The thrust of US President Trump harms the world with his punitive tariffs
In the end, Donald Trump actually did have a hand in the amount of duty: Steel deliveries from abroad are soon to receive an import tax of 25 percent in the US – 25 percent mind you, not 24, as advised by consultants, because 25 is simply the “rounder number”. This is what Trump said in casual conversation with Unterlingen several times. Cynically, one can hardly begin a global trade war and refute his own argument that the introduction of customs serves the protection of national security. No one believes that, not even the president himself.
For Trump, politics is essentially about showing power and showmanship. It’s not about what’s decided, it’s just about being decided. The long-term consequences of his erratic ad hoc decisions take little care of him, as the pumped tax reform has already shown. With the introduction of the steel tariff, he is pushing this short-term thinking to the extreme.
Trump has won the 2016 election by pledging to focus his policy on national interest alone. “America first” is the slogan, to which many of today nod, who consider the liberal zeitgeist more of a nuisance. This clientele wants to serve Trump, saying that tariffs would revitalize the domestic steel industry. But soon he will notice that the steel companies in the country employ 140,000 people, but the steel processing companies employ 6.5 million. These costs are higher – not to mention the US consumers, who will soon have to pay more for cars, house building and canned beer.
Worse, the damage Trump’s decision could do globally. For the first time in decades, the world’s major economies are experiencing an economic upturn at the same time, so rarely has the opportunity been so favorable to creating prosperity for all. Trade and the global division of labor make an important contribution to this – with all problems. But this will turn into its opposite, should now a spiral of sanctions and counter-sanctions get going. For example, the EU already has a list of US products that it could impose duties on. These include whiskey and motorcycles, potatoes and tomatoes. The main victims would be, by no means random, states with many Trump supporters – and that in the year of the congressional election.
There are two mistakes in Trump’s statements
However, with his customs decision, the president is targeting China in particular, a country that ruthlessly exploits the gaps in global trade rules in order to assert its own interests: by foreclosure, ideas and dumping prices for steel. The anger over it is shared by the Europeans and would have given them the opportunity to forge a strong multilateral alliance that will massively increase the pressure on Beijing. Instead, Trump now drives the Europeans into the arms of the Chinese.
The number of people in the White House who understand such relationships has fallen to a minimum following the departure of the controversial but globalization-friendly leaders Rob Porter and Hope Hicks and the demotion of Trump’s son-in-law Jared Kushner. “Because Rob Porter beat his women, Hope Hicks finally told the truth, and Jared Kushner lost his security clearance, we are now facing a trade war,” economist Paul Krugman has written. Krugman does not always hit the bull’s eye in political issues. This time, however, his statement is as true as sarcastic.
Trump himself says that if a country always trades deficits in trade with others, “a trade war is good and easy to win”. Behind it are two fundamental errors: that trade is a zero-sum game in which one person enriches himself at the expense of the other – and that always the stronger one prevails. In the case of trade, ideally both win. But that’s a category that Trump will probably never understand.