This week, President Donald Trump announced the imposition of new tariffs on steel and aluminum imports. In the 15 days before they are set to take effect, Washington will be in a furor as members of Congress, American security allies, trading partners and industry groups from the Wheat Growers to the Chemistry Council try to change his mind. They will have the facts on their side.
The President’s actions follow on two reports by the US Department of Commerce that the “quantities and circumstances of steel and aluminum imports threaten to impair the national security of the United States.” Sounds ominous.
The case they make, however, is extremely suspect.
In both reports, in fact, Commerce makes clear that there is far more than sufficient domestic production to meet America’s defense needs. In the case of steel, the Department of Defense (DoD) requires only about three percent of US steel production. The precise “small percentage” of domestic aluminum needed is redacted in its report, but a recent DoD memo opposing a broad swipe at imports estimates that also at three percent.
This is not the only problem with the case for tariffs. Even if one were to set aside the matter of already sufficient capacity, roughly half of what America does import comes from its security treaty allies. These are countries that the United States is sworn to defend in the event of war. Trump has decided, for now, to exempt Canada from the tariffs, but it is no less difficult to imagine what could motivate other allies, like Japan and South Korea, to hobble the US military.
Similar logic applies to Taiwan. It also provides the US market with steel.
The closest thing to an adversary among the top ten sources of America’s imported steel is Russia, which constitutes six percent. China, which the Trump administration has rightly prioritized as a strategic challenge, sends the US much less than that. Even in the case of aluminum, Canada alone ships more than twice as much to the US as Russia and China combined.
The security crisis projected by the Commerce Department would have to assume a catastrophic drop in America’s domestic production and key allies and partners (like Taiwan) abandoning interest in their own national security.
To say that this scenario is implausible is an understatement.
So if security concerns are not actually driving the Commerce Department’s recommendations, what is? The answer represents a potential sea change in American trade policy, a new approach that — if fully carried out — will profoundly affect America’s influence in Asia.
Over the last year, the Trump Administration has been laying the groundwork for a policy of tightening international access to the American market to the benefit of selected, well-connected businesses. It has imposed “safeguards” against imports of washing machines and solar panels. It prides itself on the massive increase in anti-dumping and countervailing duties (AD/CVD) cases brought against foreign suppliers in the administration’s first year. And many are predicting steep tariffs in retaliation for very real Chinese violation of intellectual property rights. In the meantime, USTR is in the midst of contentious efforts to renegotiate — and perhaps withdraw from — America’s two largest trade agreements, NAFTA and the US-Korea Free Trade Agreement.
Now, it must be said that the Trump administration has often expressed interest in negotiating bi-lateral free trade agreements, and Trump himself has even opened the door to rejoining the TPP — now called the Comprehensive and Progressive Agreement for Transpacific Partnership, or CPTPP. It is also possible that it, in the end, it will act on the steel, aluminum and intellectual property cases in ways that limit damage to critical relationships. And with regard to AD/CVD, every American President boasts about the number of cases it brings; Trump has just doubled down.
Perhaps the administration’s forays into protectionism will prove to be aberrations. Or maybe the administration acts in some of these areas, but not in others. It is not necessarily a binary choice.
On the other hand, if the United States goes all in on an effort to protect industry against competition, it will do serious damage to America’s strategic profile in the Indo-Pacific. To be sustainable, American influence in the region must be full range. It needs to be ready and present on the military side. President Trump offers great hope in that regard. Diplomatically, it must engage energetically, especially with allies, but also multilaterally. This is going much better than expected.
It must also demonstrate, however, an active interest in the economic life of the region. This is done by facilitating market access and building mutually beneficial economic linkages, not restricting them. Even if the US does all the necessary on the diplomatic and military side, failure to be there on the economic side will result in its gradual marginalization. In time, this will weaken the other elements of American influence. And this, needless to say, matters immensely to Taiwan.
The trade action now pending on steel and aluminum is just one element of America’s trade policy — and actually, not the biggest one. How the President follows through on them, though, will go a long way to signaling the region the role it plans to carve out for itself there.
Walter Lohman is director of the Heritage Foundation’s Asian Studies Center.
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