Last week President Trump announced new tariffs on steel and aluminum products, and the response couldn’t have been more negative — critics warned of trade wars, recession, global instability. But the blowback is overblown, and seems to constitute reflexive anti-Trump sentiment rather than careful economic reasoning.
[Josh Bivens | March 5, 2018 | NY Times]
To be clear, there’s plenty to hate about the policy course charted by the Trump administration. His anti-trade stance is of a piece with an agenda rooted in xenophobia and bigotry that has favored the rich over low- and moderate-wage workers. But despite this record, and despite the near-dogma status of free trade among economic writers, the proposed tariffs won’t end the world, and may even do some good.
First, let’s take them for what they are: temporary relief for specific sectors (steel and aluminum) facing a specific problem (global excess production capacity, propped up by foreign governmental subsidies). America has taken steps like this before, and did not slide down any slippery slope to autarky. This means that big-picture principles — like, “Free trade is good,” or, “Globalization decimated the American working class” — aren’t very helpful in assessing them.
For example, America’s trading partners have had to agree to increase their levels of intellectual property protection as a condition for more open access to American markets in agreements like Nafta and the proposed Trans-Pacific Partnership. Yet proponents of these agreements have felt free to call them “free trade” treaties, even as these agreements instituted far higher levels of effective protection for specific sectors (mostly pharmaceuticals and software) than what was announced this past week for steel and aluminum.