Donald Trump is set to double down on his failing strategy on trade.
Yesterday, the Trump administration announced that it would impose tariffs on European goods worth more than $7.5 billion. This is after the World Trade Organization (WTO) ruled in favor of the United States. Washington had accused the EU of giving illegal subsidies to Airbus. In celebration, the president tweeted:
Trump Responds With a Failing Strategy
Shortly after the U.S. won the 15-year battle, the Trump administration settled on a failed strategy. Tariffs have not helped the U.S. For example, last year, Trump implemented tariffs on aluminium and steel. This was done with the goal of saving the American steel and aluminium industry. However, the industry is still suffering.
Just yesterday, Bayou Steel Group in Louisiana closed unexpectedly, laying off 376 people. In the past year, the stock prices of the biggest steel companies have declined double digits. The stock price of Nucor, US Steel, and Steel Dynamics has declined by 23%, 62%, and 37%, respectively.
Meanwhile, the cost of steel has been increasing, leading to a higher production cost for manufacturing.
Trump’s tariffs have not helped with China. When he started his trade war, Trump argued that American firms in China would be forced to leave the mainland economy for the U.S. Again, that has not happened, and companies have ruled out moving their production to the U.S. They have a point. Why would they leave Asian countries where wages are $2 per hour to the U.S, where labor costs are much higher? Again, these tariffs have not narrowed down the trade deficit between the U.S. and China.
The main reason why Trump is cornered is that he started his trade wars with the wrong goal. His end goal was to narrow the multi-billion trade deficit the United States has with the…