If tariffs are part of some great national strategy, the transition team should have fleshed out that strategy, and the public has a right to know what it is.
Are tariffs coming on Saturday? The White House press secretary says they are, but there are still no specifics on what they will look like or how they will work. Here’s a trade lawyer quoted this morning in FreightWaves:
“No one knows the answer to this question, and it would be improper to speculate,” said Timothy Brightbill, an international trade law expert and partner at the law firm Wiley Rein, speaking during a webinar hosted by the firm last week.
“But the memo does indicate that the administration is going to be smart about this, get its teams across the executive branch in place and do a comprehensive assessment of many of these issues.
“At the same time, it’s wrong to assume that nothing will happen before April 1, so don’t discount these statements by President Trump as mere posturing, and don’t make assumptions. For companies that would be affected by tariffs, hoping and wishing is not a strategy.”
CNBC reports, “Trump aides are working on a plan for Canada/Mexico tariff announcement. . . . But negotiations are still ongoing. No specifics yet on whether tariffs would take immediate effect. Lots of flux ahead of deadline.”
The Wall Street Journal reports:
Amid ongoing negotiations with Canada and Mexico, the administration appears undecided on whether to impose tariffs on all imports from those countries, the people familiar with the matter said, adding that administration officials are preparing to opt for more targeted measures instead.
Trump is still likely to announce some sort of trade action by Saturday, but it may only affect certain sectors, such as steel and aluminum. Trump may also include major exemptions, such as oil. And the tariffs could be issued using existing legal authorities instead of more novel approaches officials had previously floated, according to people with knowledge of discussions, who stressed that no final decisions have been made.
The administration could also announce new tariffs by Saturday, but with a grace period before they are implemented, allowing negotiations to continue with the continental neighbors, some of the people said.
Here’s Bloomberg:
Trump on Thursday vowed to follow through by his self-imposed Feb. 1 deadline, though the mercurial president has been known to change his mind.
The scope of the duties also remained unclear. Trump declined to say if they would apply to Canadian oil imports, for example.
Put aside for a moment whether tariffs are a good idea in general (they are not). Is this a good way to make government policy?
If Joe Biden was doing something that left entire U.S. industries in bewilderment over what government policy will be literally tomorrow, Republicans would be denouncing him as threatening the livelihoods of millions of Americans. They’d be decrying his administration’s lack of planning and clear communication about what the policy would be. They’d be posting memes showing the intraday stock-market indices tanking on the words from the press secretary.
This uncertainty has costs. Since Trump’s election, European stocks have caught up with American stocks, Bloomberg reports, amid fears about what the tariffs will look like. Specifically, U.S. industrial stocks have fallen behind the U.S. stock market in general since the election because of fears about how tariffs will affect their inputs. Remember, about half of imported goods are inputs for domestic production.
Whether the tariffs will apply to energy could affect gas prices because Canada and Mexico — not the Middle East — are the top sources of U.S. crude oil imports. The substitution of North American energy for energy from sketchier countries like Saudi Arabia or adversary countries like Russia and Venezuela is a relatively recent development and widely seen as a good thing. The U.S. should not be making Venezuelan oil, the geographically nearest substitute, more competitive by taxing Mexican and Canadian oil. Additionally, Mexico and Canada are two of the three largest buyers of American petroleum-product exports, and retaliatory tariffs on those purchases will hurt the American energy sector.
If Trump grants an exemption for energy, that opens the door to a whole host of other reasonable exemption requests, because it turns out American businesses actually have really good reasons for importing goods. And they aren’t just doing it as some kind of conspiracy against autoworkers in the Midwest.
In fact, autoworkers in the Midwest are among those most likely to be directly harmed by these tariffs. “The North American automotive supply chain is so interwoven across all three USMCA countries that an engine, transmission, or other automotive component might cross the US-Canada and US-Mexico borders as much as seven or eight times before it ends up in a finished vehicle,” a Cato Institute blog post notes. That includes goods for which most of the value added is by American workers.
By the way, that’s the USMCA that Trump’s first administration renegotiated and that Trump proclaimed “the largest, most significant, modern, and balanced trade agreement in history” and that Congress approved with huge bipartisan majorities. Unilaterally casting it aside and imposing tariffs, a power the Constitution clearly gives to Congress, is subject to all kinds of legal challenges and opens the question of whether the U.S. can be trusted to stick to agreements it made only a few years earlier.
If tariffs are part of some great national strategy, then the transition team should have fleshed out that strategy, and the American people have the right to know what it is. That there doesn’t yet seem to be one, a day before tariffs are maybe supposed to take effect, leaving businesses guessing and the stock market sputtering, should suggest that maybe government by presidential whim isn’t such a great idea.