In Our Opinion: Trump must be careful in trade disputes

The proposed package of penalties, which could foment a more adversarial trade relationship with China, comes amid a report from Reuters that the Trump administration is also seeking to impose heavy new tariffs on China.

Donald Trump announced hefty duties of 25 percent on steel and 10 percent on aluminium, despite protests by many in his party and some of his top economic advisors.

Trump is not a NAFTA fan.

Trump's tariffs, like his hardline NAFTA demands, have the prospective to turn the internationally integrated auto industry upside down.

But as noted last week by The Associated Press, Trump's steel tariffs would benefit an industry that employs 140,000 Americans at the expense of steel-dependent industries that employ 6.5 million, such as vehicle and aircraft manufacturers and the makers of building materials.

Defenders of the tariffs argue that steel and aluminum are important for national defense, and so need to be protected even at the cost of less martial industries. Here is Dr. Je Hyun-jeong from the Center for Trade Studies and Cooperation at the Korea International Trade Association to analyze what the U.S.' new tariff policy is all about. But eventually, increased expenses could make it unprofitable to develop automobiles in the United States and production will move elsewhere.

The American brand at the centre of the current spat, Harley Davidson, sells thousands of motorbikes a year across Europe, and would struggle if targeted tariffs against its US-manufactured products were introduced.

You'd think California Steel Industries would be happy with President Donald Trump's new tariff on steel imports.

These tariffs were controversial both at home and overseas because, even as they helped steelmakers, they squeezed steel users, such as the auto industry. US primary production of aluminum rose steadily from the post-war era until around 1980, when it began a steady decline.

Trump is right that we've tolerated these abuses under a belief that to challenge them would violate principles of free trade.

Some trade deals, like the World Trade Organization agreements to which most nations subscribe, set out general rules involving a host of issues like anti-dumping, customs valuation and pre-shipment inspection.

Alienating nations around the world, with whom the United States has had long and mutually beneficial relationships is no way to bargain.

In contrast, during the entire time those Section 201 tariffs were in place, and while investors watched their effectiveness continually eroded, U.S. Steel stock's valuation declined, bottoming in Q2 2003 - about 15 months after the tariffs were announced.

So far, the USA government has not even been able to give its trading partners, including Europe, a set of guidelines that would allow them to win exemption.

Trade across borders is undeniably good, as Adam Smith taught us some 250 years ago.

Brazil has said it will seek exemption from the newly imposed tariffs. High tariffs enacted on electronics and clothing, which the USA buys a lot of from China, would sharpen trade frictions and risk economic side effects in the US such as inflation.

Canada sent troops into the losing Afghan War to persuade the Americans to keep the border open to trade.

China's aluminium output is a fraction of steel's size at about 36 million tonnes a year ago.

That is where President Trump's complaint is right. "Although the Chinese economy was growing by 8.7 percent, the Chinese government managed to shrink Chinese imports of American goods and services".

"If you want to know why the steel industry employs so fewer workers than in decades past, there is the answer", wrote Daniel Griswold, a senior researcher at the free-market Mercatus Center at George Mason University.

Vanessa Coleman

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