets to actual trade-wars, and a long road to go before the stroke of a pen and the announcement of an action leads to the breakdown of a global system. Here as elsewhere, the casual upending of norms and the hell-with-it approach create uncertainty and cast the United States as an unreliable partner. As yet, however, much of what Trump has done has been halted, reversed, or watered down, and there is little reason to believe that these tariffs will fare any better. The sound and fury presidency remains alive and well, but whether it will signify much remains a very open question.