THE UNITED STATES should stand for free trade and, consistent with that policy, exercise its right of redress when other nations try to gain unfair advantage. Fighting back can be tricky, though; Washington has to be careful not to create new problems in the process of dealing with existing ones.
Case in point: The Trump administration recently began an investigation into the national security threat allegedly posed by imports of two metals, steel and aluminum, that are undeniably crucial to the manufacture of military hardware. The chief target here is China, whose vast, bloated government-backed industries are flooding the world market with cheap product, threatening the viability of U.S. producers. That, in turn, could create not only economic woes for those companies, but also a dangerous level of dependency for U.S. war-fighters. The basic complaint against China — that it is pumping out exports from money-losing plants and propping them up with cheap loans — is sound. Indeed, one of the last acts of the Obama administration was to file a complaint about this at the World Trade Organization.
By invoking its national security interests, the Trump administration seeks to shield any retaliatory measures it may adopt behind an exception to global free-trade rules. It’s an aggressive tactic presidents have used only 26 times since Congress authorized it 55 years ago, in a law called Section 232. And investigations pursuant to that law have resulted in sanctions only twice, against oil imports from Libya and Iran in the early 1980s.
There’s just one problem: Section 232, necessarily aimed generally at U.S. imports, is not optimally targeted at the specific challenge of Chinese dumping. As it happens, Chinese aluminum accounted for only 8.5 percent of foreign supply (by weight) to the U.S. market in 2016, down slightly from 2015. Meanwhile, imports from Canada accounted for more than half. Now, buying aluminum from Canada, an ally so close that U.S. law actually defines its factories as part of this country’s National Defense Technology and Industrial Base, cannot plausibly be considered threatening to national security. Yet the legal operation of Section 232 is such that imports from both countries must be investigated before the U.S. government’s ultimate ruling.
Canada is not pleased about being bracketed with China in this context — and we don’t blame our northern neighbor. Quite apart from the unfriendly symbolism, Ottawa cannot prudently rule out the possibility of tariffs or other measures, even though those are, in fact, highly unlikely to result when the investigation concludes, roughly a year from now. The aluminum lobby, which urged the Trump administration to use Section 232, would probably oppose any sanctions against Canada’s producers, precisely because the U.S. and Canadian industries are so intertwined.
The Trump administration, like the Obama administration before it, has a legitimate complaint against China on aluminum. The best way to prosecute its case, however, would be through a broad coalition of countries in support of the U.S. position. Sideswiping Canada through the invocation of Section 232 actually works in the opposite direction. That’s not hard-nosed; it’s shortsighted.
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