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Donald Trump Freddy Gray Politics Trade

1,2,3,4 — Trump declares a trade war

March 2, 2018

10:00 AM

2 March 2018

10:00 AM

‘Whatever complicates the world more — I do,’ Donald Trump once said. As President, that still seems to be his mantra. Everybody knows that he feels America has been ripped off for decades when it comes to global trade — and that he intends address imbalances that hurt his country wherever he can.

But his abrupt decision to announce huge tariffs on steel and aluminium has sent shockwaves across the world. It has thrown global markets into a panic. It has caused division in his White House and put him at odds with his party establishment, which is ideologically committed to free trade and terrified of protectionism. It is vintage Trump, in other words. The great disruptor strikes again.

So what is he doing? Is he trying to soothe the base, the America Firsters, who might be upset at his moves towards gun control, by offering red-meat economic nationalism? Possibly. Is he just eager to distract attention from the rough-and-tumble within his administration this week? Possibly. Or is the best explanation the simplest? That would be that Trump really believes in protecting traditional American industries, and if it causes a global trade war, well, so what?

The truth is that Trump has been pushing for an earth-shaking trade move — abolishing NAFTA was one idea — for months, and many of his advisers and cabinet have been resisting him at every turn. But this week Trump seems on a rampage. With his poll numbers collapsing, he has gone for something big and disturbingly bold.

To explain the move, Trump tweeted: ‘Our Steel and Aluminum industries (and many others) have been decimated by decades of unfair trade and bad policy with countries from around the world. We must not let our country, companies and workers be taken advantage of any longer. We want free, fair and SMART TRADE!’

The announcement does show the influence of Commerce Secretary Wilbur Ross, aka the king of debt, on the Trump administration. Ross’s report on the degradation of core American industries prompted Trump’s sudden move — despite fierce resistance from other senior figures in the administration.

But the declaration of a 25 per cent tariff on steel and 10 per cent on aluminium is brutally sudden. Using the legislative wheeze of section 232, the tariffs could come into force as early as next week. The proposed tariffs will please American steel and aluminium producers, naturally, but also harm hard-working Americans in other industries, such as beer brewers in Pennsylvania, for instance. Trump has further insisted that the tariffs would apply to all countries. So it is bad economic news for many other nations, too, including many of America’s closest allies.

The hope for them is that this is a typically Trumpy initial gambit — he likes to shock with his first move, to wrongfoot adversaries and trading partners by the severity of his intentions, so that they accept gratefully when he compromises a little. But many Republicans will be hoping to find a lot of wiggle room in his plans — and fast.


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