This week, President Trump took to Twitter to announce new tariffs on steel and aluminum imports from Brazil and Argentina. Although the Trump administration has had its share of puzzling trade war escalations — including declaring auto parts a threat to national security — this is potentially the most indefensible one yet.
Anecdotally, the most frequent argument I hear from supporters of Trump’s trade policies is “we need to confront China.” On this point, I would simply note that it is both true that 1) China is guilty of serious, ongoing human rights abuses and 2) China’s greater embrace of economic freedom over the past 30 years has lifted over 700 million people out of poverty — a historic alleviation of human suffering. View the glass as half empty or half full, the choice is yours.
But if the single-largest justification for Trump’s trade tactics is China — what’s that have to do with Argentina and Brazil? It would be one thing if President Trump only directed his trade fire at China, but increasingly, he’s got a beef with everyone. Even French wine could soon face a tax hike as high as 100 percent!
Adding to the irony, some prominent protectionists have spoken out against Chinese investment in other continents. If alarmists are concerned about China’s growing footprint in South America, shouldn’t we promote policies that expand our own? Does raising taxes on South American imports really court their business away from China? Bold strategy, Cotton, let’s see if it pays off.
In short, the administration strongly undermines its own hard line stance against China by supporting protectionist policies elsewhere. If the administration wants America to better compete against China, it should be focused on expanding economic cooperation elsewhere, not whittling away at it.
One final point: among President Trump’s justifications for levying tariffs on Argentina and Brazil was that the countries “have been presiding over a massive devaluation of their currencies.” Implicit here is a false belief that either country would gain an advantage by doing so. If devaluing one’s currency is a path to prosperity, Venezuela and Zimbabwe would be among the richest countries on the planet right now. While it’s true that Argentina and Brazil’s currencies have slipped in value during their ongoing economic slowdowns, this devaluation is not rewarding them — it is punishing them by shrinking the value of wages and savings in their respective nations.
I don’t understand the administration’s rationale for the ongoing trade disputes, but if taking on China is the justification, the policy prescriptions don’t fit. Trump’s tariffs on Brazil and Argentina make America less competitive against China, not more. But good luck making the case to the public that “we need to confront Argentina.”
Photo credit: Gage Skidmore