President Trump is making a mistake with his plan to introduce 25 percent tariffs on steel imports and 10 percent tariffs on aluminum imports.
Doing so risks an economically damaging trade war with close allies like Canada, the European Union, and Japan. Moreover, if the president is serious about maintaining his tariffs for “a long time,” he’ll drive up the cost of car purchases and building projects. He’ll also reduce efficiency in high-end economic sectors where the U.S. enjoys a comparative advantage, such as airplane construction.
In addition, this choice risks undercutting U.S. alliances the world over. This is especially true in the Indo-Pacific region, where U.S. commitment to free trade sets us apart from China and offers the U.S. growing access to lucrative export markets.
In essence, Trump is rewarding hundreds of thousands of workers in the steel and aluminum industries and punishing hundreds of millions of Americans. The policy is both morally and economically illiterate.
Yet there is one little saving grace here: This will upset China.
While China’s aluminum and steel export share in the U.S. market is limited, it is a factor in Beijing’s consideration. In that sense, if Trump is willing to thread these tariffs into his North Korea strategy, he might be able to get Beijing to cut off its export and financial capital flows to North Korea. As we’ve explained, the only way to pressure Pyongyang is for Trump to pressure its key benefactor, China, far more substantially.
Why would increased Chinese pressure on Kim Jong Un’s regime be so valuable?
Because if China cuts off its lifelines to Kim, Kim will have no choice but to come crawling to the negotiating table.
Even amidst the broader errors of this policy, the Trump administration has an opportunity here. After all, earlier this week, the Commerce Department announced tariffs on Chinese aluminum producers which it found to have engaged in unfair trading practices. That makes Thursday’s actions just the latest in a trend towards decisive action.
China will fear more is to come.
Playing off these fears, Trump should now pick up the phone to his Chinese counterpart, Xi Jinping, and warn that the only way new tariffs won’t follow is if China starts enforcing U.N. sanctions on North Korea.
