Trade continues to be a hot topic — a few months ago I gathered a bunch of links on the subject, including a few by these three guys who have just authored another article at American Thinker — Howard Richman, Jesse Richman, and Raymond Richman:
On Thursday, President Trump, surrounded by steel workers in the Oval Office, signed a memo imposing tariffs on steel (25%) and aluminum (10%) that are imported to the United States.
He carved out two exceptions to the tariffs:
- Canada and Mexico would be temporarily exempted from the tariffs, pending the outcome of the ongoing renegotiation of NAFTA. The U.S. will likely insist that products imported tariff-free into the U.S. use steel produced within NAFTA.
- He directed USTR (U.S. trade representative) Robert C. Lighthizer to negotiate with those military allies that want to be excluded from the tariffs, but such exclusions would require trade reciprocity. The Trump administration is expert at using economic leverage to produce negotiated outcomes that benefit the United States.
This announcement marks a victory for the trade deficit hawks in President Trump’s inner circle of economic advisers, including Wilbur Ross, Trump’s secretary of commerce, and University of California at Irvine economics professor Peter Navarro, who was recently elevated to the ranks of the president’s top-level advisers.
The economic recovery being produced by President Trump’s tax cuts and deregulation is at stake. During the fourth quarter of 2017, real GDP grew at a 2.5% clip, which is good compared to growth rates during the Obama years, but it could have been much better. Here are the contributions to growth during the fourth quarter:
The reduction of inventories by 0.7% is not of concern. It simply means that business inventories declined by 0.7% of our GDP, probably because businesses were selling more than they had anticipated. The concerning factor is the worsening net exports (i.e., trade balance), which reduced GDP growth by 1.3% of our GDP. If not for the worsening trade balance, GDP growth would have been an outstanding 3.8% during the fourth quarter.
Read more: American Thinker