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Has Trump Evolved on Trade?

February 12, 2018 in Economics

By Daniel J. Ikenson

Daniel J. Ikenson

On the campaign trail and into the first year of his presidency,
Donald Trump has been a walking, talking billboard for
protectionist nationalism. He promised 45 percent tariffs on
imports from China, 35 percent levies on imports from Mexico, a
requirement that U.S. oil and gas pipelines use only American
steel, and the closure of “loopholes” in our Buy
American laws to ensure that only U.S. goods and American workers
are eligible for federal procurement projects.

Trump withdrew the United States from the Trans-Pacific
Partnership, forced renegotiations of the North American Free Trade
Agreement and our trade deal with South Korea under threats of
withdrawal, launched investigations under a provocative and rarely
used statute to determine whether U.S. dependence on foreign
sources of aluminum and steel represent national security threats,
and initiated another investigation under an even more provocative
statute to determine whether China is engaging in unfair technology
transfer and intellectual property practices.

A year and change into his presidency, however, Trump’s
making noises about rejoining the TPP, the odds are looking better
for NAFTA renegotiation over withdrawal, and the president’s
only overtly protectionist actions have been to impose safeguard
tariffs on solar cells and tariff rate quotas on washing machines.
Of course, imposing tariffs is as aggressive as it is
self-destructive, so use of the word “only” is not to
excuse the actions, but to suggest that the administration has
exercised relative restraint. There is near consensus that the bark
has been worse than the bite.

Have Trump’s views changed? Is he beginning to recognize
that his protectionist impulses are economically and politically
constrained? Are we merely in the eye of the hurricane? What to
make of the state of U.S. trade policy?

Is he beginning to
recognize that his protectionist impulses are economically and
politically constrained?

First, we are by no means in the clear with respect to avoiding
a deluge of protectionism. Still pending are three potentially
explosive cases (and more contentious issues could soon emerge).
The two investigations into the national security implications of
U.S. imports of steel and aluminum, conducted under Section 232(b)
of the Trade Expansion Act of 1962, reportedly have been completed.
Whether those findings reveal national security concerns and, if
so, whether the president is going to respond with trade barriers
remains to be seen.

The president has broad discretion to impose high tariffs under
this statute and—as is the case generally on matters of
national security—the U.S. courts show great deference to the
executive. Should Trump announce tariffs, the United States might
find itself defending that decision at the World Trade Organization
by invoking GATT Article XXI (the Security Exception), which allows
members …read more

Source: OP-EDS

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