Everything is a National Security Crisis!
by

Bad news: there’s another national security crisis. And no, it has nothing to do with cancelling the Iran deal or the Singapore summit.

It’s cars. We don’t make enough cars. Or something like that.

At least, that’s the rationale the Trump administration is presenting for its proposal to use (again!) Section 232 rules to implement a 25 percent tariff on automobile imports. These same rules were used to implement tariffs on steel and aluminum, and are only intended to be used to cut down on imports that endanger national security. Steel imports didn’t do that—the market values of the five largest steel manufacturers more than doubled over the five years prior to tariffs being implemented. So why would we stop there?

Likewise, there is no threat from automobile imports. Over 97 percent of our automobile imports in 2017 came from Mexico, Canada, the EU, Japan, or South Korea, not exactly countries that are a security threat to us. Motor vehicle production has been rising steadily for years.

In fact, looking at a graph of motor vehicle production since 2000, the only thing that seems to present a threat to our motor vehicle production is a recession. And good thing there’s no historical examples of a slew of tariffs driving us deeper into massive economic depressions…

In reality, this highlights the erratic nature of  trade policy coming from the Trump administration. Trump says that he wants to help auto workers, but one of the best ways that he could have done that would have been by not spiking the price of steel. Now he is proposing protections for those auto workers who will be harmed by tariffs costing as much as $400 per car. That’s a hefty tax on the middle class (on top of increases in car prices from steel tariffs), and for what benefit? To cover for job-killing steel tariffs?

There is no logical end to this kind of trade policy. Trump cannot simply protect every industry he hurts with a tariff with a new tariff. The more tariffs Trump imposes, the more Americans he hurts. Economics experts don’t agree on much, so when they find something they do agree on—and they agree that Trump’s tariff policy hurts consumers—policymakers should listen.

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