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Catherine Rampell: Trump is waging a trade war in the dumbest way possible

In a trade war, every side loses, experiencing lost jobs, crippled businesses and higher prices for consumers.

(AP Photo/Evan Vucci, File) In this Oct. 11, 2017, file photo, President Donald Trump shakes hands with Canadian Prime Minister Justin Trudeau in the Oval Office of the White House. When Trump visits Canada this week there's speculation he could walk out of meetings with allies furious over his belligerent trade policies. Trudeau has said he finds it "insulting" that Trump considers Canadian imports a threat, saying that is not how allies who fought side-by-side in World War II, Korea and Afghanistan should treat one another.


Video: Trump says he didn’t start a trade war with China. But Post opinion writers say there will still be American casualties. (The Washington Post)


President Trump says we need to be “smarter” in how we deal with other countries. And yet his approach to extracting concessions from our trading partners has proved very, very dumb.

Notwithstanding Trump’s Twitter declarations, trade wars are neither good nor easy to win. In a trade war, every side loses, experiencing lost jobs, crippled businesses and higher prices for consumers. We learned that the last time we had a full-blown global trade war — in the 1930s after Congress passed sweeping tariffs that exacerbated the Great Depression.

Even so, it’s possible for some countries in a trade war to lose more than others. And that’s the position Trump is leaving the United States in, by taking perhaps the worst possible approach to economically bullying other countries.

Most of the time when a U.S. president takes an aggressive new trade action, it’s a tariff that targets a specific country or narrow set of countries. There’s good reason for this: Again, most of the time, these actions are in response to an act of alleged foul play.

Yet another reason to slap tariffs only on imports from selected countries is to limit the pain to U.S. businesses and consumers that purchase those products. We want to make sure we have alternative suppliers available when the imports from one misbehaving country suddenly get pricier.

Again, that’s how we usually think about trade measures. It’s not what happened this time around with steel and aluminum tariffs, however.

Using a rarely invoked authority designed to protect “national security,” Trump has imposed a global tariff on steel and aluminum.

Because it’s a global tariff on a commodity supplied by dozens of countries, each of those other countries is taking a hit. But the hit is relatively small compared with the one we’re experiencing — the one we’ve inflicted on ourselves.

After all, we can’t easily shift supply around to limit U.S. business and consumer pain if we’re slapping tariffs on steel and aluminum produced by almost everyone. And while we do produce these metals here, the exact mix of products that, say, U.S. steel mills make is not identical to the mix of steel products we import. Which means factories here can’t easily convert and scale up their production to meet market demand even if they do have idle capacity.

Unsurprisingly, this has major consequences for the many American firms that purchase steel and aluminum, and that are now less competitive because their costs have skyrocketed.

U.S. steel prices have risen nearly 40 percent since the start of the year, and are now more than 50 percent higher than in both Europe and China, according to the S&P Global Platts benchmark price assessment for hot-rolled coil, the bellwether product.

But that’s not the only reason these tariffs are going to hurt us a lot more than they hurt everyone else. The bigger problem is how other countries, including our friends and military allies, are responding to our protectionist measures.

Collectively Canada, the European Union, Mexico, Russia, India, Japan and Turkey have already announced $40 billion worth of retaliatory tariffs on U.S.-made products. The scale of these retaliatory tariffs isn’t what’s most concerning; it’s the composition. These other countries have been far more strategic about which U.S. products they choose to target than we apparently were in launching this trade war.

That is, their counterpunches are likely to draw more blood than our sloppy opening gambit.

Why? First, these other countries have tried to pick and choose products that their businesses and consumers can easily obtain elsewhere. In fact, when the E.U. recently revised its list of U.S. products subject to retaliation, it decided to remove some items for which non-American close substitutes apparently weren’t available, as The Economist’s Soumaya Keynes pointed out.

Even worse for Trump, these angry countries are choosing products with political sensitivities in mind. Hence the appearance of Kentucky-made bourbon, Iowa-farmed pork, Wisconsin-manufactured motorcycles and Ohio-made washing machines on these lists.

In short: Our trading partners have fine-tuned the art of minimizing their own pain — and maximizing ours.

Trump clearly believes he’s being “tough” with these other countries, and protecting American jobs, with his ineptly designed tariffs. In fact, he’s putting many more jobs in other industries at risk. A report released this week by the Trade Partnership, a consulting and research firm, estimated that the ratio of jobs lost to jobs gained from Trump’s trade actions will be about 16 to 1: 26,280 steel and aluminum jobs gained, compared with 432,747 jobs eliminated throughout the rest of the economy.

And that’s presumably not even counting any of the hundreds of jobs now held by Trump’s fellow Republicans on Capitol Hill.


Catherine Rampell is an opinion columnist at The Washington Post. She frequently covers economics, public policy, politics and culture, with a special emphasis on data-driven journalism. Before joining The Post, she wrote about economics and theater for the New York Times.