PRESIDENT TRUMP’S repeated tariff skirmishes with U.S. trading partners have forced us to adopt a new definition of progress on trade policy. Rather than actual advancement toward open and equitable access to global markets, for the United States and for all countries, progress now means avoiding retreat from that goal. By that heavily discounted measure, there was progress on two fronts this week.
On Friday, Mr. Trump agreed to drop the steel and aluminum tariffs he had levied against Canada and Mexico on spurious national security grounds. In return, he received an end to those two neighbors’ retaliatory tariffs and a pledge from them to do more to prevent the transshipment of metals from China, whose subsidized overproduction is at the root of the international metals industries’ woes. Ending these tariffs removes what politicians in all three countries, including key Republicans in the Senate, had branded an obstacle to ratification of the United States-Mexico-Canada Agreement (USMCA), Mr. Trump’s replacement for the North American Free Trade Agreement.
To be sure, the USMCA epitomizes our discounted definition of progress, because it actually diminishes free trade in the crucial automotive sector (while adding some modest, and necessary, updates to the current North American Free Trade Agreement). Mr. Trump’s threatened alternative, however — a U.S. renunciation of NAFTA and a breakdown in hemispheric commerce — would be worse.
Meanwhile, Mr. Trump postponed for six months a decision on whether to hit foreign automakers with new tariffs. The alternative was to impose them pursuant to a review process that the president ordered last year, which found auto imports, most of which come from Germany and Japan, to be a threat to national security, despite the fact that many U.S. consumers like Audis, Mazdas and the rest, and that those two countries have mutual defense treaties with the United States. With passenger vehicles imports worth $191.7 billion last year, and an additional $158.8 million of vehicle parts potentially affected (directly or indirectly), the threatened tariffs faced tremendous resistance from both U.S. automakers and those abroad, who understand the fragility of carefully constructed international supply chains. This has apparently stayed Mr. Trump’s hand, pending further talks.
Reduced tensions with trading partners in Europe, Asia and the Western hemisphere let the Trump administration focus its attention on negotiations with China, where it has the strongest argument for playing hardball. It is even possible that traditional U.S. friends, who have their own disagreements with Chinese mercantilism, might rally to Mr. Trump’s side in that contest, even at this late date and despite the gratuitous fights he has picked with them.
A united front against China is the strategy Mr. Trump should have pursued from the beginning, and it’s far from a sure thing he can organize an effective collective effort now. As we said, though, the first step in making things better is to cease making them worse.