The Rules-Based System is in Grave Danger
Donald Trump’s tariffs on steel and aluminium would be just the start
Donald Trump is hardly the first American president to slap unilateral tariffs on imports. Every inhabitant of the Oval Office since Jimmy Carter has imposed some kind of protectionist curbs on trade, often on steel. Nor will Mr Trump’s vow to put 25% tariffs on steel and 10% on aluminium by themselves wreck the economy: they account for 2% of last year’s $2.4trn of goods imports, or 0.2% of GDP. If this were the extent of Mr Trump’s protectionism, it would simply be an act of senseless self-harm. In fact, it is a potential disaster — both for America and for the world economy.
Rough trade
This danger has several dimensions. One is the risk of tit-for-tat escalation. After the EU said it would retaliate with sanctions on American goods, including bourbon and Harley-Davidson motorbikes, Mr Trump threatened exports of European cars.
The second danger springs from Mr Trump’s rationale. The tariffs are based on a little-used law that lets a president protect industry on grounds of national security. That excuse is self-evidently spurious. Most of America’s imports of steel come from Canada, the European Union, Mexico and South Korea, America’s allies. Canada and Mexico look set…
