WSJ Editors: "This Is The Biggest Policy Blunder Of Trump's Presidency"

With Peter Navarro egging him on, and a handful of US steel and aluminum producer CEOs patting him on the back, President Trump's decision to impose tariffs has prompted worldwide outrage from the establishment as a sign of impending trade wars and the end of the world as we know it.

While many are purely political kneejerk reactions - just as anything Trump does is a negative (think "crumbs") to those on the 'other' side - The Editorial Board at  The Wall Street Journal,  believe that Donald Trump made the biggest policy blunder of his Presidency Thursday by announcing that next week he’ll impose tariffs of 25% on imported steel and 10% on aluminum.

This tax increase will punish American workers, invite retaliation that will harm U.S. exports, divide his political coalition at home, anger allies abroad, and undermine his tax and regulatory reforms.

The Dow Jones Industrial Average fell 1.7% on the news, as investors absorbed the self-inflicted folly.

Mr. Trump has spent a year trying to lift the economy from its Obama doldrums, with considerable success. Annual GDP growth has averaged 3% in the past nine months if you adjust for temporary factors, and on Tuesday the ISM manufacturing index for February came in at a gaudy 60.8. American factories are humming, and consumer and business confidence are soaring.

Apparently Mr. Trump can’t stand all this winning. His tariffs will benefit a handful of companies, at least for a while, but they will harm many more. “We have with us the biggest steel companies in the United States. They used to be a lot bigger, but they’re going to be a lot bigger again,” Mr. Trump declared in a meeting Thursday at the White House with steel and aluminum executives.

No, they won’t. The immediate impact will be to make the U.S. an island of high-priced steel and aluminum. The U.S. companies will raise their prices to nearly match the tariffs while snatching some market share. The additional profits will flow to executives in higher bonuses and shareholders, at least until the higher prices hurt their steel- and aluminum-using customers. Then U.S. steel and aluminum makers will be hurt as well.

Mr. Trump seems not to understand that steel-using industries in the U.S. employ some 6.5 million Americans, while steel makers employ about 140,000. Transportation industries, including aircraft and autos, account for about 40% of domestic steel consumption, followed by packaging with 20% and building construction with 15%. All will have to pay higher prices, making them less competitive globally and in the U.S.

Instead of importing steel to make goods in America, many companies will simply import the finished product made from cheaper steel or aluminum abroad. Mr. Trump fancies himself the savior of the U.S. auto industry, but he might note that Ford Motor shares fell 3% Thursday and GM’s fell 4%. U.S. Steel gained 5.8%. Mr. Trump has handed a giant gift to foreign car makers, which will now have a cost advantage over Detroit. How do you think that will play in Michigan in 2020?

The National Retail Federation called the tariffs a “tax on American families,” who will pay higher prices for canned goods and even beer in aluminum cans. Another name for this is the Trump voter tax.

The economic damage will quickly compound because other countries can and will retaliate against U.S. exports. Not steel, but against farm goods, Harley-Davidsonmotorcycles, Cummins engines, John Deere tractors, and much more.

Foreign countries are canny enough to know how to impose maximum political pain on Republican Senators and Congressmen in an election year by targeting exports from their states and districts. Has anyone at the White House political shop thought this through?

Then there’s the diplomatic damage, made worse by Mr. Trump’s use of Section 232 to claim a threat to national security. In the process Mr. Trump is declaring a unilateral exception to U.S. trade agreements that other countries won’t forget and will surely emulate.

The national security threat from foreign steel is preposterous because China supplies only 2.2% of U.S. imports and Russia 8.7%. But the tariffs will whack that menace to world peace known as Canada, which supplies 16%. South Korea, which Mr. Trump needs for his strategy against North Korea, supplies 10%, Brazil 13% and Mexico 9%.

Oh, and Canada buys more American steel than any other country, accounting for 50% of U.S. steel exports. Mr. Trump is punishing our most important trading partner in the middle of a Nafta renegotiation that he claims will result in a much better deal. Instead he is taking a machete to America’s trade credibility. Why should Canada believe a word he says?

* * *

Mr. Trump announced his intentions Thursday, so there’s still time to reconsider. GOP Senators Orrin Hatch (Utah) and Ben Sasse (Nebraska) spoke up loudly against the tariffs, but a larger business and labor chorus is required. Mr. Trump is a bona fide protectionist so he won’t be dissuaded by arguments about comparative advantage. But perhaps he will heed the message from the falling stock market, and from the harm he will do to the economy, his voters, and his Presidency.

