Trump Trade

FILE - In this Aug. 16, 2017 file photo, the national flags of Canada, from left, the U.S. and Mexico, are lit by stage lights before a news conference, at the start of North American Free Trade Agreement renegotiations in Washington. (AP Photo/Jacquelyn Martin, File)

By TIM BÜTHE

What do apples, bourbon, pork, cranberries and orange juice have in common with designer blue jeans, Harley-Davidsons, beer kegs, lamps and washing machines? They’re all profitably exported to Canada, the European Union and Mexico from U.S. districts and states where Republicans must win in November to keep their majority in the House and the Senate.

They are also subject to “punitive” tariffs imposed (or about to be imposed) by these countries in retaliation against the 10 percent and 25 percent tariffs the Trump administration imposed, effective June 1, on U.S. aluminum and steel imports from these allies.

Swift retaliation has been politically controversial within Canada, Europe and Mexico and therefore was far from certain. Some trade policy experts advocated handing Trump some negotiated “victory” on steel and aluminum in the hopes that it would appease him. Others encouraged waiting for a decision from the World Trade Organization, which is expected to rule the U.S. tariffs violate the largely U.S.-written international trade law.

Retaliatory tariffs are also controversial. Imposing them on U.S. goods makes the goods more expensive to Canadian, European and Mexican consumers. And many of those goods aren’t made in these countries, so there is no protectionist benefit. Worse, retaliation may prompt counter-retaliation by the easily angered president and thus trigger a full-blown trade war.

So why are the Canadian, European and Mexican governments unified in pursuing retaliation that is economically harmful and politically risky?

Their confrontational reaction reflects not just outrage about Trump’s disregard for written and unwritten rules and his willingness to declare longstanding U.S. commitments null and void. There is an increasing sense that Trump is deliberately engaging in threats and blackmail as a negotiating tactic, and that pushing back may be required so as not to encourage more of it.

Even more importantly, the assessment that hitting back is necessary indicates these longstanding U.S. trade partners and allies have decided that Trump is “playing” domestic politics without any regard for the international political and economic consequences. And the only way to stop it is to hit back where it hurts — in domestic politics.

The president has asserted that reducing U.S. dependence on foreign steel and aluminum is necessary for national security. He had to make such a claim to be able to bypass Congress in imposing these tariffs.

The economic rationale is similarly specious: Tariffs on aluminum and steel make those metals more expensive in the United States, and imported aluminum and steel are important inputs for many products that U.S. companies make and export. So the tariffs will actually hurt U.S. exports, which matter in highly competitive industries. Economic analyses therefore suggest that many more U.S. jobs will be lost or downgraded than gained. Even without any retaliation, Trump’s tariffs are economically self-defeating.

There is a growing sense among U.S. allies — after the U.S. withdrawal from the Paris climate accord and from the Iran nuclear deal — that reasoning about cost and benefits is largely pointless.

To put a stop to it, Canada, the EU and Mexico appear to be willing now to adopt carefully politically targeted counter-measures, even if it risks a full-blown trade war. Congressional Republicans would do well to drive home to President Trump the dangers of relentlessly conducting domestic politics through foreign policy.

Tim Büthe is an associate research professor of political science and public policy at Duke University.