The Trump And Navarro Junior Varsity Team Fumbles On Steel And Aluminum Tariffs
President Donald J. Trump shocked the American business community, many Republicans and the every American who supports free trade when his trade guru. Peter Navarro. convinced him to impose tariffs on imported steel and aluminum.
Republicans since President Ronald Reagan have supported free trade — which generally means reciprocal low or no tariffs — since Reagan announced that free was a basic plank of his campaign for the Presidency in 1980. Along with Bill Clinton, it was the “free trade” majority of the party that created the North American Free Trade Agreement (NAFTA) 25 years ago.
Free trade Republicans are nowas scarce as immigration reformers in the Trump White House.
Navarro is a protectionist Democrat. He used to earn his living as a business and economics professor at the University of California, Irvine. He’s also a failed politician who has run numerous times for the San Diego City Council, San Diego Mayor, Congress and county supervisor. He lost every time. (By the way, Navarro is a Spanish surname.)
He was and is a Democrat. He ran against NAFTA when he stumped for congress on the San Diego border with Mexico. After he left San Diego with his political tail between his legs, he discovered trade with China. He is not a China expert, he is not a trade expert. He’s a rent control “expert.”
“Protectionist” Peter Navarro has President Trump’s ear on trade. He is behind the administration’s 25 percent and 10 percent tariffs on imported steel and aluminum. China is the target. China manufactures 49 percent of world steel but, in fact, sells very little in the United States.
Moreover, the United States is a steel exporter. Ninety percent of U.S. exports go to three countries: Canada (50 percent), Mexico (39 percent) and Italy (1 percent). Steel exports to Turkey increased last year by 588 percent over 2016; to Italy (+182 percent), Belgium (+48 percent(, South Korea (+21 percent) and — of all places — China (+15 percent). U.S. steel exports are two percent of global steel trade. The U.S. buys very little of its steel from China.
The United States ranks 16th as a steel exporter in global steel trade.
On the import side, Navarro and Trump’s targeting of China is misplaced because China isn’t in the top ten countries from which we import steel.
Having a decade of personal experience with Peter Navarro in San Diego (I was a regular panelist on his self-produced cable television news/discussion/commentary show), I can state with full knowledge that has no more no clue about American trade with China or anyone else than he had in our many debates about trade with Mexico and NAFTA.
Bloomberg explains what Navarro doesn’t know:
“In accounting terms exports add to gross domestic product, while imports leave it unchanged. U.S. GDP represents all the stuff that gets produced in the country — exports are produced here and shipped overseas in exchange for foreign IOUs, while imports are consumed here in exchange for American IOUs. If you close the trade deficit purely by reducing imports, while leaving exports, consumption, investment and government spending the same, the economy doesn’t grow by even one dollar. But if you close the deficit by exporting more, while leaving everything else unchanged, the economy grows a lot.”
Here in fewer than a hundred “Bloomberg” words is why trade is so consequential for the U.S. economy. Neither Navarro nor Trump understand exports and imports. Nor do they understand what retaliation for tariffs could mean to the American public and how American jobs may disappear.
For example, Navarro on Fox News Sunday stated that any “retaliation” would have a minuscule effect on the American public. Fox moderator Chris Wallace quoted sources that the tariff will raise the price of steel and aluminum used in car manufacturing by $175 per car. Multiplying the $175 times 17 million cars sold last year would have cost the American car-buying-public $3 billion additional dollars.
Effectively that is a $3 billion-dollar tax increase on Americans. If cars cost more, is it possible that car sales will slow; if so, will any employees lose jobs starting at the car sales lot, professor Navarro?
Raoul Contreras is the author of “The Armenian Lobby & U.S. Foreign Policy” and “The Mexican Border: Immigration, War and a Trillion Dollars in Trade.” he formerly wrote for the New American News Service of the New York Times.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.