Finance

Trump is considering a move that would be his biggest step yet toward a trade war

President Donald Trump
Alex Wong/Getty Images

  • President Donald Trump is reportedly pushing for a 25% tariff on all steel imports, the harshest of three possible actions from Department of Commerce recommendations.
  • Some in the White House are attempting to get the president to go for a more targeted, less harsh action on steel.
  • Such a broad tariff would likely spark retaliatory action from other countries and could be the opening salvo of a trade war.

President Donald Trump is reportedly considering a move that could push the US into a trade war as the administration enters a critical stretch for trade policy.

According to multiple reports, Trump is pushing for a sweeping tariff — a tax on imports — on steel. He is also considering a series of other protectionist trade measures that could prompt retaliatory measures from other countries.

As part of a review into the national security ramifications of import of steel and aluminum imports, the Department of Commerce sent Trump three recommendations about possible actions designed to cut the amount of incoming metals.

A report from Bloomberg on Friday said Trump favors the harshest of these recommendations for steel — a 24% tariff on all imports regardless of country. In a follow-up report on Sunday, Axios’ Jonathan Swan said that Trump wants to go even further — actually favoring a 25% tariff because it is a more round number and “sounds better.”

Trump’s said during a White House meeting with a bipartisan group of senators on February 13 that the administration could slap “substantial tariffs” on imports.

Regardless of the exact number, any major tariff on steel imports will likely lead to blowback from other countries.

The European Union, a major exporter of steel to the US, is already looking into retaliatory options, including tariffs on US agricultural goods. China, for its part, is reportedly researching possible action on US soybean imports.

Additionally, Trump is considering several measures directed at China that could impose new trade restrictions — including possible action on intellectual property theft.

Economists have long been worried about the potential for more protectionist trade policies under Trump, which they worry could prompt retaliatory action. In the worst case scenario, many economists argue, an ongoing trade war could push the US into recession.

Given the potential for economic downsides to such a trade fight, many members of the White House are reportedly trying to convince Trump take less harsh action than a broad tariff on steel. Gary Cohn, Defense Secretary James Mattis, and National Security Adviser H.R. McMaster have all urged Trump to go with a targeted approach to avoid angering allies, according to Bloomberg.

The possibility of new tariffs and trade measures has worried international partners. In an interview with German news organization DPA, Roberto Azevêdo, the director-general of the World Trade Organization, warned that a trade war could “come up at any time, and in ways that we don’t expect.”

The WTO chief also said that the Trump administration’s protectionist views on trade are unlikely to reverse anytime soon.

“I don’t see at this point a conversation that will lead us to believe that a solution is in the making,” Azevêdo said.

The Trump administration is nearing critical junctures on trade. In the short-term, senior Chinese economic adviser Liu He, who is close to Chinese president Xi Jinping, is expected to meet with senior administration officials to discuss trade disputes.

In the longer-term, the president must make a decision on the steel and aluminum imports by April 11 and 19, respectively. Also, negotiations over the North American Free Trade Agreement remain ongoing.

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