Donald Trump girds for a trade war (and he just might get it)
The putative national-security justification put forward by the Trump administration seems particularly dubious. R Street’s Clark Packard observes that “while steel unquestionably is vital to U.S. military superiority . . . only about 3 percent of steel shipped domestically in 2016 was used for defense and national security purposes.”
What’s more, many of the leading steel- and aluminum-exporting countries are U.S. allies, including Canada, Japan, Germany and South Korea. Other top suppliers to the United States include Brazil, Mexico and Taiwan. Although China produces nearly half of the world’s steel, it accounts for just 2 percent of U.S. steel imports, placing it eleventh.
Cato’s Ikenson notes, “Any U.S. decision to restrict imports based on the argument that an abundance of low-priced raw materials from a diversity of sources somehow threatens national security would . . . invite every other member of the World Trade Organization to invoke national security to protect favored industries.”
And whereas Donald Trump has long seen trade as a zero-sum game, with the trade deficit a giant scoreboard recording who’s up and who’s down, the losers will almost surely exceed the winners here in the United States. In 2015, Packard explains, “steel mills employed about 140,000 Americans, while steel-consuming industries (including manufacturers who rely on steel imports) employ 6.5 million Americans. Unnecessarily raising the costs of steel-consuming industries will jeopardize far more jobs than could possibly be saved at steel mills.”