In a time of warfare, a country doesn’t want to suddenly discover that it relies on far-off trading partners for the goods its people or military need. It’s far better for a country to be able to produce the basic stuff of survival within its own borders. To ensure those domestic industries survive, a country may need to take action against foreign competition.
It’s the argument the Trump administration is considering about steel. It has also been China’s argument about wheat for years.
The Trump administration is preparing to release, perhaps within days, what could be its biggest step on trade yet — the results of an investigation that could impose limitations on imported steel and aluminum on the grounds of protecting U.S. national security.
But that prospect is sparking concern among some U.S. industry leaders, who argue that other countries may turn to the same explanation to bar American products from their markets.
Agricultural products, one of America’s biggest exports, could be particularly vulnerable. European officials have told U.S. officials and business groups that they may respond to restrictions on steel and aluminum with their own tariffs, and that U.S. agriculture could be a target, according to people familiar with the exchange.
In its public comments about the administration's investigation, U.S. Wheat Associates, an export promotion group for the wheat industry, said it was “extremely concerned about the potential ramifications of import protections based on national security arguments,” adding “the results could be devastating.”
“Wheat is probably the commodity most associated with food security in the world. We’re proud of that,” said Ben Conner, the group's director of policy. “We just don’t want that to get turned around on us.”
Any investigation that leads to new tariffs on imports could spark retaliatory duties or tariffs on U.S. products, said a spokesperson for a separate farm industry group, who spoke on condition of anonymity because of the sensitivity of upcoming North American Free Trade Agreement negotiations. “As we’ve seen historically, agricultural products tend to be on the front line for retaliation.”
Industries and trade experts say they are concerned that the administration, by using a justification as broad as national security, could set a precedent for other countries to follow suit.
The administration has turned to a little-used statute that gives it broad purview to impose restrictions on any imports that it deems a threat to national security. The Trump administration hasn’t specified how it defines national security, but statements from Commerce Secretary Wilbur Ross and others suggest that their definition may go beyond defense equipment to include broader security issues, like infrastructure and the industrial base.
The World Trade Organization, which typically polices international trade actions, gives countries a lot of autonomy when it comes to dealing with national security matters.
Supporters say the Trump administration’s actions could offer relief for the domestic steel and aluminum industries, which have struggled as a flood of overcapacity from China has weighed on prices.
But others say that citing national security as a reason for limiting trade could prove to be a dangerous precedent.
“You could imagine extending this argument to almost anything, and I think that’s one of the difficulties with employing it at all,” said Chad Bown, a senior fellow at the Peterson Institute for International Economics. “Once you open that Pandora’s box, it’s really an argument you can apply almost limitlessly.”
Other countries have tried to protect seemingly unrelated industries on national security grounds, sometimes with laughable results.
In 1975, Sweden famously put restrictions on footwear, arguing that the drop-off in domestic production was a threat to shoeing its emergency defense services. The move was ridiculed domestically, especially given Sweden's long history of remaining neutral in conflicts, and the country revoked the measure two years later.
Far less humorously, China has cited national security as justification for its cybersecurity law, which requires companies to store their data within China’s borders and individuals to register on social media services with their real names. Critics describe the law as a tool for China to compromise the intellectual property of foreign countries, crack down on dissidents and restrict freedom of speech. Under the law, companies as diverse as banks and power providers may need to provide Beijing with their program source code and other details of their intellectual property, which critics fear could be passed to Chinese competitors.
When it comes to food, countries like China and India have cited security concerns as a reason for protecting their domestic industries. India has been fighting at the WTO for years to carve out exemptions for developing countries to stockpile food, something that agricultural exporters like the United States and Canada firmly oppose.
Depending on the results of the Trump administration's investigation, the U.S. agriculture sector could become a focus of retaliation because of its heavy dependence on global markets. The United States exports roughly half of all the soybeans and wheat it grows.
Foreign governments are also likely searching for the right pressure points to persuade the Trump administration to alter their trade policies, and they may conclude that the president’s base of support among voters in the Midwest makes agriculture a good target, said Bown of Peterson.
Bown also points out that U.S. agriculture has served as a choke point in the past, including the other major incident in history in which a U.S. president imposed restrictions on imported steel.
In 2003, the Bush administration opted to lift its 20-month-old tariffs on steel after the WTO ruled they were illegal and European countries vowed to impose sanctions on up to $2.2 billion in U.S. exports.
The Europeans' threats included restrictions on orange juice and other citrus exports from Florida — a key swing state that President George W. Bush was then looking to win in the 2004 presidential election.
Damian Paletta contributed to this report.