Trump’s steel and aluminum tariffs reveal a scary governing style
Donald Trump has displayed a nearly unprecedented weakness as chief executive — the Potemkin president’s offhand comments on various matters have nothing to do with the actual conduct of the Trump administration.
That’s what made Trump’s apparent decision to impose a sweeping 10 percent tax on imported aluminum and a steeper 25 percent tax on imported steel so unusual. It looked like it might actually happen. And it was his idea. This was the freewheeling Trump so many feared might actually run the country.
Until last week, Washington had learned to ignore Trump’s words on so many subjects — health care, immigration, taxes, guns — that it came to seem natural to assume that just because he said he would impose tariffs, there was no reason to believe he actually would. And given his sloth and ignorance that’s left Republicans in Congress in the driver’s seat on policy, normally one could assume he would do nothing.
But on tariffs, even the strongest supporters of Trump’s move, like Commerce Secretary Wilbur Ross, appeared at least moderately unsure what’s actually going to happen.
“Whatever his final decision is is what will happen,” Ross told Chuck Todd when pressed on whether the new tariff policy is real policy.
The practical consequences of taxing metal imports are small in the scheme of things (imported steel and aluminum are a very small slice of the overall economy), though the risks of escalation and a larger trade war are more distressing.
The bigger issue, though, is the window the proposal provides into the presidency of a man who has no idea what makes good policy. His policy ideas, again and again, have been disasters in theory and would be in execution. Raising tariffs on steel and aluminum is most likely a bad idea for the economy. Worse, the threat of tariffs actually happening raises the specter of a Trump presidency actually run by Donald Trump.
Trump’s tariffs make no sense as policy
There’s no coherent goal at all in Trump’s approach on trade. His stated argument that “our steel industry is in bad shape” is simply wrong (steel companies have been beating profit expectations lately), and his chosen policy instrument bears no relationship to any larger objectives.
We must protect our country and our workers. Our steel industry is in bad shape. IF YOU DON’T HAVE STEEL, YOU DON’T HAVE A COUNTRY!
— Donald J. Trump (@realDonaldTrump) March 2, 2018
The idea that free trade orthodoxy went too far in the past has a reasonable amount of support. (I recommend Stephen Cohn and Brad DeLong’s book Concrete Economics for that argument; its restraint makes it all the more convincing.) Certainly, a new administration elected on a trade-skeptical message is entitled to take a shot at turning rhetoric into action.
Take an earlier Trump initiative that at least kind of made sense — the decision to slap punitive tariffs on imported Chinese solar panels. That protected US solar manufacturers, and induced at least one Chinese company to announce plans to build a factory in the United States. Squint and you can see a nascent industrial policy effort to make the USA a world leader in solar power. (Except, in every other possible way, Trump maintains laser-like focus on deterring the growth of renewable power.)
Trump paired solar tariffs with new tariffs on Chinese home appliances, seemingly an effort to promote the US appliance manufacturing industry. Appliances, however, are made of metal. While taxing imported appliances gives US-based appliance manufacturing a leg up, taxing imported metal takes that leg away — which is why Electrolux is putting a planned $250 million investment on hold.
The net result is simply to make everything more expensive for no reason. The country will survive an arbitrary, pointless increase in the price of consumer durable goods, but it’s still a stupid way to run the country.
On some level, it should be no surprise that Trump’s steel and aluminum tariffs don’t advance any coherent economic goal because the legal authority he invoked as justification has nothing to do with economics.
A bad idea, badly implemented
Prior presidents have dabbled in steel protectionism by invoking “anti-dumping” rules that lead to legal and bureaucratic wrangling at the World Trade Organization, mild international tiffs, and then usually both sides backing down to some extent.
But Trump, who likes to be tough, was reaching for stronger statutory authority. He found it in Section 232 of the Trade Expansion Act of 1962, which allows the president to protect strategically vital industries.
There is no explicit statutory requirement that the president’s invocation of this authority not be total nonsense — it was just one of those unstated norms — so Trump is off to the races, even though the invocation is really, truly nonsense.
