The art of the steel tariffs


  • Business
  • Saturday, 17 Mar 2018

PRESIDENT Trump is beginning to unveil the details of his tariffs on steel and aluminum, but they’re hard to hear above the noise. Democrats loudly rejoice in Trump’s folly, hoping the tariffs will erase the benefits of tax reform.

Republicans scream the lessons of Smoot-Hawley to anyone who will listen. Lobbyists march steelworkers to the cameras to explain how they would benefit, while Americans in industries that consume steel protest that higher prices might kill their jobs. Even the beloved (and aluminum-wrapped) Hershey’s Kiss is the subject of ear-splitting debate.

Most likely this cacophony is exactly what Trump intended. A recurring trick of his presidency, and before it his campaign, has been to stir controversy with unexpected announcements. He always begins by taking a loud and outlandish position far outside the current discussion. That resets the negotiation. He shocks the parties at both ends of the table, then watches as the back-and-forth begins. It’s a wonder that so many are still fooled by the same old approach.

Look at Trump’s record. The pattern began near the start of his candidacy, when he first pledged to “build a great, great wall on our southern border” – and to make Mexico pay for it. The strategy was torn right out of The Art of the Deal, the 1987 book in which Trump advises: “If you’re going to be thinking anyway, you might as well think big.”

Mr. Trump describes the next step of his recurring gambit in the same book: “I also protect myself by being flexible. I never get too attached to one deal or one approach.” Sure enough, by the beginning of this year, his border wall had developed into a more amorphous “border wall system”.

“We don’t need a 2,000-mile wall,” he said in January at a bipartisan meeting with lawmakers. “We don’t need a wall where you have rivers and mountains and everything else protecting it.” Shortly thereafter he asked Congress to fund the project, despite his earlier promise that Mexico would pay for it.

As part of the same proposal, the president offered a pathway to citizenship for 1.8 million so-called Dreamers, roughly three times as many as President Obama’s policy has shielded from deportation. The offer surprised Republicans and Democrats alike. Although the deal fell through in the end, Trump presented each side with something it wanted and something it hated.

The “travel ban” was another instance of Trump’s shock-and-awe gambit. As a candidate in 2015, he called for “a total and complete shutdown of Muslims entering the United States until our country’s representatives can figure out what is going on” with Islamic terrorism.

As president, however, Trump addressed the issue with a series of executive orders temporarily barring entry to travelers from certain majority-Muslim nations, most of which had already been flagged by the Obama administration as likely origins for terrorists. This was a far cry from his original position.

During the campaign, Trump said that the North Atlantic Treaty Organisation (Nato) “may be obsolete”. His complaint was that Nato members weren’t meeting their spending commitments. The world decried Trump’s naiveté, his misunderstanding of history and international relations.

But Nato’s leader said this week that the alliance’s European members plus Canada increased their military spending nearly 5% in 2017. Whereas in 2014 only three countries other than the US met the goal of spending 2% of their gross domestic product on defense, the number will jump to eight this year.

The negotiating style Mr. Trump developed in business may not translate perfectly to politics. Will the ruse of steel and aluminum tariffs give the president enough leverage to renegotiate dramatically a decades-old deal like the North American Free Trade Agreement? We’ll see. Was it the potential cost to China’s industry that spurred North Korean dictator Kim Jong Un, whose regime is propped up by Chinese aid, to reach out to Trump on the same day the tariff details were announced? We can’t know for sure.

What is certain is Trump’s style of leadership is agonising for his staff and Republican officeholders, who must time and again defend the indefensible or attempt to alter the president’s positions. My advice to them is to close their ears and open their eyes. Instead of joining the chorus of critics when Trump bellows an outrageous position, they should recognize his final goal and realize that he’s just opening up the bidding.

As Trump suggests in his book, the only thing that matters at the end is whether he can get results: “You can create excitement, you can do wonderful promotion and get all kinds of press, and you can throw in a little hyperbole. But if you don’t deliver the goods, people will catch on.”

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Business , Steel tariffs

   

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