J.D. Foster J.D. Foster
Former Senior Vice President, Economic Policy Division, and Former Chief Economist


June 07, 2018


The administration’s trade policies, such as the recently announced steel and aluminum tariffs, put at risk the gains from many of President Trump’s economic policy successes, most notably the jettisoning of the previous administration’s anti-growth regulatory policies and the powerfully pro-growth tax reform he signed into law late last year.

To underscore the benefits of the proposed 10% tariff on aluminum, for example, the president’s National Trade Council Director, Peter Navarro, recently touted ina USA Today op-ed a new aluminum plant being built in Ashland, Kentucky. Without question, this new plant is a great sign for the economy and for the people in the surrounding community, but equally clear is that the facility was planned years ago, withthe announcement dating back nearly a full year before these new tariffs were posed. In short, the new Ashland aluminum plant had nothing do with the president’s tariffs and was expected to prosper without them.

The op-ed goes on to allege the plant’s builders believe the new tariffs will contribute to their “future growth and prosperity.” This may be true. No one disputes that tariffs tend to benefit the protected industry and their workers–at least at first. But then it is curious the Aluminum Association, the primary group representing domestic aluminum producers, came out firmly opposed to the new tariffs, saying they were “disappointed” the president took this action.

Nor can we ignore the consequences for the U.S. companies that will now have to pay higher prices for aluminum, thus rendering them less competitive at home and abroad. Heavy steel and aluminum users may find they have to shift production overseas to stay competitive.

Nor can we ignore the consequences for American families. Commerce Secretary Wilbur Ross recently acknowledged that the steel or aluminum tariffs “could mean price increases for American consumers.”

We’re not talking small change here, either. As reported by The Wall Street Journal, the price of U.S. steel has already risen nearly 40% this year, pushing prices to almost 50% above equivalent benchmarks in Europe and China, according to data from S&P Global Platts.

Nor can we ignore the fact that our trading partners are not going to take these protectionist policies by the administration lying down. They will respond with counter-measures, which will certainly hurt a broad swath of American industry and their workers and families, quite likely including some of the very companies and workers who initially benefited from the new U.S. tariffs. Tariffs giveth in the short term, and tariffs taketh even more away in the long run.

Many of President Trump’s policies have been a much-needed tonic for the U.S. economy. Many of his arguments that some existing trade agreements can be improved ring true. Many of his complaints likewise ring true regarding the trading practices of others, most notably China, with respect to domestic access, intellectual property, subsidies to state-owned enterprises, and much more.

The president has identified many of the right problems in our trading relationships. It’s his administration’s often tariff-based approach to solving those problems that raises serious concerns for American companies and workers. The proposed tariffs are ill-conceived and ultimately indefensible, and threaten to torpedo a U.S. economic resurgence just as it is finally underway.

The president needs to find a better way.

How? First, by pursuing robust, thoughtful negotiations and actions that address unfair trade practices and unequal treatment for American businesses in global markets. By strengthening agreements like NAFTA, not ending them. And by working with China to constructively fix what’s broken about that critical trade relationship.

We respect the president’s sense of urgency and agree that these trade challenges must be addressed without delay. However, a bad deal done quickly is still a bad deal, and we must not let the inclination to act quickly outweigh the pursuit of trade deals and policies that will truly benefit American workers and grow the American economy.

About the authors

J.D. Foster

J.D. Foster

Dr. J.D. Foster is the former senior vice president, Economic Policy Division, and former chief economist at the U.S. Chamber of Commerce. He explores and explains developments in the U.S. and global economies.