President Trump is allegedly going to impose tariffs on imported steel and aluminum next week. When the European Union questioned his wisdom in doing this, he doubled down by threatening to impose tariffs on European car imports. He is also alleged to have said "trade wars are easy to win". This is madness and ultimately bad for America. The President seems fixated on trade imbalances and sees an easy and wrong solution to the American trade deficit which last year was 566 billion dollars. His take on this is that "its not fair" that America can't export more – the cause of the deficit is those dastardly furriners are conspiring against American industry. This is childish.
I will not go into detail about specifics of the product mismatches between America and the rest of the world that are part of the export problem, anyone who has ever been to say, London or Amsterdam would know that a Dodge Ram would be entirely out of place. My main observation, based on a lifetime of experience with manufacturers facing international competition, is that tariffs are an addictive drug for lazy and incompetent business management, featherbedding unionists and bad government. All tariffs do is put off the day when the toxic combination of bad management, lack of investment, poor work practices, rotten infrastructure, overpriced energy, excessive regulation and bad government become too much of a cost for the community to bear.
To put that another way, if you are working for a manufacturing company that is internationally competitive and well run, how would you like it if your raw materials, Steel and Aluminum, suddenly became 25% more expensive next week? … And all to protect some lazy SOB down the road who hasn't invested in his plant for thirty years? Then there is the question of foreign retaliation.
The correct response to a trade imbalance is to find out why your product isn't selling and fix it. For example American cars are oversized gas guzzlers in the eyes of the rest of the world, that is why they don't sell, but nobody in Detroit seems to want to make what the rest of the world wants, instead they cry to uncle Donald.
Ultimately, Trumpian tariffs will hurt the internationally competitive sectors of American industry while merely postponing the day when the uncompetitive sectors must modernize or go under…and the result is always a net loss of jobs.