Going Medieval On Trade

U.S. steel and aluminum need help, but tariffs are a Game of Thrones approach to the problem

- Peter Coy

Gary Cohn had one of the toughest jobs in Washington: restraining an impulsive president from waging a trade war he’s been itching to fight. Now that Cohn is leaving as director of Trump’s National Economic Council, the way is clear for the president to slap hefty tariffs on steel and aluminum imports from around the world. Trump also has a freer hand to punish China for its alleged theft of intellectual property. The U.S. is weighing restrictions on Chinese investments and tariffs on a broad range of Chinese imports, people familiar with the matter told Bloomberg News on March 6.

Trump and the nationalists who have his ear, such as Commerce Secretary Wilbur Ross and trade adviser Peter Navarro, have a point. The U.S. steel and aluminum industries really have been devastated by unfair Chinese competition. China has begun closing some of its steel mills under international pressure, but its production capacity remains twice as high as it was in 2006, the year the country issued the State Council Notice Promoting Structural Adjustment for Overcapacity. The pattern with aluminum is similar.

Trump and his advisers are also correct that economic strength is a matter of national security—and that right now China plays that game much more effectively than the U.S. does. China routinely forces foreign companies to turn over their intellectual property—the crown jewels of any corporation—as the price for doing business in the country. The Made in China 2025 project aims to develop domestic sources for a wide array of advanced technologies, something that would reduce its dependence on potential adversaries such as the U.S. and Japan. The 2018 National Defense Strategy document prepared by the Pentagon accuses China and Russia of “undermining the international order from within.”