President approves tariffs
President Donald Trump is yet again defying the advice of economists, workers and his own party.
Thursday in the Roosevelt Room, the President, surrounded by steel workers, Vice President Mike Pence, Secretary of Treasury Steve Mnuchin and Secretary of Commerce Wilbur Ross, approved tariffs on foreign imports of steel and aluminum to the United States.
The tariffs, 25 percent on steel imports and 10 percent on aluminum, were rationalized by the president as both an economic and national security concern.
“The actions we’re taking today are not a matter of choice, they’re a matter of necessity,” Trump said.
Mexico and Canada, the two other nation’s making up NAFTA, also will be excluded from the tariffs. During his statement, the President suggested negotiations on Mexican and Canadian imports will occur at a later date. Behind Canada and Mexico, the largest importers to the U.S. are Brazil and South Korea for steel, and Russia, United Arab Emirates, and China for aluminum.
Enthusiasm is limited for the administration’s intervention in global trade. The policy comes days after the announced resignation of Chief Economic Gary Cohn, as well as an open letter to the President signed by 107 House Republicans urging a different approach to confront “unfair trading partners.”
The letter cautioned against “broad tariffs” in order to “avoid unintended negative consequences to the U.S. economy and its workers.”
Congresswoman Susan Brooks (IN-5) was one of the letter’s signatorees. While Brooks could not be reached directly for comment, Rebecca Card, her press secretary, stated Brooks “had some concerns” about the tariffs, and believes they “could undermine some of the progress we’ve made with the Tax Cuts and Jobs Act” signed last year.
The upcoming impacts from the tariffs could be felt in Rust Belt states like Indiana in a matter of days.
Economists from state universities believe three of Indiana’s top industries, auto parts, steel and agriculture, will be negatively affected by the new policy.
“We’re the second largest auto producer in the country behind Michigan,” said Wallace Tyner, professor of agricultural economics at Purdue University. “If we got into a trade war, all of our exports get hurt.”
According to a report released by the Brookings Institute, 20 percent of the nations steel and aluminum imports go to Rust Belt states. Potential retaliatory tariffs by other countries would immediately affect Indiana’s auto industry as well as the steel industry, Tyner said.
“Indiana does produce aluminum and steel,” Tyner said, who described his shock when he recently realized of “the thousands of communities in the U.S., four of the top ten steel exporting communities were in Indiana: Lafayette, Kokomo, Elkhart and Columbus.”
Ron Long, the retiree chair of United Auto Workers Local 933 in Indianapolis said the “president relishes in the fact he wants a trade war” which would have “winners and losers.”
“He’s not to be trusted in the ways he says things,” Long said. “But if the president is sincere and it would work, I would welcome that.”
Farmers in Indiana and Grant County should also be concerned of retaliatory tariffs against the agricultural sector, according to Mike Hicks, director of Ball State University’s Center for Business and Economic Research.
Such responses by foreign countries would be “very carefully aimed to put maximum damage on American exports” as well as sections of the voter base “where the president might be most sensitive,” Hicks said.
“The potential affect is now agricultural commodity prices could come in lower,” he added. “It doesn’t drive out the 500 acre farmer first, it drives out the forty acre farmer first who can’t buy a new combine.”
Tyner also worries China will retaliate against U.S. agriculture by slapping tariffs on soybeans.
“They can get their soybeans from Argentina or Brazil, and Indiana farmers suffer because they can’t sell their soybeans,” Tyner noted.
As the drama unfolds in the President’s trade battles, a focus will be on if the U.S. workers he relied on for victory in 2016 will stand behind him. At this moment, some Indiana manufacturing workers are already skeptical of the economic rejuvenation tariffs can bring.
“I think it’s a PR game more than anything else,” said Chuck Deppert, a member of the International Association of Machinists. “We’ve been taken advantage of. I was in the halls of Congress when they were debating passing NAFTA years ago. It isn’t that labor is opposed to foreign trade, but it’s fair trade that we’re after.”