Below the surface, however, the fallacies and distortions inherent in the Trump approach continue to put down roots in U.S. policy. Both the China deal and USMCA include strong elements of managed trade, whereby countries agree to buy and sell goods in quantities, and under conditions, approved by politicians — not determined by economic criteria. Also, quotas and tariffs still affect much U.S. trade in steel and aluminum, imports of which Mr. Trump has sought to control through the spurious invocation of a threat to “national security.” To be sure, tariffs no longer threaten metal imports from our closest ally, Canada, but friendly nations such as South Korea and Brazil remain subject to import quotas. And there was no broad restart of U.S. manufacturing.
Now the Trump administration is extending its metal tariffs, from basic steel and aluminum to finished metal products — car bumpers, nails, wires and the like — from certain countries, again citing “national security.” Apparently, U.S. steel and aluminum capacity utilization has not hit 80 percent on a sustained basis, the target Secretary of Commerce Wilbur Ross set “to remove the threatened impairment of the national security,” as Mr. Trump’s statement put it. Hardly anyone noticed the announcement, which came on Jan. 24, at the height of the impeachment furor in Washington. It nevertheless confirms what many critics of the first round of tariffs predicted: that as tariffs inflated the cost of U.S.-made metal, the prices of everything made with U.S. metal would go up, and firms would shift to cheaper imports — necessitating “cascading protection” against those goods, too.
The overall quantity of imports newly affected by the fresh tariffs (10 percent on finished aluminum products, 25 percent on finished steel products) is a modest $450 million. However, the impact will be heavily felt by U.S. users of those goods, as well as by the countries that sell them to us — principally Taiwan, Japan and the European Union — as Chad P. Bown of the Peterson Institute for International Economics has reported. These are U.S. friends, not threats to our security. Thus does Mr. Trump’s trade policy compound injuries to economic efficiency with insults to the truth.