Blunt Force Tariffs Backfire on Business and Farmers



Stephen Olson | Hinrich Foundation

Last year saw a dramatic uptick in actual or contemplated tariff actions, and that trend shows no signs of abating in 2019, as the trade war drags on. The typical pattern has been a unilateral application of tariffs by the US, promptly followed by retaliatory tariffs put in place by impacted trade partners.

The successive rounds of tit-for-tat tariffs between the US and China, which began last July, have attracted the most attention, but they were proceeded by section 232 tariffs on steel and aluminum in March which broadsided several of the US’ largest trading partners and key strategic allies. Meanwhile, the White House continues to weigh the possibility of applying global automotive tariffs, as discussions on possible trade agreements with Japan and the EU – two major auto exporting economies – are expected to commence shortly.

The stated US rationale for these tariffs has been to elicit policy changes to address perceived unfair trade practices on the part of trade partners, or more broadly in the belief that tariffs can reduce bilateral trade surpluses maintained by these partners.  The section 232 tariffs on steel and aluminum were nominally taken on national security grounds, but the US President himself has implied that the real rationale was to reduce the US trade deficit or gain negotiating leverage, and most analysts find the national security arguments to be specious.

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