This seems to be an imprudent move intended to retain the support of those who were his base during the presidential campaign. U.S. President Donald Trump should realize there is nothing to gain but a flare-up of futile trade frictions by imposing tariffs unilaterally.
Trump announced Thursday that Washington would place tariffs of 25 percent on steel imports and 10 percent on aluminum imports.
Although specifics, such as which countries and products will be subjected to the measure, have yet to be unveiled, the duties could cover Japanese products if they are applied broadly.
There is a view that a major target of the measure is China, which has been pushing to increase its exports. Meanwhile, the European Union and Canada announced they would take countermeasures immediately if the tariffs have adverse effects on them.
Slapping each other with countermeasures will impair the free-trade system that the United States has promoted consistently since the end of Word War II. It is the wrong decision for Washington to reverse its course.
Concern over the tariffs' impact on global trade drove the Dow Jones industrial average to a 420-point plunge on the New York Stock Exchange on Thursday. In Tokyo trading, the Nikkei average fell more than 540 points on Friday.
Market reactions to the protectionist policy must not be ignored.
Support from voters in places such as U.S. Midwest steel industry areas was a decisive factor in Trump's presidential victory.
If the import restrictions are intended to reinforce his support base ahead of the midterm congressional election in November, the move is significantly lacking in legitimacy.
Respect free trade principles
Regarding employment in the U.S. manufacturing sector, on which Trump has focused, some observers point out that this measure could have serious implications of reducing employment in industries such as automobile manufacturing, which would see material costs rise, instead of increasing jobs in the steel industry.
It is also significantly problematic that Trump cited a national security threat as the reason for imposing the import restrictions on the grounds that the exhaustion of the U.S. steel industry could undermine the U.S. ability to procure materials for military use.
This punitive measure based on U.S. law could constitute a violation of World Trade Organization rules.
The WTO allows trade restrictions in exceptional cases on national security grounds. However, Trump's claim is hardly convincing for reasons that include the U.S. Defense Department's denial of difficulty in material procurement.
If countries start stretching the interpretation of national security in a tug-of-war, the WTO could become debilitated.
As a superpower, the United States should take the lead by exercising restraint based on free trade principles.
Regardless of these U.S. tariffs, it is vital for China to accelerate efforts to rectify its excess steel production voluntarily to promote sound free trade.
The Chinese government has pledged to consolidate excess production facilities on occasions including summit talks of the Group of 20 major economies. Such entities as state-owned companies, of which local governments have appeared strongly defensive, should not be regarded as sanctuaries from such consolidation measures.
(From The Yomiuri Shimbun, March 3, 2018)
Read more from The Japan News at https://japannews.yomiuri.co.jp/
