Trump’s tariffs are not just affecting small firms. General Motors also warned that escalating tariffs will lead to job losses in the United States. White House trade adviser Peter Navarro responded by describing GM’s complaint as “smoke and mirrors.” Harley-Davidson announced it would be relocating some production overseas, offering the escalating tariff wars by way of explanation. Trump responded to this by blaming Harley-Davidson, claiming his supporters might boycott the product. As the Peterson Institute for International Economics noted, “one could not find a better case study than this episode of how the Trump administration’s trade policy weakens American export competitiveness.”
There are trade issues for which protective and/or coercive measures might be justified, like China’s failure to protect intellectual property rights. Even there, however, the Trump administration has handled things badly. As Gary Shapiro noted in Fortune:
Tariffs are Trump’s worst choice. They don’t make us “great.” Instead, they lead to retaliation. And as the rest of the world moves forward with tariff-busting trade agreements such as the Trans-Pacific Partnership and other bilateral agreements, we will become further isolated as foreign markets shrink for our goods.
What is particularly disturbing is that Trump’s entire trade team, including the president, seem flummoxed that this is where we are. Consider three interviews with Fox Business Channel anchor/Trump administration sycophant Maria Bartiromo. The first one is from a March 2 interview with Navarro, in which he confidently asserts that Trump’s steel and aluminum tariffs will prompt no retaliation from America’s trading partners:
The second is from last week, in which Treasury Secretary Steven Mnuchin complains the European Union’s response to the steel and aluminum tariffs is “very unfair”:
And, finally, there’s Donald Trump, insisting to Bartiromo that America’s trading partners are calling up the White House constantly, begging to negotiate.
Navarro was clearly wrong, which is really all you need to know about his negotiating savvy. Mnuchin seems genuinely surprised that the European Union and Canada did not rely only on the WTO process to push back on the tariffs and implemented their countermeasures immediately. That Mnuchin is surprised by this is, um, surprising. The moment this administration abused the national security provisions of U.S. trade law and attempted this crude form of economic issue linkage, it invited this exact response.
As for Trump, he is lying. There is zero evidence that any country has expressed an interest in negotiating a new bilateral deal with the United States. More than eight months ago, Trump invited Pacific Rim countries to enter into bilateral trade negotiations with the United States, and no one picked up the phone. The one story that we know about, reported by The Washington Post’s Josh Rogin, was Trump’s offering of a bilateral deal to French President Emmanuel Macron to get France to exit the European Union. That dog did not hunt.
To sum up: This administration’s trade policy is already hurting the U.S. economy. Retaliation by our European and North American trade partners will make it worse. China shows no sign of acquiescing. This administration’s trade team has been caught flat-footed at every turn. As with Iran, there appears to be no Plan B.
When it comes to trade negotiations, the Trump administration is either lying to America or lying to itself. Either way, the United States will lose, and lose bigly.