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1 /1 2/2 017 T he p re sid ent e le ct’s p erilo us tr a de p olic y | T he E co nom is t h ttp ://w ww.e co nom is t.c o m /n ode/2 1713853/p rin t 1 /2 T ru m ponom ic s T he p re sid en te le ct’s p erilo u s t r a d e p olic y T ru m p m ay s im ply b e l o okin g f o r g o od h ea d li n es. I f h e i s a ft e r m ore , h e i s l i k ely t o s u ffe r a n e x p en siv e f a ilu re .
J a n 7 th 2 017 I T M UST s e em t o D on ald T ru m p t h at r e v ers in g g lo b ali s a tio n i s e a sy p ea sy . W it h a c o u ple o f w eek s s till t o g o b efo re h e i s e v en i n au gu ra te d , c o n tr it e f ir m s a re q u eu in g u p t o i n vest i n A m eric a . T his w eek F ord c a n ce lle d a $ 1.6 b illi o n n ew p la n t f o r s m all c a rs i n M ex ic o a n d p le d ged t o c re a te 7 0 0 n ew j o b s b u ild in g e le ctr ic a n d h yb rid c a rs a t F la t R ock i n M ic h ig an — while p ra is in g M r T ru m p f o r i m pro vin g t h e b u sin ess c li m ate i n A m eric a . O th er m an ufa ctu re rs , s u ch a s C arrie r, h ave c h an ged t h eir p la n s, t o o. A ll i t h as t a k en i s s o m e h ars h w ord s, t h e o d d t a x h an dou t a n d a f e w c a su al t h re a ts .
M r T ru m p h as c o n sis te n tly a rg u ed t h at g lo b ali s a tio n g iv es A m eric a a p oor d ea l. H e r e p orte d ly w an ts t o i m pose a t a rif f o f 5 % o r m ore o n a ll i m ports . T o h elp h im , h e h as a sse m ble d a d vis e rs w it h e x p erie n ce i n t h e s te el i n du str y , w hic h h as a r ic h h is to ry o f t r a d e b attle s. R ob ert L ig h th iz e r, h is p ro p ose d t r a d e n eg o tia to r, h as s p en t m uch o f h is c a re er a s a l a w yer p ro te ctin g A m eric a n s te elm ak ers f r o m f o re ig n c o m petit io n . W ilb u r R oss, w ou ld b e c o m merc e s e cre ta ry , b ou gh t l o ssm ak in g A m eric a n s te el m ills j u st b efo re G eo rg e W . B ush i n cre a se d t a rif fs o n i m porte d s te el. D an ie l D iM ic co , a n a d vis e r, u se d t o r u n 1 /1 2/2 017 T he p re sid ent e le ct’s p erilo us tr a de p olic y | T he E co nom is t h ttp ://w ww.e co nom is t.c o m /n ode/2 1713853/p rin t 2 /2 N uco r, A m eric a ’s b ig gest s te el f ir m . P ete r N ava rro , a n e co n om is t, a u th or o f b ooks s u ch a s “ D ea th b y C hin a” a n d n ow a n a d vis e r o n t r a d e, s e es t h e d ecli n e o f A m eric a ’s s te el i n du str y a s e m ble m atic o f h ow u n fa ir c o m petit io n f r o m C hin a h as h urt A m eric a .
B ut t h e s te el b u sin ess i s n ot a m od el f o r t r a d e p oli c y i n g en era l a n d c o m pan ie s a re c a p ab le o f b ein g t r ic k sy , t o o. M r T ru m p m ay s im ply b e l o okin g f o r g o od h ea d li n es, b u t i f h e w an ts m ore , h is p la n s t h re a te n t o b e a n e x p en siv e f a ilu re .
T he m ille r’s t a le O ne r e a so n i s t h at P au l R ya n , t h e S p ea k er o f t h e H ou se o f R ep re se n ta tiv es, s a id t h is w eek t h at C on gre ss w ou ld n ot b e r a is in g t a rif fs . E xecu tiv e o rd ers a re b ad p oli t ic s a n d c a n g et M r T ru m p o n ly s o f a r. A noth er i s t h at F ord ’s p la n s a re n ot a s s im ple a s t h ey l o ok. I t w ill s till b u ild i t s n ew s m all c a r i n M ex ic o — at a n e x is tin g p la n t ( s e e a rtic le ( h ttp :/ /w ww.e co n om is t.c o m /n ew s/ b u sin ess/ 2 17 13 8 99 i n ste a d it e m ph asis e d n ew in vestm en t a n djo b sm ic h ig an fo rd m oto rs c o u rts d on ald tr u m p) ) . B ut a b ove a ll, M r T ru m p g ra vely u n dere stim ate s t h e c o m ple x it y o f m essin g w it h t a rif fs .
T he m en o f s te el a re r ig h t t o c o m pla in a b ou t C hin a. I ts g o vern m en t h as i n deed s u bsid is e d i t s s te elm ak ers , l e a d in g t o a g lu t t h at w as d u m ped o n t h e w orld m ark et. S u cce ssiv e A m eric a n g o vern m en ts h ave p u t u p t a rif fs t o p ro te ct d om estic p ro d u ce rs ( in 2 0 16 t h e O bam a a d m in is tr a tio n p la ce d a t a rif f o f 5 2 2% o n c o ld r o lle d C hin ese s te el) , a s h as t h e E uro p ea n U nio n .
Y et t h is w ay o f t h in kin g f a ils t o d ea l w it h t h e q u estio n o f w heth er a n a m ple s u pply o f c h ea p s te el c o u rte sy o f a f o re ig n g o vern m en t i s r e a lly s o t e rrib le : i t b en efit s A m eric a n f ir m s t h at c o n su m e s te el— a n d t h ey e a rn b ig ger p ro fit s a n d e m plo y m ore p eo p le a s a r e su lt . M ore o ver, t r a d e i n m ost g o od s a n d s e rv ic e s i s n ot l i k e s te el. A m eric a ’s b ig gest i m port f r o m C hin a i s e le ctr ic a l m ach in ery . C hin a’s g o vern m en t d oes n ot s u bsid is e t h e o verp ro d u ctio n o f i P hon es w hic h a re t h en d u m ped o n t h e m ark et, c a u sin g i P hon em ak ers i n A m eric a t o b e l a id o ff. I n ste a d , a s m artp h on e m ig h t b e d esig n ed a n d e n gin eere d i n C ali f o rn ia a n d a sse m ble d i n C hin a, u sin g c o m pon en ts m ad e o r d esig n ed i n h alf a d oze n A sia n a n d E uro p ea n c o u n tr ie s, u sin g m eta ls f r o m A fr ic a . L ik ew is e , e v ery d olla r o f M ex ic a n e x p orts c o n ta in s a ro u n d 4 0 c e n ts o f A m eric a n o u tp u t e m bed ded w it h in i t . F or p ro d u ce rs o f s u ch g o od s, t a rif fs w ou ld b e a c o stly d is a ste r. A m eric a n s te elm ak ers m ig h t s e ek o u t g o vern m en t p ro te ctio n . A pple a n d i t s k in d w ill n ot.
T his a rtic le a p peare d i n t h e L ead ers s e ctio n o f t h e p rin t e d itio n u nder t h e h ead lin e “ M en o f s te el, h ouse s o f c ard s”