Stand for Something: Consistent, Sensible, Trade Policy

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There’s no easy way to say this — I’m really worried about how erratic foreign policy has become under the Trump Administration. As I mentioned in my last column, the relationship between the United States and other countries has a direct impact on how we live our lives here in Longmont. The events of this week aren’t just vague statements about “living in a global economy.” Today’s tariffs are going to show up in our wallets.

For starters, tariffs on aluminum and steel have been finalized this week. These tariffs were originally a tool meant to be used against China because of “unfair trade practices.” Chinese companies have, indisputably, been known to steal intellectual property from Americans trying to do business there — whether that’s designs from companies which hire them to contract manufacture, or forced disclosure of source code required by the Chinese government. As the co-founder of a technology startup, my partners and I frequently discuss concerns about our intellectual property being disclosed to a party in China and undermining our entire business. So in theory, the idea of turning American foreign policy towards addressing this problem sounds great. The problem is that the execution has more closely resembled the antics of a confused and angry child than shrewd, considered action.

Way back at the beginning of his presidency, President Trump announced withdrawal from the Trans Pacific Partnership, apparently because it was something Former President Obama was for. While like many liberals I took issue with the portions of the TPP which would export the worst aspects of American patent law, on the whole I was prepared to accept the compromise as a method which would ally many of China’s biggest trading partners against it.

President Trump announced those steel and aluminum tariffs literally while in the midst of deescalating a months-long war of words with North Korea. And while supposedly targetted against China, the tariffs as announced affected allies indiscriminately and insulted our closest allies by requiring them to apply for an “exemption.” And the exemption process was so poorly organized that it wasn’t clear who qualified and who did not.

Effective today, June 1, the tariffs are finalized and they are a total mess. There is now a 25% tariff on steel and 10% tariff on aluminum imported from China, yes, but also Mexico, Canada and Europe — our biggest trading partners across the entire economy, and our closest allies in diplomacy and military matters. In fact, Mexico, Canada and Europe are our largest sources of imported steel and aluminum combining for 8 times as much trade as China. So why are we imposing tariffs on our allies? I have yet to see a credible reason. Even the standard Trump Administration explanation of flagrant corruption doesn’t make sense here.

This is going to show up in all of our pocket books. Steel and aluminum are important commodities because they are in nearly everything, and used to make the equipment that makes nearly everything. Cars, airplanes, computer chips, cans for food and beverages…these tariffs are going to affect the bottom line of literally every company in Longmont, in Colorado, and across the country. And that means that prices are going to go up across the board for consumers. And wages certainly aren’t going to increase for most families to compensate for rising prices. It’s hard to know exactly how much prices will rise — combined imports from countries subject to these tariffs account for about 25% of total steel use in the country. That’s a huge swathe of the economy which is about to take a hit.

I don’t know how this ends. Best case scenario? Prices will go up for consumers, the tariffs will stay in place until the already announced retaliatory tariffs begin to take a toll on the economy, and then what? President Trump backs down? That seems unlikely. Or maybe Congressional Republicans will grow a spine and force the president to back down. Or maybe these tariffs simply become the new normal, and the United States is viewed as an unreliable partner in trade and in trying to make peace.

Either way, our standing in the world is diminished. Average Longmonsters are poorer. It becomes harder to compete in the global economy. And then the next news cycle comes.

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