Untangling Trump’s trade policy

By Don McIntosh

A year and a half into his presidency, it’s clear Donald Trump is starkly different from the last four presidents on trade policy. He’s the first NAFTA opponent elected president since George Bush Senior signed NAFTA in 1992. And Trump has shown more willingness than his predecessors to threaten and impose tariffs on foreign imports.

But given Trump’s habit of contradictory statements,  tweeted policy announcements and reversals, and personal spats with foreign heads of state, it can be hard to keep up. To make sense of it all, here’s a list of what Trump has actually done.

Steel and aluminum tariffs

On March 8, 2018, the Trump Administration announced that a 25 percent tariff on steel and a 10 percent tariff on aluminum would start March 23. Then on March 22, the Administration said the tariffs would start for Japan, but hold off til May 1 for others while the U.S. negotiated tariff alternatives such as quotas capping exports. After brief negotiations, South Korea, Brazil, and Argentina agreed to limit their steel exports to the United States via quotas. Korea’s quota amounts to a 30 percent cut. Argentina’s quota caps its exports at current levels. Australia got its tariffs suspended indefinitely without any concessions on its part. Following another extension, the tariffs took effect on the European Union, Mexico, and Canada June 1. For perspective, tariffs on steel and aluminum aren’t unusual. President Obama imposed steel tariffs, and so did George W. Bush, but they did so with specific countries under “anti-dumping” provisions. Trump’s steel tariffs were imposed across the board under a national security clause in a seldom-used trade law. The Trade Expansion Act of 1962 allows the Secretary of Commerce to investigate the impacts of any import on national security — and gives the president the power to adjust tariffs accordingly. Trump ordered the Commerce Department to investigate steel and aluminum in April 2017. They were the first such investigations to take place since 2001. The report was sobering. It found that 10 U.S. steel furnaces have closed since 2000, and today the United States is the world’s largest importer of steel. The report also found that there’s huge excess capacity in the global steel market: China’s excess capacity alone exceeds the entire  capacity of the U.S. steel industry. In aluminum meanwhile, imports now account for 90 percent of total U.S. demand, up from 66 percent just six years ago. From 2013 to 2016, six U.S. smelters closed, and U.S. aluminum industry employment fell by 58 percent.

Auto tariffs coming?

On May 23, 2018, Trump directed the Commerce Department to begin a similar investigation into imports in the auto and auto parts sector. That could lay the ground work for later tariffs on foreign-made SUVs, vans and light trucks, and automotive parts.

Tariffs on solar panels and washing machines

On Jan. 23, 2018, the Administration announced 30 percent tariffs on foreign-made solar panels and 20 to 50 percent tariffs on foreign-made washing machines.

Retaliatory tariffs on China 

On March 22, Trump announced that he would order 25 percent tariffs on $50 billion worth of Chinese exports to the U.S., more than 1,300 items in all, from flat-screen televisions to aircraft parts to medical devices. Officially, the tariffs are in response to China’s practice of requiring American businesses to share intellectual property with Chinese companies if they want to do business in China. The tariffs took effect June 30.

Flipflop on Trans Pacific Partnership (TPP)

Having called the TPP the “rape of our country” during his campaign, Trump in his first week in office formally withdrew the United States from the proposed 12-nation Pacific Rim trade agreement – which Obama negotiated but failed to ratify. But on April 12, 2018, Trump shocked farm-state lawmakers and governors with a remark that he was looking to rejoin the TPP. Later in the day, he tweeted that he’d only get back in if the TPP became a much better deal. And four days after that, he tweeted that he didn’t like the TPP after all, and would rather do bilateral deals.

Talks on NAFTA

Trump promised during his 2016 campaign to withdraw from NAFTA. That could still happen. So far, he’s attempting to renegotiate it. In the negotiations, Trump trade representatives have proposed to eliminate NAFTA’s much-criticized “investor-state dispute settlement” process, in which foreign corporations can sue governments over rules they say unfairly harm expected profits. Trump negotiators also have proposed that NAFTA not continue automatically, but have a sunset clause; that domestic content requirements on autos be strengthened; and that restrictions on “buy local” and “buy American” policies in government purchasing be lessened.  Trump wanted the negotiations to wrap up quickly, but that’s not happening. Republican House Speaker Paul Ryan said May 17 would be the deadline for getting the current Congress to vote on a revised NAFTA. On July 1, Mexicans elected a new president, left-populist Andrés Manuel López Obrador; Trump will have a different negotiating partner when Obrador takes office Dec. 1.

Limited results so far: Trade deficit up

Will Trump’s trade moves succeed? In year one of his term, the trade balance actually worsened. In 2017, the trade deficit reached $566 billion, its highest level since 2008. The U.S. goods deficit with China alone grew 8 percent to a record $375 billion. [The last time the United States had an overall trade surplus was 1975.]

U.S. labor leaders who have been critical of so many other Trump moves — cutting corporate taxes, slashing federal worker union rights, appointing union foes to head federal agencies— have found at least some things to approve of in Trump’s trade moves.

When business groups and Republicans in Congress howled in protest as tariffs were announced in March, national AFL-CIO President Richard Trumka defended the policy in an opinion piece in the Washington Post: “The politicians who are screaming about a trade war have one thing in common: They are beholden to Wall Street. The real trade war is being waged directly on working people — our jobs, our communities, our way of life. We’ve been getting our butts kicked for decades because the rules allow global companies to profit at our expense rather than letting us rise together. It’s a rigged game. …Wall Street CEOs and powerful billionaires have rigged our economic rules to protect and maximize their profits. Their trade rules boost outsourcing, labor exploitation and environmental degradation—cutting the legs out from under working people and our communities. Trade has become, like tax cuts and austerity, a primary weapon in CEOs’ war on workers.”

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