Friday , November 24 2017
Home / Econbrowser - James Hamilton / Some Non-Economic Implications of the National Security Rationale for Protection

Some Non-Economic Implications of the National Security Rationale for Protection

Summary:
In several recent pieces [1] [2] [3], I have worried about the economic implications of trade protection, particularly those moving forward in the guise of “national security”. In this post, I want to make a couple of observations on some non-economic implications. From Politico: President Donald Trump’s protectionist rhetoric on trade has already set the United States apart from its global allies, but the White House’s pending moves — sweeping new trade policies to protect the steel industry — could be the first major steps to reverberate across global economies and incite other countries to retaliate… The pending Section 232 review, under which the administration is considering whether to limit imports of both steel and aluminum in the name of national security, would help Trump keep

Topics:
Menzie Chinn considers the following as important:

This could be interesting, too:

Menzie Chinn writes Guest Contribution: “The Long-term Job Decline in US Manufacturing”

Menzie Chinn writes The Association between China-based Job Displacement and Drug Overdose Deaths

Menzie Chinn writes US Withdrawal from KORUS Free Trade Agreement?

Menzie Chinn writes Thoughts on Trade, Growth and Inequality from “Fostering a Dynamic Global Economy”

In several recent pieces [1] [2] [3], I have worried about the economic implications of trade protection, particularly those moving forward in the guise of “national security”. In this post, I want to make a couple of observations on some non-economic implications.

From Politico:

President Donald Trump’s protectionist rhetoric on trade has already set the United States apart from its global allies, but the White House’s pending moves — sweeping new trade policies to protect the steel industry — could be the first major steps to reverberate across global economies and incite other countries to retaliate…

The pending Section 232 review, under which the administration is considering whether to limit imports of both steel and aluminum in the name of national security, would help Trump keep his campaign promise to crack down on unfair trade practices. The administration has been debating the issue behind closed doors for months, including in a high-level meeting this week with the president, and it finally appears to be moving toward a coherent path forward.

…“The president’s advisers are coalescing around a tailored approach that would target the steel imports of individual countries, rather than across-the-board measures against every nation that sends steel to the U.S., according to two sources familiar with the discussions.

Those who doubt we are heading toward implementation of some substantial protectionist measures should read this account, which characterizes the President as being “hell bent” on moving forward.

Chad Bown at Peterson IIE has outlined what countries would likely suffer the most – i.e., our traditional allies. That’s partly because imports of Chinese steel have already been reduced by conventionally used anti-dumping and countervailing duties. As for aluminum, see this NYT article.

However, to the extent that China is now again in the firing line – partly because of a perceived failure to rein in North Korea, I expect that a large amount of the rhetoric justifying the use of Section 232 will be aimed at China.

Not only is the use of Section 232 more likely to lead to retaliation by our trading partners. I think it might also be inflammatory with respect to certain minority groups within the United States. Almost exactly 35 years ago, Vincent Chin was beaten to death with a baseball bat in Detroit because he was blamed for the plight of two unemployed auto workers (who, obviously, mistook him for being Japanese, instead of American of Chinese descent). It does not take too much imagination to believe that, in the current political environment, commentary about the enemies of the people can be re-deployed against certain countries, and hence minority groups associated with those countries. While the President has recently spoken of the evils of Germany, I do not realistically believe there will be a surge of attacks on Americans of German descent, but should diplomatic and economic relations with China or other nations deteriorate, other groups may be targeted.

Count me worried.

Menzie Chinn
He is Professor of Public Affairs and Economics at the University of Wisconsin, Madison

Leave a Reply

Your email address will not be published. Required fields are marked *