Day 407: Trump Demands Trade War → Markets Plummet
He also added steel to a list that includes borders and cops, saying without it, there’s no U.S.
Donald Trump is intent on starting a trade war. Thursday morning, he announced his intent to impose tariffs of 25 percent on imported steel and 10 percent on imported aluminum.
Even Republicans immediately pushed back on the decision.
“New, huge tariffs on all kinds of imported steel is a big mistake that will increase costs on American consumers, cost our country jobs, and invite retaliation from other countries,” said Sen. Pat Toomey of Pennsylvania.
Republicans in Congress broke ranks with the president in an unprecedented way, with one after another coming forward during the day to caution about the dangers of tariffs and plead with Trump to hold off on any action.
Sen. Mike Lee of Utah said Trump’s tariffs would be a “huge job-killing tax hike” on consumers.
“While I am sympathetic to the issues facing domestic steel manufacturers, there must be a better way to address the steel industries concerns, and I hope Congress and the executive branch can identify an alternative solution before these tariffs are finalized next week,” Lee said in a statement.
“My advice was … that you’ve gotta be careful here, you get into a tariff war,” Sen. Roy Blunt, R-Mo., told reporters. “So I would prefer that this was not where we were.”
Senator Ben Sasses (R-NE) added:
“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. “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.”
Canada, a large exporter of steel and aluminum, called such tariffs “absolutely unacceptable.” Speaking for European Union nations, European Commission president Jean-Claude Juncker announced that the EU would respond in kind, by quickly developing a plan to retaliate against U.S. tariffs “firmly and commensurately.”
The markets pushed back too, as the Dow fell more than 400 point after Trump’s Thursday announcement and was quickly down another 300 points in the opening minutes Friday.
Trump doubled down on his rhetoric, calling a trade wars “good, and easy to win.”
After tweeting negatively about Alec Baldwin’s Saturday Night Live impersonation of him, Trump got back to steel.
The “don’t have a country” trope is one that Trump has used in the past, and his definition of what defines a country is all over the place.
Overall, Trump’s trade war could have a number of problematic effects for Americans. For instance, if countries decide that U.S. tariffs make exporting to the States no longer worth it, they will export supplies elsewhere. This will curb demand for U.S. exports to those same places and drive prices down abroad as the market becomes more saturated, ultimately hurting U.S. companies who rely on exportation.
In the U.S., assuming steady demand, a reduction in imported goods will causes prices to rise for American consumers. Meanwhile, the goods that are imported and taxed at higher rates will have those costs largely passed on to the end-buyer. These are basic, bedrock macroeconomic principles that Trump thinks are easy to defeat on a worldwide scale.
Trump’s political allies have spoken, U.S. trade partners have spoken, markets have spoken, economic principles have spoken.
No one agrees with Trump.
407 days in, 1055 to go
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