The few domestic companies that may (or may not) benefit from special treatment shouldn’t outweigh the costs for the rest of the economy.
The problem steels tariffs are supposed to address isn’t receiving much attention – a number of countries are undeniably engaging in unfair and even predatory trade practices in the steel and aluminum sectors which are damaging to their trade partners.
When it comes to steel tariffs, we could be in a trade war — with ourselves.
Protectionism is making a comeback. Governments aren’t just trying to protect traditional sectors such as agriculture,chemicals, and machinery out of concern for lost jobs or domestic economic interests. They’re also intervening in the digital economy and innovation-intensive industries as critical components of national competitiveness.
We often talk about “trade wars,” but in the era of a rules-based trading system the phrase typically refers to the use of tariffs or import restrictions to inflict economic harm. It was not always so. Before the GATT and its design for the peaceful settlement of commercial disputes, the use of military power in international economics was commonplace. Take the case of the fight over control of nutmeg production in the 1660s.
Safeguards are designed to help domestic producers adjust to competition, but there at least four reasons they don’t help the American consumer. Two high profile petitions will test how the administration deals with these competing concerns.
Currency exchange rates have affected the terms of international trade since the beginning of floating exchange rates, and for nearly as long, politicians have accused trading partners of manipulating exchange rates to gain an unfair advantage. What does it mean to engage in “currency manipulation,” how do governments determine whether and when it happens, and what can be done about it?
If the Trump Administration is serious about applying a 20 percent tariff on goods from Mexico to pay for new construction on a wall along the United States and Mexico, it’s the United States that will pay, not Mexico. And the bill could come in as much as 900% above cost.
Countries often use a variety of tactics to give their home-grown companies a leg up over foreign competitors, like requiring “skirts” on lawnmowers of competitors. These are non-tariff barriers.