The Economy Can Handle Steel and Aluminum Tariffs. The Real Risk Is Erratic Policy.

The administration first announced the tariffs back in early March, portraying them as an aggressive effort to fight the perfidious behavior of China and other countries to subsidize their domestic metals industries, undermining American national security.

Then, soon after they were announced, the administration gave exemptions to most major American allies, including the European Union, Canada and Mexico. It extended them by 30 days at the start of May, though that was a down-to-the-wire moment.

With those 30 days now elapsed, the administration has this time gone the other direction and removed the exemptions. It’s now tariffs for everybody, including the United States’ closest military allies. And even that is subject to change as the Trump administration continues to dangle relief on steel and aluminum tariffs in exchange for other concessions.

There has been extensive behind-the-scenes jockeying over those exemptions for the last three months, but there has been no real public accounting of what criteria led to those exemptions in the first place, or what led to their removal. And it is not at all clear how taxing imports of Canadian and European steel and aluminum is going to get China to cut subsidies for its producers.

The imposition of the tariffs on Canada and Mexico added another layer of complexity to the sluggish renegotiation of the North American Free Trade Agreement.

American negotiations with China over its trade practices have been even more erratic. One day, tariffs on $150 billion of imports from China appeared imminent, the next they were put on pause amid infighting by the president’s trade negotiation team.

Even more remarkable is that the Trump administration is willing to make threats against all the nation’s major trading partners at the same time. A trade war with China would be a big deal; a trade war with Europe would be a big deal; a trade war with Canada and Mexico would be a big deal. The United States is flirting with all three at once.

Article source: https://www.nytimes.com/2018/05/31/upshot/-us-tariffs-real-economic-risk-is-unpredictability.html?partner=rss&emc=rss