Trump’s Recent Trade Decisions Could Spell Doom for the Economy
With President Trump’s announcement on steel and aluminum tariffs and his continued wrong-headed approach to trade policy, there are reasons to be concerned that a shift from free-market policies to more protectionist policies will erase any and all gains this administration has made on the economic front.
The Trump administration likes to use the term “security” when describing the motivation behind its policy decisions. There’s no doubt the term polls well, especially with Trump’s base, but it’s important for the administration and the rest of the country to understand that there is a big difference between “economic security” and “national security.” And, when it comes to President Trump’s position on trade and tariffs, these policies that he claims are good for national security, could potentially tank our nation’s economy.
Here are three takes from CEI experts on the economic news coming out of the White House this week:
CEI President Kent Lassman:
“The administration’s ability to pursue domestic policy initiatives is dependent on economic growth, and unless the president course corrects on his trade policy, the path ahead will be challenging. It’s not clear whether Gary Cohn’s departure will hinder the development of an economic vision with few trade or regulatory barriers, but it’s certainly concerning. Unless that pro-growth voice is replaced, President Trump and his supporters can bid farewell to his goals for boosting the economy in exchange for a job-killing trade war.”
CEI Vice President for Strategy Iain Murray:
“This White House is supposed to understand business, but if you get rid of everyone who has a good understanding of free market economics, businesses and jobs will suffer. And, the next administration could be even worse, so we’re looking at a potential long-term impact that could sacrifice all the economic gains the administration has made thus far.
“Trump’s tariffs announcement shows that no one understands economics 101, specifically how concentrated benefits and dispersed costs work. Let’s say you gain a concentrated benefit of 500 new steel jobs in Ohio, but you lose a small number of jobs in various places across the country because of the marginal costs of these tariffs. Alone, these marginal costs are small, but when you add them altogether, they can easily outweigh the benefits.”
CEI Senior Fellow Marc Scribner:
“President Trump’s tariffs on imported steel and aluminum, cloaked in the garb of national security, are a harmful tax on American businesses and consumers. Recent analysis suggests the president’s plan will destroy five American jobs in downstream industries for every job created in American steel and aluminum production. That dismal figure fails to account for future retaliation from major trading partners, such as the European Union, from where most economic damage will come. If trading partners retaliate against U.S. exports as expected, the fallout from the president’s preemptive trade war could ultimately create a global economic recession and, ironically given the supposed basis for the president’s decision, present new security risks around the world.”
For more about CEI’s position on trade policy see: