In the context of the tariffs on steel and aluminum that the Trump administration announced in the past weeks, a lot has happened. Exemptions were given to Canada and Mexico, the former which is the top importer of steel to the United States. Gary Cohn, Trump’s top economic advisor and one of Wall Street’s favorite free trade advocates, resigned. Paul Ryan and the most ardent free trade advocates in both the corporate and political worlds freaked out at the new measures. Here are some of the main takeaways we have gathered from the slew of coverage and analysis that has come out since the tariffs were announced.
- Free traders freaked out and everyone found out. The free trade establishment hates tariffs and immediately set off the alarms that Trump would begin a trade war that would negatively affect the US economy. From New York Times opinion pieces to declarations by Paul Ryan, there was a significant effort to demonstrate that tariffs are an illogical tactic for achieving economic improvements. The tariffs are challenging the ideological advantage that free traders have maintained in the United States for so long and which was reaching its apex with the Trans-Pacific Partnership (TPP).
- But Wall Street knows Trump is a capitalist and they are protected. When Gary Cohn announced his resignation, the stock markets had a small dip reacting to the news and since then has jumped back to its regular patterns. However, Wall Street is not freaked about Trump at all. A Politico report by Ben White on why Wall Street is not worried about Trump detailed how after each major presidential scandal of this administration, Wall Street has had a small dip and then picked up quickly. The article reads:
“If there is a unified field theory for why Trump’s highly unusual presidency doesn’t ruffle Wall Street, it’s this: Beyond all the noise and bluster, he’s mostly a standard-issue Republican. At the agency level, his appointees have championed fewer regulations on every conceivable industry, rolling back or postponing one Barack Obama-era restriction after another. Trump also signed a bill slashing the corporate tax rate nearly in half, fattening corporate profits, and unleashing dividend payments and stock buybacks, all of which help drive share prices higher[…] The trade wars with Mexico and China have not materialized. At least so far, he has mostly tinkered with trade deals like NAFTA, and applied relatively small-time tariffs on things like solar panels and washing machines.”
- Economic nationalism leans into war-mongering. The steel and aluminum tariffs are not going to, on their own, inspire a trade war. Tariffs are common economic practice around the world which have been mobilized to protect certain industries that are important for the domestic economy. However, Trump’s economic nationalism always seeks to blame problems faced by people in the United States on people considered to be ‘outsiders’ to the ‘nation’. Domestically this refers to people of color and immigrants and internationally Mexico and China, amongst others, depending on the issue. The announcement of the tariffs on their own will not create a trade war, not to say that there will not be retaliation from other countries. Yet, Trump is appealing to a base which desires to see the unapologetic revival of American imperialism for which wars are ‘easy to win’, as Trump tweeted about trade wars. Since the tariffs were announced, Canada and Mexico were given exemptions and other countries were invited to negotiate terms on exceptions as well. There is an increasing discourse on war from the administration that, regardless of the veracity of the threat, is becoming a dangerous precedent of normalizing declarations of war.
- The tariffs are as political as they are economic. Steel and aluminum industries are based in strategic states both for the mid-term elections in November and for the presidential elections in 2020. Ohio and Pennsylvania, for example, are battleground states that voted for Trump in 2016 and will continue to be contested for future elections. Just this week, Democrat Connor Lamb beat the Trump-supporting Republican in a race for a seat in the House of Representatives in a district where Trump won by double digits. The Republican establishment cannot assume that Trump’s presidential victory will translate into support later this year or in 2020. Thus far, Trump’s policies has had no real influence upon these industries, so the tariffs themselves are a concrete policy that the administration is taking that is in the interests of people that work in the steel and aluminum industries. Both Democrats and Republicans in these states were strong supporters of the tariffs, both union members and industry leaders supported them as well. Likewise, left-leaning Democrats like Elizabeth Warren and Bernie Sanders have come out in their favor, while also including other critiques to Trump’s trade policy. The status quo around free trade’s opposition to tariffs is being questioned by people all throughout the political spectrum and gaining votes in key states will depend on candidates’ ability to engage issues of trade.
- Bottom-line: We must defeat corporate trade both in its free trade and economic nationalism models. Neither Trump Trade nor free trade like the TPP or the original NAFTA will solve the basic economic problems that affect working people and the environment. Workers’ jobs and well-being will not be resolved with mere tariffs, we need a living wage, we need healthcare for all, access to quality free education, we need to get rid of right-to-work legislation, we need a Labor Department which has the resources and political will to protect all workers, we need to get rid of corporate tax breaks and loops which further rampant inequality. We need public infrastructure and services that attend to the needs of everyone. We need a model of international trade that puts the conservation of the environment and reversing the trends of climate change before the interests of the oil industry. It is our job to continue to propose an alternative model, trade for people and planet.