Editorials

California would be a casualty of Trump’s trade war

Chaos in the Trump White House doesn’t usually directly affect Californians’ daily lives. But if it leads to President Donald Trump starting a trade war, it will cost jobs, raise prices and set back California’s economy.

Exports – which totaled $172 billion in 2017, 11 percent of the U.S. total – are a big part of our economy. So it was bad enough for Trump to withdraw from the Trans-Pacific Partnership and to threaten the North American Free Trade Agreement.

Now, he’s about to take his terrible trade policy to an even more dangerous place.

If Trump follows through with a 25 percent tariff on steel imports and a 10 percent duty on aluminum, it will mean job losses. While there are only about 5,500 steel workers in California, there are more than 100,000 workers in industries that use steel and would face higher costs.

The tariffs would also mean higher prices for consumers. When the 28-nation European Union said it would retaliate against U.S. products, Trump threatened to increase tariffs on European cars. That’s the thing with trade wars – they can escalate quickly and easily spin out of control. The entire global economy can be disrupted.

California’s business and political leaders must speak out clearly and loudly against these tariffs. On Tuesday, the California Chamber issued a statement urging Trump against imposing the tariffs, which it called a “misguided and dangerous policy” that is “likely to cause a trade war.”

While Trump is apparently aiming at China with these tariffs, he badly misfired. More steel imports come from our allies – Canada, Japan and South Korea. They’re already seeking waivers, but his trade adviser says there will be no exemptions.

The tariffs are supported by steel and aluminum companies that would be protected from foreign competition, some Rust Belt Democrats and some unions.

But far more businesses – automakers and beer brewers alike – are warning about job losses and price increases. So are fellow Republicans, including House Speaker Paul Ryan, who is urging a “more surgical approach” to avert a trade war. Trump’s top economic adviser, Gary Cohn, reportedly opposes the tariffs and announced his resignation Tuesday.

Stock markets around the world are spooked. As experts point out, trade is not a zero-sum game. Lowering barriers increases economic activity and, on balance, helps more nations.

Despite the criticism and the facts, Trump isn’t backing down. He is expected to finalize the tariffs later this week.

On Friday, he tweeted that “trade wars are good and easy to win” – one of his most ridiculous tweets ever, which is saying a lot.

On Monday, Trump declared that he will use the tariffs as leverage in the negotiations to update NAFTA with Canada and Mexico, California’s two largest export markets. And on Tuesday, he said the tariffs would be applied in a “loving way,” whatever that means.

Trump says he wants to bring the steel and aluminum industries back from the dead. But particularly with this president, these tariffs aren’t going to necessarily save or create jobs. Why would any corporation invest a sizable amount of money in a new plant if Trump could see a segment on “Fox & Friends” and suddenly change his mind?

Trump’s advisers need to teach him the lesson of another Republican president, George W. Bush, who also imposed tariffs on steel, but backed off a year later, after the loss of as many as 200,000 jobs. Unfortunately, Trump is not a student of history, or of economic policy.

For Trump, it’s more about a big applause line at his election rallies. But keeping a destructive campaign pledge – one that would damage the nation’s most populous state –isn’t presidential. It’s stupid.

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