Daniel McDowell on Trump’s Proposed Tariff Changes
Daniel McDowell, assistant professor of political science in the Maxwell School, offers insight on the political and economic repercussions of President Donald Trump’s proposed 25 percent tariff on steel imports and 10 percent tariff on aluminum imports.
01What will be the domestic impact of these tariffs?
I haven’t heard much on the domestic politics of these tariffs in the U.S. The tariffs have received widespread condemnation from Republican lawmakers (as well as some Democrats) and have been roundly criticized in the financial press. However, I think these measures—even those against U.S. allies—will be well received among the president’s base. Trump’s message that the U.S. has been treated unfairly by the rest of the world on trade has resonated with a lot of Americans, many of whom are unlikely to be persuaded otherwise by good arguments that these tariffs are likely to be counterproductive and may hurt the U.S. more than foreign countries.
Public opinion—especially among Trump’s base—matters, since this will influence the extent to which the president follows through on his statements. If support for broad tariffs as described is relatively high, then persuading him to back down or provide ‘carve-outs’ for allies is less likely.
02How will this affect China, who was routinely criticized by Trump during the 2016 election for its cheap steel?
Marginally. Only about 3 percent of steel imports in the U.S. come from China. It is a bit higher for aluminum, but still, China is ranked as the No. 4 exporter to the U.S.,” says McDowell. “So, these tariffs won’t actually do much to hurt Chinese steel and aluminum industries. On the other hand, the tariffs drive a wedge between the U.S. and its closest allies, which indirectly benefits China.
If the U.S. is fighting with Canada and the European Union, its attention is diverted away from China and its increasingly protectionist policies. It also is yet another anecdote that China can use to say, ‘See, the U.S. is turning its back on world trade. We’re now leading the globalization charge.’ Even though such claims aren’t entirely accurate, the public image of the U.S. as a defender of open economic policies is sullied a bit by these proposed measures.
03How will this plan impact U.S. companies?
It will probably help steel and aluminum companies a bit. But I don’t see this doing anything to help firms outside of the protected industries, and, of course, when there is retaliation, other sectors will suffer additional costs.
04Do you think this proposal is actually being used as leverage for renegotiating trade deals such as NAFTA?
That’s the latest suggestion in the media. That does seem in line with some of Trump’s past approaches to politics. He tries to find leverage wherever he can in negotiations. Look at DACA. By removing DACA protection, he created an emergency deadline by which legislation had to be introduced to protect Dreamers. He then used the threat of that deadline to try to push Democrats to accept his preferred immigration policies (the wall, reduced legal immigration).
So far, that strategy hasn’t worked, but the similarities are there. Now, Trump has proposed these tariffs and may be using it like the DACA deadline, suggesting to Canada and Mexico: If you don’t give me what I want, these tariffs aren’t going anywhere. But, if you play ball, then I’ll remove the tariffs.