By Salvatore Babones
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When U.S. president Donald Trump announced sweeping new tariffs of 25 percent on imported steel and 10 percent on aluminum Thursday, the world’s commentariat broke out in a frenzy of condemnation. Trump was accused of playing politics in a way that could “destabilize the global economy.” It was said that Trump’s actions could “bring global trade growth to a halt” (notwithstanding the fact that levels of global trade have already been declining since 2011). His critics screamed “trade war.” Canadian and European leaders immediately threatened retaliation. China didn’t, but American China experts predicted that Beijing soon would.
It is likely that few, if any, of these experts have read the two detailed Commerce Department reports that prompted the tariff decision, or the Defense Department memo endorsing their findings. The goal of the tariffs proposed by Commerce and endorsed by the president isn’t to punish Chinese dumping or put an end to free trade. It’s to ensure that the United States retains any domestic steel and aluminum production at all. Like President Barack Obama’s controversial auto industry bailout in 2009, these tariffs are about keeping an industry for the future, not about making it profitable today.
If China has merely expressed concern over Trump’s plans, it’s because China is not really the target of the planned tariffs. China’s massive state-owned steel and aluminum firms may ultimately lie behind the world’s glutted markets, but Chinese products account for only a fraction of U.S. imports (2.2 percent for steel and 10.6 percent for aluminum). The real problem is that other countries—including allies like Canada and the European Union—have responded to years of Chinese dumping by subsidizing their own industries and imposing broad tariffs on Chinese steel. American antidumping measures have traditionally been more narrowly focused. In a sense, Trump is only catching up with what the rest of the world is doing already.