I do not want to appear negative. So I will answer the following question: Is it possible that the US could pursue policies other than tariffs that would work better and be more focused on sensible objectives. So let us begin with what a sensible objective might be. The US should not want its steel and aluminum industries to disappear totally. This is for strategic purposes and for political purposes. The US should allow other countries to subsidize US consumers with various sneaky advantages they give to their steel and aluminum producers. However, when these other countries use explicit tariffs, the US should raise its own tariff barriers to a point just below the barriers raised against the US. This facilitates negotiations that would drop tariff barriers to trade in general.

The mechanism that the US should use is as follows: Any vendor that sells more than some minimum amount of equipment to the Federal government must certify that 100% of the steel and aluminum content is sourced in the US. They would not be required to follow the origin of every nut and bolt. Instead this would be done on average: what is the total amount of steel and aluminum they purchase in a year? What is the steel and aluminum content of the goods they sell to the government? Next, they would need to show that the amount of domestic steel and aluminum they purchase is at least as great as the proportion that they sell to the government.

There are a lot of non-tariff barriers to trade. Let's not take on every issue at once.

Peter that is very helpful.

What you say about the mechanisms 'the US should follow' is persuasive.

But we ask from over here if these measures (if they are implemented) are, in your words, 'focused on sensible objectives'.

Non economists are poring over the 1930s and the role protectionism in the US played then. Why?

We see the news

https://www.theguardian.com/business/live/2018/mar/02/markets-fall-trump-tariffs-uk-construction-may-pound-brexit-carney-live

And can only wonder who can possibly benefit from all this (apart from steel producers in US of course)

Ronaldo,

The idea that the US is protectionist is wrong. Instead, it is responding to rampant protectionism in other countries. On the whole, sentiment in the US is mostly for free trade.

There are a number of mercantilist countries. China is first among them. Perhaps closer to you, Germany might be an example. These countries busy themselves by messing with trade balances and the allocation of resources. Meanwhile, the US has lost most of its manufacturing base.

Let me give you an extreme example of totally messed up resource allocation. The US has forests. Whole logs are shipped to China to be processed into things like stair parts. Then those stair parts are shipped back to the US for use in housing. If you are familiar with transportation economics, you know that the factory should be located near the raw material in weight losing processes. So the current state of the world violates this basic principle. The US needs to get back to wood products and a number of other important activities. It is not just the industrialists who gain from this. Think about the workers who are under employed and under paid as a result.

What about security? What do you or Europe expect of the US as Russia is attempting to reassemble its former empire? How about China's imperialist ambitions? Do you think that it would be reasonable for the US to harbor industries that are key to its security . . . and maybe the security of other places as well?

Best wishes,

Peter

Thanks Peter

To be clear I am not in any way saying China or Russia are the good guys.

Just questioning whether this measure- why do you say US not protectionist?- seems to be counter productive for all concerned.

My understanding was most US economists and politicians accepted that the 1930 Hawley–Smoot Tariff was not a good idea in retrospect?

Yes I would agree that majority opinion in US is NOT protectionist.

So is this Trump plan a good idea from an economics point of view I wonder?

Bargaining. He generally stakes out an extreme position from which he is happy to withdraw.

Is the fuss about the Trump decision on steel ad aluminium a kind of overreaction? First this is not the first time that the steel and aluminium are subject to trade wars; these are highly cyclical industries and Europe has been first to fire in april 2017 against chinese exports of some steel products by imposing between 18 and 36% tariffs for different products, targetting firms like Bengang Steel Plates, Handan Iron & Steel et Hesteel . In that case it seems that Europe is choosing precisely its targets, while the US are much more indiscrimate.

Another case is the solar case: there again Trump seems to follow Europe which impose high tariffs between 27% and 67% on solar panel and the "modules photovoltaïques en silicium cristallin" since 2013 and Europe had decided to maintain these tariff for the coming years and extend it to taiwanese and malaysian products. There again the difference is more in the precise targetting of Europe regulators than other thing. Last remark Europe and the US are still reluctant to give market economic status to China.

I think you are right to talk about over reaction.

It's partly the way Trump does things and the fear it is all impetuous and not thought out.

But yes these tariffs etc are a normal part of trading relations.

Yes also re Europe and US very reluctant to let China into the club...

But on the other hand.....

Things are not always totally rational

Eg today

"Markets fear trade war after Gary Cohn's White House resignation – business live"

https://www.theguardian.com/business/live/2018/mar/07/markets-slide-gary-cohn-resignation-fuels-trade-war-fears-business-live

Gentlemen,

I would just like to expand the question seemingly based on economics to a larger picture. Say, we re-energize our own mining programs for these raw minerals, is there not some credible downsides to us performing our own mining, versus another country stripping away their own mineral deposits? What have we historically seen when our mines were in full swing? What poisons were left behind and located only after the mining operation shut down? So, rather than examining the economics of a tariff, I vote for letting another country strip away their minerals and have asbestos in their soils or mercury left in National Parks (Big Bend, Texas).

Certainly, the health and well-being of our own people and future generations should be a primary concern. Please take a moment to review the USGS Report for yourself and then discuss the "pros and cons" of a tariff on imported steel, etc.

https://minerals.usgs.gov/granted.html

Thank you.

Professor Russell

As an answer to Margaret Russell, it might be that the US bears environmental cost as it mines iron ore and coal and sends these inputs abroad to be manufactured into finished goods and sent back to be consumed in the US. Of course, manufacturing has its own environmental risks. So maybe the US should just specialize in consumption of imports and just send debt abroad in return. After all, the US produces some of the best debt in the world. Wait, that's where the US is headed.

'best debt'?

Ronaldo, I'm channeling Jonathan Swift. Best wishes, Peter

Aaah

thanks

Getting back to the initial question, I would just like to add a few thoughts, all of them summing up to the answer: no, it is not wise.

I think both the protectionist measure itself and the accompanying rhetoric applied by Trump and the US administration underscores the question what the fundament of a positive US global leadership role might be.

If the world's leading economy that has shaped the entire global economic system in the past like no other country has starts arguing that it is being taken to the cleaners - then this is totally implausible. The truth is that the US and its companies benefit greatly both from the way globalisation is organised and from world trade.

For any nation that aspires a global leadership role there is just one credible path: promoting common rules and principles that work best for all, and obligates itself to follow these rules. Now both the measure and the rhetoric show that the current US administration is not interested in rules and principles but in protecting its own interests or what it defines as such. This will further weaken the US's status as global No 1 because other nations will invest their energy not in aligning with the US but in creating counter-measures, in balancing against the US, in searching alternative economic and political partnerships.

Whether or not the tarriffs will bring any measurable positive effect to the US economy is yet another question, and I doubt it. First, because of the counter-measures applied by other nations, second, because any protectionist measure weakens world trade in general and at the end diminishes potential gains for all, including the US.

So, as I said before: not wise at all.

" promoting common rules and principles that work best for all, and obligates itself to follow these rules"

we don't see much of this though do we?

very true