Former White House economists urge Trump not to impose emergency tariffs on steel imports

Fifteen former top White House economists, from both political parties and dating back to the Ford administration, are urging President Trump not to go through with plans to impose tariffs on steel imports in the name of national security.

In an extraordinary letter Wednesday to Trump, these former chairs of the White House Council of Economic Advisors say they represent a wide range of political and economic views but are of one accord in opposing Trump’s plan to slap new tariffs on imported steel.

The Trump administration is undertaking a review of the issue, which would provide a basis for the president to levy new tariffs on the grounds that foreign steel presents a threat to American security interests.

Such tariffs would not only come with diplomatic costs, as most imported steel comes from important allies, but they also would actually damage the U.S. economy, these economists write.  

The U.S. already has many duties on a variety of steel imports that were found to have been dumped into the U.S. at unfair prices or receiving government subsidies. The additional tariffs that Trump is contemplating, the letter states, “would raise costs for manufacturers, reduce employment in manufacturing, and increase prices for consumers.”

“We urge you to avoid a policy that would likely incur greater economic and diplomatic costs than any conceivable national security gain,” it says.

Most economists are not in favor of protectionist policies. Still, the letter is highly unusual in that such a sizable number of prominent economists, who seldom agree on major policy issues, would join in raising opposition to a potential policy action by a sitting president.

READ  SDI Butler Site of Next Steel 101 Workshop Mill Tour

The list of signatories include two former chairmen of the Federal Reserve — Ben S. Bernanke, who served in the George W. Bush White House, and Alan Greenspan, the chair of the council under Gerald Ford in the mid-1970s. Others who penned their name on the one-page letter include Nobel laureate Joseph Stiglitz of Columbia University and Laura Tyson of Berkeley, both of whom advised Bill Clinton, and conservative economists Glenn Hubbard of Columbia and Greg Mankiw of Harvard.

Janet L. Yellen, the current Fed chairrwoman and chair of the Council of Economic Advisers from February 1997 to August 1999, was not asked to sign.

The White House and the Commerce Department, which is preparing the report on steel imports and national security, did not immediately respond to requests for comment.

Veteran trade analyst William Reinsch, who is a fellow at the Stimson Center, said he could not recall a time when so many economists had joined in such a letter addressed to the president. Even so, he doubted that it would have much effect.

“This is the economic establishment that he enjoys thumbing his nose at,” Reinsch said. “I don’t think he’ll be inclined to take their advice.”

At the same time, some of Trump’s own top advisors inside the White House are likely to be advising caution against imposing sweeping measures that could anger allies and risk a trade war. At the Group of 20 major economies’ summit last week, European Union officials warned that such tariffs on foreign steel would be met by swift retaliation.

READ  Liberty to acquire Tata pipe mills in Hartlepool

The letter by the economists noted that the experience with steel tariffs under George W. Bush should serve as a lesson.

In 2002, Bush applied emergency tariffs of up to 30% on steel imports, but he lifted the measures 16 months before they were scheduled to expire. The World Trade Organization ruled that action illegal and Europe threatened to retaliate with tariffs of its own — on citrus from Florida, motorcycles made in Wisconsin and other U.S. goods.

“The diplomatic costs might be worth it if the tariffs generated economic benefits,” the letter said. “But they would not.” 

Source link