Trade wars?: What does Trump’s decision on tariffs mean?

With President Donald Trump’s tariffs are we approaching something we could call trade wars and what kind of political sense does this Trump proposal make as it is going to hit also allies, is this a manifestation of America First? Read few comments.

R. Daniel Kelemen, Professor of Political Science and Law, Jean Monnet Chair in European Union Politics, Department of Political Science, Rutgers University

Yes, the tariffs Trump has announced will likely trigger a trade war. We won’t know the details until next week – and things may change given the unpredictable and inconsistent way in which the Trump administration operates. But this is clearly bad news for international trade. The tariffs – and the trade war they would trigger – would of course be very damaging economically. They reflect Trump’s so-called “America First” economic policy, and his general misunderstanding of how trade works. Trump sees political benefits in the tariffs, as they may prove popular with some voters in Rust Belt who see Trump standing up for their interests and trying to revive Steel and aluminum manufacturing in the US. But while those industries may see some job gains as a result of the tariffs, other industries will see job losses; manufacturers who rely on steel and aluminum imports will see their costs increase as a result of the tariffs, which will hurt their industries. Also, when our trade partners impose retaliatory tariffs in reaction to Trump’s move, workers in the sectors affected by those tariffs (most likely in agriculture) will suffer. More generally, beyond the economic damage, Trump’s trade war would damage relations with our closest allies such as the EU and Canada. Once again, we see Trump pursuing idiotic policies which harm America’s economic and strategic interests.

Iain Begg, Professor, European Institute, London School of Economics and Political Science

Yes, it is consistent with America First, but it is also worth stating that the US has always been willing to impose emergency tariffs when it believes others are engaging in unfair trade practices. Therefore we should be wary about jumping to the conclusion that this is a huge escalation.

Darrell WestVice President and Director of Governance Studies, The Brookings Institution

Trump’s tariffs risk a trade war. Once a nation imposes tariffs on particular imports, it encourages other countries to reciprocate and before long, there can be a trade war that engulfs many nations. The burden of tariffs can fall on countries that are friendly as well as those that are foes, so such a policy runs the risk of escalating and creating unusual alliances. It is important that Trump reconsider his poorly-formulated tariffs before they disrupt longstanding trade relationships and international commerce. Many of his own economic advisers oppose tariffs and think they are dangerous for global trade.

Noah Gordon, Clara Marina O’Donnell Fellow, Centre for European Reform

With these US tariffs on steel and aluminium, we are certainly in danger of a trade war. The EU will impose what the WTO calls “safeguard” tariffs to stop too much cheap steel being redirected to Europe, and will also likely prepare retaliatory tariffs for certain US goods while it waits for the WTO to hear a challenge to Trump’s actions. What worries me is that this is just a sign of Trump giving into his protectionist instincts. He and some of his advisers either don’t know or care that these tariffs will cost thousands of jobs in the US, raises prices for American customers, and infuriate America’s allies. This is America-first through and through.

It’s hard to judge how this will play politically in the US. Steel and aluminium workers will be delighted, but auto-makers will be furious about higher prices. Most of the Republican party supports free trade and wants Trump to reconsider… But this is Trump. He wants the US to “win” at trade and he wants to look like the tough protector of American factory workers; he wants to make the country “great” again, whatever the cost.

Thomas Scotto, Professor of Government and Politics, University of Strathclyde

I would say that if you are a President who is concerned with maintaining the support of a core base of domestic supporters as is Trump, the President’s words and actions on trade make perfect sense. In his surprise victory in both the Republican Primary and general election, Trump gained the support of voters who believed they were falling behind economically and Trump linked this economic decline to the decline of manufacturing. In the world according to Trump and his white working class base, the decline of manufacturing is equated with foreign companies dumping cheap raw materials into the American market. Trump’s base of supporters, particularly in Midwestern America are those who, during their lifetimes, have seen well paying jobs in the manufacturing sector disappear. If you stop the dumping of cheap raw materials into American markets via tariffs, these jobs will come back, or so Trump and his base believes. Tariffs appeal to a specific set of voters–however, voters hurt by retaliatory tariffs are more spread out–people may not link the fact that the increased price of cars is a function of foreign steel tariffs. So, a President who needs a base of core supporters might see this as a rational calculation.

 

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