WASHINGTON — President Trump’s tariffs were initially seen as a cudgel to force other countries to drop their trade barriers. But they increasingly look like a more permanent tool to shelter American industry, block imports and banish an undesirable trade deficit.
More than two years into the Trump administration, the United States has emerged as a nation with the highest tariff rate among developed countries, outranking Canada, Germany and France, as well as China, Russia and Turkey. And with further trade confrontations brewing, the rate may only increase from here.
On Tuesday, the president continued to praise his trade war with China, saying that the 25 percent tariffs he imposed on $250 billion worth of Chinese goods would benefit the United States, and that he was looking “very strongly” at imposing additional levies on nearly every Chinese import.
“I think it’s going to turn out extremely well. We’re in a very strong position,” Mr. Trump said in remarks from the White House lawn. “Our economy is fantastic; theirs is not so good. We’ve gone up trillions and trillions of dollars since the election; they’ve gone way down since my election.”
He called the trade dispute “a little squabble” and suggested he was in no rush to end his fight, though he held out the possibility an agreement could be reached, saying: “They want to make a deal. It could absolutely happen.” Stock markets rebounded on Tuesday, after plunging on Monday as China and the United States resumed their tariff war.
Additional tariffs could be on the way. Mr. Trump faces a Friday deadline to determine whether the United States will proceed with his threat to impose global auto tariffs, a move that has been criticized by car companies and foreign policymakers. And despite complaints by Republican lawmakers and American companies, Mr. Trump’s global metal tariffs remain in place on Canada, Mexico, Europe and other allies.
The trade barriers are putting the United States, previously a steadfast advocate of global free trade, in an unfamiliar position. The country now has the highest overall trade-weighted tariff rate at 4.2 percent, higher than any of the Group of 7 industrialized nations, according to Torsten Slok, the chief economist of Deutsche Bank Securities. That is now more than twice as high as the rate for Canada, Britain, Italy, Germany and France, and higher than most emerging markets, including Russia, Turkey and even China, Mr. Slok said.
The shift is having consequences for an American economy that is dependent on global trade, including multinational companies like Boeing, General Motors, Apple, Caterpillar and other businesses that source components from abroad and want access to growing markets overseas.
While trade accounts for a smaller percentage of the American economy than in most other countries — just 27 percent in 2017, compared with 38 percent for China and 87 percent for Germany, according to World Bank data — it is still a critical driver of jobs and economic growth.
Mr. Trump and his economic advisers say the administration’s trade policy is aiding the American economy, companies and consumers. And despite the tough approach, the administration continues to insist its goal is to strike trade agreements that give American businesses better trade terms overseas.
At a briefing last week, Steven Mnuchin, the Treasury secretary, praised the president’s trade policies for helping economic growth thus far and said the administration supports “free and fair reciprocal trade.”
But if the goal really is freer trade, the administration has never been further from achieving that goal than it is today, said Chad Bown, a senior fellow at the Peterson Institute for International Economics.
“They’re heading in the opposite direction,” Mr. Bown said.
Beyond an update to the United States agreement with South Korea, no other free trade deals have been finalized. Mr. Trump’s revisions to the North American Free Trade Agreement with Canada and Mexico still await passage in Congress, while trade talks with the European Union and Japan have been troubled from the start, with governments squabbling over the scope of the agreement.
Mr. Trump came into office fiercely critical of the failure of past administrations and global bodies like the World Trade Organization for failing to police China’s unfair trade practices. He withdrew the United States from multilateral efforts like the Trans-Pacific Partnership, a multicountry trade deal negotiated by President Barack Obama, and the Paris climate accord.
That shift has created an opening for other countries to step forward as global leaders, including Europe, Japan and China, despite its position as one of the world’s most controversial economic actors. On Tuesday, China submitted its proposals for overhauling the World Trade Organization, including broadening the privileges of developing countries, a status that China claims for itself.
Advocates of free trade fear that governments in India, China, South Africa and elsewhere might find Mr. Trump’s model of protectionism appealing and erect even higher barriers to foreign companies.
While the United States and China could still strike a trade deal that would roll back many of their tariffs, that likelihood has appeared to diminish in recent weeks.
Progress toward a deal came to a sudden halt this month when China backtracked on certain commitments and Mr. Trump threatened to move ahead with higher tariffs.
“We had a deal that was very close, and then they broke it,” he said on Tuesday.
The two sides continue to disagree over whether the deal’s provisions must be enshrined in China’s laws. But they are also arguing over Mr. Trump’s tariffs, which were intended to prod the Chinese to agree to more favorable trade terms for the United States. China insists those tariffs must come off once a deal is reached, but the Trump administration wants some to remain in place, to ensure China abides by its commitments.
In an interview on Tuesday on CNBC, Senator Marco Rubio, Republican of Florida, supported the administration’s tactics.
“Ideally, you wouldn’t have tariffs,” he said. But the United States already faces “all kinds of impediments” to gaining access to the Chinese marketplace, including tariffs, subsidization of industries and theft of intellectual property.