For starters, the US doesn’t import all that much steel, and the Pentagon says its total needs only come to about 3 percent of total domestic production. So there’s no risk that being cut off by our suppliers would make military production impossible.
But it gets sillier (with Trump it always does) because America’s biggest foreign supplier of steel is Canada. That’s followed by Brazil, South Korea, Mexico, Turkey, the European Union, and Japan (then comes Russia). Defense Secretary James Mattis sensibly suggested that we might consider exempting our close allies from the tariffs to avoid creating a ridiculous diplomatic incident, but Trump blocked that idea because exempting allies would make the policy economically meaningless.
Trump’s analysis of the economics is correct. But that’s just another way of saying that the vast preponderance of the steel America imports comes from allies, so the national security case is nonsense. The whole thing is a failure on every level.
The only saving grace of the situation is that everyone knows Trump is bullshitting, so we have a minor trade crisis on our hands rather than a major national security one. Still, with this level of slipshod decision-making, who knows?
Trump has no idea what he’s doing
The Trump era has, so far, gone better than anyone had any right to expect. It’s true that as problems arise — flu, drug overdoses, Hurricane Maria, school shootings — Trump invariably fails to rise to the occasion. And, from time to time, he for no good reason opts to pour salt in America’s racial wounds. His immigration policies are making us poorer and meaner, while his health care and tax policies make our economy more unequal.
But on a day-to-day basis, life goes on.
Despite the frightening concentration of incompetence in the West Wing, many critical posts — most of all at the Departments of Defense and Treasury and the Federal Reserve — appear to be in the hands of basically capable people. Trump’s habit of relentlessly deferring to GOP congressional leadership on policy issues is disappointing if you were a true believer in Trumpism, but sort of vaguely reassuring if you found the idea of installing a narcissistic rage-holic in the Oval Office alarming.
The tariffs, by contrast, show what happens when Trump actually tries to make himself the central player in his own administration. It’s telling that not only is the content of Trump-centric policymaking terrible but that, as evidenced by a must-read report from Stephanie Ruhle and Peter Alexander at NBC News on the tariffs’ unveiling, Trump appears to have no idea how to do the job of president:
There were no prepared, approved remarks for the president to give at the planned meeting, there was no diplomatic strategy for how to alert foreign trade partners, there was no legislative strategy in place for informing Congress and no agreed upon communications plan beyond an email cobbled together by Ross’s team at the Commerce Department late Wednesday that had not been approved by the White House.
… No one at the State Department, the Treasury Department or the Defense Department had been told that a new policy was about to be announced or given an opportunity to weigh in in advance.
It’s not exactly unprecedented for Trump to wing it on a major decision. But the two previous examples of making policy this way — the travel ban with which he launched his administration and the firing of FBI Director James Comey — were both disasters. The complacent allowed themselves to believe that Trump had somehow learned his lesson.
America will pay a price
One irony of the current situation is that no matter how ridiculous Trump’s steel tariff initiative may be, it’s hardly the No. 1 instance of poor policymaking from the current White House. The range of initiatives Trump has taken to destabilize health insurance markets and raise premiums is striking, and it’s only over the next 12 months that the full impact will be felt. The looming wave of deportations of highly sympathetic DREAMers that Trump is poised to unleash is bad economics and worse politics.
Conservatives haven’t been as unnerved by these initiatives as they should be because the policies mostly line up with right-wing dogma.
But in a normally functioning political party, a president — who has to stand for reelection before a national audience — serves as a restraining force for congressional party members, who mostly have safe seats and can afford to indulge in ideological flights of fancy.
Trump’s failure to provide that kind of restraint reflects his weakness as a leader, and the country suffers for it. The tariff fiasco shows, however, that there is no alternative. Trump is completely unprepared to do the president’s job but also utterly unwilling to learn on the job or adopt a reasonable decision-making process.
The erratic, ignorant figure you see on Twitter isn’t all there is to the Trump administration, but it’s absolutely all there is to Trump.