Trump's high-risk reversal of 70 years of trade progress
In 1944, as the Allies were closing in on Nazi Germany, they did two things to try to ensure that the world would never again face a global war.
That October, at a private mansion in Washington, representatives of the big powers laid the groundwork for the future United Nations. And in the White Mountains of New Hampshire, at the Bretton Woods resort, a much larger international gathering agreed on a plan for economic cooperation.
As leaders of that era realized, laying down arms wasn’t enough. It also was important to prevent the sort of worldwide economic depression that, in the 1930s, had led to protectionist trade and currency policies, which fostered ugly nationalism and ultimately led to war.
A key part of the new financial order was a gradual reduction in trade barriers. For most of the time since, the United States has been at the forefront of promoting trade. Until Tuesday.
That was when President Trump slapped giant tariffs on the washing machine and solar-cell industries. The immediate practical impact, in the first case, will be to raise the price of washing machines. Every hard-pressed family that ends up spending a little more — every retail outlet that loses a sale — can thank the great theoretician in the White House. No wonder Sears begged the president not to go ahead.
The most likely impact in the second case will be to raise the cost of solar, depressing sales and costing jobs. Since the people who make solar cells (the ones receiving protection) are a small part of the overall industry, the tariff increase will help a small group of highly visible beneficiaries and hurt a much larger number. The Solar Energy Industries Association guesses that job losses will reach 23,000.
It’s important to note that the tariffs, 30 percent in solar and up to a whopping 50 percent in washing machines, were imposed under a rarely used section of trade law whose only condition is that an industry is hurt by imports. Not by unfair imports — just imports. All that Whirlpool, the manufacturer that petitioned for the appliance tariff, had to establish was that somebody overseas — in this case, Samsung and LG Electronics, each based in South Korea — was making a better product, or a cheaper one. If you can’t compete, call the government.
https://www.msn.com/en-us/money/markets/opinion-trumps-high-risk-reversal-of-70-years-of-trade-progress/ar-AAvdrGB?li=BBnbfcN&ocid=edgsp