“We already have a series of hundreds of billions of dollars of Chinese penalties against the United States which are threatening our long-term viability,” Mr. Rubio said.
Canada and Mexico have repeatedly pressed the administration to lift its tariffs on steel and aluminum now that negotiations over the Nafta revision are done. The three countries signed the United States-Mexico-Canada Agreement in November, but the pact awaits passage in all three legislatures.
The Trump administration still views the tariffs as a source of leverage in case it needs to demand final changes to the deal from Canada and Mexico. But Canadian and Mexican officials — as well as many in Congress — say the levies are actually an impediment because all three legislatures will refuse to finalize the deal while they are in place.
A similar standoff could soon unfold with the European Union, which Mr. Trump has accused of being a “brutal trading partner” and being “tougher than China.”
The president, who wants Europe to open its markets to American farmers and companies, has already imposed tariffs on European metals and is threatening to levy a 25 percent tax on imports of European cars and car parts if the bloc does not give the United States better trade terms.
Europe has absorbed Mr. Trump’s steel and aluminum tariffs without too much damage. But car tariffs would strike the most important industry in Germany, which has the Continent’s biggest economy. European officials would regard car tariffs as a breach of a truce they worked out last year with Mr. Trump, and they have said they would refuse to negotiate as long as car tariffs were in place.
Cecilia Malmstrom, the European commissioner for trade, repeated on Monday that the European Union had prepared a list of American products worth $22.5 billion — including ketchup, suitcases and tractors — that would face immediate retaliatory tariffs.
“We’re prepared for the worst,” Ms. Malmstrom said in an interview with the Süddeutsche Zeitung newspaper in Germany.
European officials still hold out hope that Mr. Trump will see them as allies and not geopolitical rivals like the Chinese. And he could ultimately delay the decision and extend the Friday deadline for countries that are in trade talks with the United States.
But the president shows no signs of backing away from his stance that tariffs have helped the United States.
On Tuesday morning, Mr. Trump posted on Twitter that tariffs had rebuilt America’s steel industry and were encouraging companies to leave China, making it “more competitive” for buyers in the United States.
“China buys MUCH less from us than we buy from them, by almost 500 Billion Dollars, so we are in a fantastic position,” Mr. Trump tweeted. “Make your product at home in the USA and there is no Tariff.”
You’ve got to give Vladimir Putin his due: The man knows how to play a weak hand well.
With relatively little investment, the Russian leader is expanding his toehold in the Western Hemisphere and potentially getting access to giant oil and uranium supplies by backing a dictator in Venezuela.
With relatively little investment, he has expanded his base of operations in the Middle East by propping up a dictator in Syria and by trying to send some sophisticated Russian military equipment into Turkey. (For the latter effort, he’d actually turn a profit.)
And with relatively little investment, and little notice from a distracted international community, he has kept up a low-level war against those fighting a Russian takeover in eastern Ukraine, holding on to a bargaining chip he might find useful someday.
He does all this while overseeing an economy roughly the size of South Korea’s, which produces little or nothing the world wants to buy, outside of oil and military gear.
It’s an audacious strategy—and it is working. Never was that more clear than last week, when Secretary of State Mike Pompeo and national security adviser John Boltoncited Russian support as the only reason Venezuelan dictator Nicolás Maduro remained in his country in the face of an organized uprising by his opponents and elements of his own military.
.. In short, Mr. Putin appears to recognize the moment he is in, and what to do about it. After almost two decades of a focus on combating terrorism and Islamic extremism, the world is evolving into a new era of big-power competition. The U.S. and China are the two big competitors now, of course, but Mr. Putin is making sure Russia is the third.
His problem is that Russia doesn’t have the economic might of the U.S. and China. So he brings to the table what he can, which is basically the ability to make trouble and thereby insert himself into the global mix.
Thus, Russia became an early world leader in the 21st-century tool of unconventional combat—cyber warfare. The Kremlin combined that skill with its traditional willingness to engage in the dark arts of covert action to interfere with the 2016 election in the U.S., as well as other elections in the West.
As the U.S. tries to maintain economic pressure on North Korea, Russia provides just enough economic relief to Pyongyang to ensure that Moscow has to be a player in how the standoff over North Korea’s nuclear program plays out.
Meanwhile, Mr. Putin is wedging himself into the space between East and West by offering to sell Russia’s S-400 air-defense system to Turkey, which happens to be a member of the American-led North Atlantic Treaty Organization. After members of Congress declared that Turkey couldn’t both buy the American-made F-35 jet fighter and have a Russian air-defense system geared toward shooting down that same jet, Russia stepped up and said it also would sell its own jet fighters to Turkey instead.
Jason Kenney, the newly elected premier, is set to clash with Justin Trudeau, Canada’s prime minister
“HELP IS on the way, and hope is on the horizon,” proclaimed Jason Kenney after his United Conservative Party decisively won the election in Alberta, an oil-producing province in western Canada, on April 16th. He was talking to Albertans depressed by a downturn in the oil industry, which has pushed up unemployment and left empty a quarter of the office space in Calgary, the province’s biggest city. For Justin Trudeau, Canada’s Liberal prime minister, Mr Kenney’s victory is more a source of worry than of hope.
