No matter how you feel about the tariffs on steel and aluminum imports that the president imposed this week, the way the decision was made and announced has to be concerning to everyone. I wrote about that at New York.
Taking the kind of action the president took this week in imposing tariffs on steel and aluminum imports is a perilous endeavor for multiple reasons. It may impose more economic damage on Americans than it prevents. It arguably violates world trading rules. It invites retaliation. It can be very destabilizing for markets and investors.
And if you happen to be a Republican president, imposing tariffs can upset much of your party’s free-market opinion leaders, business constituencies, and campaign donors.
While Trump’s action should not have surprised anyone who listened to him rant and rave on the campaign trail about Uncle Sucker getting kicked around by trading partners, it’s still unsettling how he made it. As Eric Levitz noted, it seems to have been an “impulsive action” that was made at a time when the elaborate advisory mechanisms set up to guide him on international economic issues were in chaos.
The more we learn about it, the picture gets even worse.
It’s important to understand that under the process laid out under the Trade Expansion Act of 1962, the domestic legal authority for these new tariffs, Trump had until April 11 to act on the Commerce Department’s recommendations on steel imports, and until April 19 to act on aluminum. He jumped the gun in a big way, trashing the usual procedures for explaining the action to the public, other countries, and various economic players. Why was that? According to NBC News, Trump was freaked out over other, entirely unrelated problems, and basically launched a trade war to make himself feel better. Seriously.
“On Wednesday evening, the president became “unglued,” in the words of one official familiar with the president’s state of mind.
“A trifecta of events had set him off in a way that two officials said they had not seen before: Hope Hicks’ testimony to lawmakers investigating Russia’s interference in the 2016 election, conduct by his embattled attorney general and the treatment of his son-in-law by his chief of staff.
“Trump, the two officials said, was angry and gunning for a fight, and he chose a trade war, spurred on by Commerce Secretary Wilbur Ross and Peter Navarro, the White House director for trade.”
This culminated in a seat-of-the-pants decision announced at a White House meeting that was advertised as a discussion:
“The Thursday morning meeting did not originally appear on the president’s public schedule. Shortly after it began, reporters were told that Ross had convened a ‘listening’ session at the White House with 15 executives from the steel and aluminum industry.
“Then, an hour later, in an another unexpected move, reporters were invited to the Cabinet room. Without warning, Trump announced on the spot that he was imposing new strict tariffs on imports.
“By Thursday afternoon, the U.S. stock market had fallen and Trump, surrounded by his senior advisers in the Oval Office, was said to be furious.”
And that’s the constant in this whole situation: The president is furious, and someone has to pay.