Comments

you_are_cleared_hot man from glad Fri, 03/02/2018 - 09:14 Permalink

Exactly my thought. He plays chicken better than anyone I've seen on the global stage - which is why this is going to payoff for him. The media keep painting him like he's an impulsive blowhard, but that's what he WANTS people to think. People, this guy is a successful CEO. He is CALCULATING. He is doing this because he knows other people will cave in.

And Bush was...well, Bush.

In reply to by man from glad

cheka Stuck on Zero Fri, 03/02/2018 - 10:54 Permalink

all of the nyc vipers are crying out in pain as flyover country might get a piece of their pie

this wsj endorsement tells us all we need to know

good for flyover = bad for wall street.  the parasites feast on taking our productivity.  they are being threatened with losing a small percentage of it.

watch nyc viper media work -- they will scream, whine, deride

In reply to by Stuck on Zero

fattail Gaius Frakkin'… Fri, 03/02/2018 - 11:16 Permalink

The closed chinese economy is a perfect tool for the globalist supply chain.  Bribe the heirarchy of the communist party, get what you want.  Employ hundred of millions of peasants, at a pittance of the cost of western workers.  Pollute the environment at will.  All the cheap, subsidized steel and energy you need.  No wonder the stock market has been on a roll it has priced in the continued rape of the Asian Labor market and environment by the globalists and their multinational corporations.   Of course they are going to whine when it looks like the party is going to end before they own everything, where else can the force serfs to stand all day in a production line in their adult diapers.

In reply to by Gaius Frakkin'…

AAPL Slayer you_are_cleared_hot Fri, 03/02/2018 - 09:49 Permalink

What people don't remember is before the fed income tax was imposed on us US gubment ran on tariffs only,then they enslaved us with fed income tax and lowered tariffs so the big corps made all the money while we have been getting fucked and controlled ever since,better get the military tribunals rolled out way ahead of schedule they are on now,gitmo has been remodeled and tenants being moved to make room for the new ones.

In reply to by you_are_cleared_hot

TheReplacement man from glad Fri, 03/02/2018 - 09:42 Permalink

"Get the guns first, due process later."

Because.He.Won't.Back.Down.

Will end our involvement in wars we have no business in but we are still in every single one of them today.

Because.He.Won't.Back.Down.

Gonna repeal Obamacare.

Because.He.Won't.Back.Down.

If I (Trump) were President she'd be in jail.  He is.  She is not.

Because.He.Won't.Back.Down.

Shall we continue this game?

 

In reply to by man from glad

Full Draw TheReplacement Fri, 03/02/2018 - 11:27 Permalink

Rome was not built in a day nor was it destroyed in a day.....all we can say at this point is stay tuned. If anything he's given those with their eyes open a bit more time to prepare......just think about where we would be on any of these issues today if the wicked witch of the east and her pedo/rapist first hubbie were kickin' back at 1600 P.A.?

In reply to by TheReplacement

BritBob Fri, 03/02/2018 - 09:03 Permalink

Obama blunder - 

Obama never moved off the fence from 'recognizing the de facto UK administration of the Falklands' to realizing that Argentina's Falklands' claim is spurious and that they have been duped into believing propaganda. He even called the Islands 'the Maldives' when he meant to say 'Malvinas.'

The Falkland Islands belong to Argentina - Who told you that?

Falklands - Argentina's Imaginary Territory (1 pg):- https://www.academia.edu/35715281/Falklands_Argentinas_Imaginary_Territory

How will Trump fare?

Full Court Lug… Fri, 03/02/2018 - 09:04 Permalink

Fuck those shills. Sure tariffs means less profit for our corporate overlords, since more of that money is going to have to go to pay American workers. Oh no! Our stock market might actually be more than 5% below the ATH for once! What horror!

This is what I voted for: economic nationalism, and a reversal of offshoring. A few years ago the WSJ editorial board wrote an op-ed calling for a new Constitutional amendment to read: "there shall be open borders". They can suck a bag of dicks.

hazardfish Full Court Lug… Fri, 03/02/2018 - 09:39 Permalink

Exactly, who gives a rat fuck about globalist corporations and billionaires not able to continue fleecing Americans. The jig is finally up, since 2000 China has literally fucked America up the arse and the politicians have stood by and done nothing, allowing Americans to pay the price. 

Trump needs to step up this trade war times 10 maybe 20, on every single good that comes into port a tax, and let these globalist corporations start moving manufacturing back to America. 

 

My only criticism of these small measures is that they are too small, time to even the playing field before there is nothing left.

In reply to by Full Court Lug…

khnum Fri, 03/02/2018 - 09:07 Permalink

I understand the make America grate again thingy but really is the solution for the 21st century 100 year old industries that can be done for a tenth of the cost elsewhere?.Also these industries require a huge amount of base load power where is that coming from?