On Friday morning, President Trump expressed his support for trade wars, even though his unexpected announcement of imposing tariffs on foreign steel on Thursday rattled the markets.
“[…] trade wars are good, and easy to win,” Trump tweeted.
When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win. Example, when we are down $100 billion with a certain country and they get cute, don’t trade anymore-we win big. It’s easy!
— Donald J. Trump (@realDonaldTrump) March 2, 2018
A few hours later, Trump added that the United States steel industry is in danger, and without steel, there is no country.
We must protect our country and our workers. Our steel industry is in bad shape. IF YOU DON’T HAVE STEEL, YOU DON’T HAVE A COUNTRY!
— Donald J. Trump (@realDonaldTrump) March 2, 2018
Trump’s plan would impose a tariff of 25 percent on steel imports and 10 percent on aluminum, but he did not specify whether certain countries would be exempt from the tariffs. This approach towards penalizing foreign steel is an attempt by Trump to make good on a campaign promise of protecting the American steel industry, but could have, what House Speaker Paul Ryan called, “unintended consequences.”
Unfortunately for Trump, tariffs are taxes and aren’t necessarily paid by countries like China, but more so by American consumers of Chinese goods. These tariffs will also likely have the adverse affect of rising the prices of American goods that rely on steel.
As The New York Times put it:
The most immediate losers are the industries that rely on steel and aluminum as an input and will face higher prices. That includes some of the nation’s biggest industries: the automobile sector; aerospace; heavy equipment; and construction. In short, the chassis of a Ford, the body of a Caterpillar bulldozer, the wings of a Boeing aircraft, and the steel girders inside a New York skyscraper are all about to get more expensive.
Following the tariff announcement on Thursday, some American breweries voiced their concerns that an aluminum tariff would raise the costs of their products.
“Anything that raises our raw material costs will affect the bottom line,” Henry Schwartz, founder and CEO of Milwaukee brewery MobCraft Beer told the Milwaukee Journal Sentinel.
According to the beer industry experts, for every dollar worth of beer produced in the U.S., brewers spend about a dime for cans and roughly five cents for aluminum. This small amount will quickly add up, considering brewers produce more than $55 billion worth of beer annually.
The 10 percent tariff on aluminum would cost beer and beverage producers $256.3 million, according to the Beer Institute, based in Washington, D.C.
Members of the president’s own party cautioned that Trump may not actually be aware of what he is doing.
“I am highly concerned about the negative aspects. I completely want fair and reciprocal trade and there’s no doubt about it America’s has been magnanimous in its trade laws,” Sen. Ron Johnson (R-WI) told reporters Thursday. “There have been abuses building up over the years. We should target those abuses. I’m just not sure this is the way to do it overall with the steel and aluminum. It really will have negative and unintended consequences.”
Sen. Ben Sasse (R-NE) called Trump’s Friday morning tweet “kooky 18th century protectionism.”
“Trade wars are never won. Trade wars are lost by both sides. Kooky 18th century protectionism will jack up prices on American families — and will prompt retaliation from other countries,” Sasse said in a statement. “Make no mistake: If the President goes through with this, it will kill American jobs — that’s what every trade war ultimately does. So much losing.”
Both the tariff announcement and Trump’s Friday morning tweets surprised even the highest members of his cabinet. Gary Cohn, the president’s chief economic adviser, was reportedly considering leaving the White House but stayed behind to stop the president from imposing tariffs. Now that Cohn has seemingly lost the battle, his future in the White House is unclear.
White House Press Secretary Sarah Huckabee Sanders appeared on Fox & Friends on Friday morning and told viewers that nothing is set in stone and the details on who will be exempt from tariffs, if anyone, have yet to be finalized.
“The president expects to make those announcements next week and those details are being finalized,” Sanders said. “In terms of what that will look like, I can’t get ahead of the president’s announcement.”
Not exempting Canada and Europe from tariffs would have huge trade implications, as both nations sell a lot of steel to the United States.