Although Alberta’s slump was largely caused by factors beyond the province’s control—notably the fall in oil prices in 2014-15—voters took their anger out on the government of Rachel Notley of the left-leaning New Democratic Party. Her election four years ago had been a first for a province with a reputation for Texas-like conservatism and suspicion of the federal authorities in Ottawa. Ms Notley is a defender of the province’s oil industry, which extracts the stuff expensively from tar sands. She lobbied hard for an expansion of the Trans Mountain pipeline to take more oil to the Pacific coast for export.
But she is also an environmentalist, and introduced a carbon tax, now C$30 ($22) a tonne, to discourage greenhouse-gas emissions. In striking this balance she had an ally in Mr Trudeau, who championed the pipeline but also passed a law requiring provinces to set a price on carbon emissions or to submit to one imposed by the federal government.
Much of Canada has resisted that grand bargain. The province of British Columbia, the pipeline’s terminus, remains opposed to the project on environmental grounds. In August 2018 the federal government took it over from Kinder Morgan, the frustrated US-based firm trying to build it. Moreover, four provinces led by conservative premiers—Ontario, Manitoba, Saskatchewan and New Brunswick—are fighting Mr Trudeau’s carbon price in the courts.
Alberta will now join them. Mr Kenney, a former federal immigration minister described by Maclean’s, a magazine, as a “Guinness-sipping nerd”, is expected
- swiftly to kill the provincial carbon tax. He plans to
- raise an emissions cap on tar sands oil production and s
- low down plans to eliminate coal-fired electricity. He has
- threatened to cut off British Columbia from shipments of Alberta’s oil if it continues to oppose the pipeline expansion. Mr Kenney also
- promises to bring “tens of thousands of jobs” to Alberta by slashing environmental and labour regulation, and by reducing the corporate-tax rate from 12% to 8%.
At first glance, his victory will pose additional problems for Mr Trudeau, who has been hurt by allegations that his office put improper pressure on the country’s attorney-general to drop the prosecution of a Quebec-based engineering company. He faces a re-election battle in October. But Mr Trudeau may not mind a fight over climate policy. According to a poll conducted in March by Abacus Data, 69% of Canadians say climate change is one of the top five issues they will consider when they vote. Just 28% of Canadians are firmly opposed to a carbon tax.
The federal government has the power to override British Columbia’s opposition to the pipeline expansion. It could do so as early as May 22nd. That gives Mr Trudeau some hope that he can rescue his energy grand bargain, despite Mr Kenney’s opposition to the carbon tax.
Alberta’s new premier may benefit from an upturn in the province’s growth. The unemployment rate was 6.9% in March. That is still 1.1 percentage points above the national rate, but it is well below the peak of 9.1% in November 2016. TD Financial Group, a bank, predicts that Alberta’s economy will grow by 2.4% in real terms next year, the fastest rate in the country, thanks in part to a rise in oil prices. The sunnier outlook has nothing to do with the new premier’s pro-oil policies. That will not stop him from taking the credit.
The roots of the scandal stretch back to 2015, when SNC-Lavalin was charged by Canadian authorities with using bribes to secure business in Moammar Gaddafi’s Libya.
The Globe and Mail newspaper reported in February that Trudeau’s team “pressed” Wilson-Raybould to cut the firm a deal known as a deferred prosecution agreement.
These deals, which are used in several countries, allow firms to avoid criminal convictions if they admit wrongdoing, pay fines and commit to stricter compliance rules.
Trudeau has said his team did not “direct” Wilson-Raybould’s decision, but few have been satisfied by the response.
In a January cabinet shuffle, Wilson-Raybould was moved from the Ministry of Justice to Veterans Affairs. It was widely seen as a demotion.
The Globe and Mail published its report the next month. Wilson-Raybould resigned as minister of veterans affairs and hired a retired Supreme Court justice to represent her.
.. Wilson-Raybould testified before a parliamentary committee that 11 members of Trudeau’s team had pressured her — some resorting to “veiled threats” — to get her to cut a deal.
Then Philpott resigned from the cabinet in solidarity with Wilson-Raybould.
.. Trudeau appeared for a spell to have weathered the storm, but the scandal burst into view again last week when Wilson-Raybould went public with a recording of a December phone call with Canada’s then-top civil servant.
In the call, she warned Michael Wernick, then Canada’s clerk of the Privy Council, that Trudeau “was on dangerous ground.”
Some have questioned her decision to tape the call.
“I am angry, hurt, and frustrated because I feel and believe I was upholding the values that we all committed to. In giving the advice I did, and taking the steps I did, I was trying to help protect the prime minister and the government from a horrible mess,” she wrote in a letter to fellow Liberals.
Shortly after breaking the news of her expulsion, she sent another tweet.
“What I can say is that I hold my head high & that I can look myself in the mirror knowing I did what I was required to do and what needed to be done based on principles & values that must always transcend party,” she tweeted.