Seemingly without notice, President Trump on Thursday announced he plans on putting a tariff on imported steel and aluminum.
Neither the President nor his staff had mentioned the plan before Trump blurted out his intentions during a Thursday meeting. He plans to impose a 25% tariff on steel, and a 10% tariff on aluminum. His announcement caused the stock market to plunge, causing the Dow down over 525 points before rebounding to close 300 points down.
Many thought Trump’s sudden outburst was a result of a terrible week for the President. Trump saw his trusted son-in-law Jared Kushner lose his top-secret security clearance, Kushner being bashed in the press as foreign countries talked about manipulating him, trusted aide Hope Hicks resigned, the President himself was schooled by the NRA on due process, and more embarrassment came from cabinet members such as Ben Carson who ordered a $31,000 table for his HUD office. Perhaps the President thought he could distract the press from the other issues by making another bizarre statement.
It is rumored that Trump aide Peter Navarro put the bug in Trump’s ear to institute the tariffs. Navarro stated that he didn’t believe any nation would retaliate against the US. Almost immediately, US trading partners voiced their objections, with many threatening retaliation. The EU Trade Commission said they are investigating possible retaliation targets, and specifically suggested tariffs on Harley Davidson motor cycles, Levi jeans, and American whiskey.
While not mentioning specific targets, both Canada and China stated that they would also retaliate. Canada is by far the biggest source of steel to the US, exporting almost eight times more steel to the US than China.
Neither Trump or his aide Navarro seemed concerned on the potential loss of US jobs a trade war may cause. If other nations start to put tariffs on American agriculture products, US farms could lose billions in revenue and tens of thousands of jobs. China is the biggest buyer for the US soy crop. For six years, China has also been the biggest market for General Motors, far outpacing the sales of vehicles in the US. A tariff on US vehicles in China would be devastating to US car makers. In South Carolina, one in eleven workers depend on the seaports where thousands of ships come to load and unload goods. Over 187,000 jobs in South Carolina depend on trade at the ports.
Even though a sustained and elevated trade war would be devastating to the US economy, the President thinks a trade war would be good.
When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!
— Donald J. Trump (@realDonaldTrump) March 2, 2018