Trump’s gamble with trade policy imperils economy

US President Donald Trump has gambled with the US economy and his own presidency.

The tariffs he wants on steel and aluminum win applause from steel and aluminum manufacturers.

But they’ll hurt steel and aluminum consumers—meaning everyone else.

Maybe he’s right. Maybe, as he tweeted early on Mar. 2, trade wars really are “good” and “easy to win.”

If so, history is misleading.

A stock market swoon on Mar. 2, the day after Trump called for a 25% tariff on steel and a 10% duty on aluminum, indicates investors think him less than clairvoyant.

The president acts as though trade deficits mean only that trade partners cheat the US.

Some do. But the US can address unfair trade with measures less draconian than tariffs.

And, yes, the country has quarrels with the principal dispute mediator, the World Trade Organization. But revanchist protectionism is no proper response.

The oil and gas business will suffer two main ways from this.

The price of steel will rise for an industry that uses lots of the material.

Trump might think he’s done enough for oil and gas by easing the hyperregulation of his predecessor. Comparing metal costs raised versus regulatory costs avoided might make him look right.

The greater and more-lasting damage, however, will come from retaliation and consequent economic damage.

The US soon will be a major net exporter of natural gas. The Energy Information Administration expects it to become a net exporter of oil about 2029. US exports of natural gas liquids are surging.

What if oil and gas-importing steel producers respond to Trump’s tariffs with duties or embargos on US hydrocarbons?

Such mischief happens in trade wars. Indeed, recessions happen in trade wars.

According to polls, Trump is a very unpopular president. He would not benefit from an economy wobbled by brinksmanship with trade.

Trump seems determined to make a major mistake for reasons difficult to fathom. Some blustery campaign promises, especially economically reckless ones, just aren’t worth keeping.

(From the subscription area of www.ogj.com, posted Mar. 2, 2018; author’s e-mail: [email protected])