Despite Opposition, Trump Is Expected To Unveil International Tariffs Soon

Mar 8, 2018
Originally published on March 8, 2018 6:21 am
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RACHEL MARTIN, HOST:

The White House is expected to unveil its proposed steel and aluminum tariffs proposal as early as today. The move comes despite widespread opposition from business as well as Democrats and Republicans in Congress. President Trump will offer Canada and Mexico a temporary exemption from the tariffs on steel and aluminum imports and possibly extend that offer if there's progress on renegotiating the North American Free Trade Agreement. We're going to talk now with Glenn Hubbard. He chaired the Council of Economic Advisers under President George W. Bush. He is currently the dean of Columbia's Business School. Thanks so much for being with us this morning.

GLENN HUBBARD: My pleasure.

MARTIN: We should remind listeners, you were among the economists who signed a letter last year urging President Trump not to impose tariffs like this, saying it would damage the American economy. Do you still believe that?

HUBBARD: I do. I think the Trump administration got two things right and two things wrong. The thing that's right is there actually is global excess capacity in steel and aluminum, and China is a culprit. So that's correct. And second is Chinese theft of intellectual property is a real issue for the U.S. The current economic report of the president makes that point. The two things wrong is that tariffs, particularly with national security excuses, aren't the answer to that question. Rather than China being the villain in the play, the U.S. has now become the villain. That's crazy. The second thing wrong is the failure to help American workers who were hurt by global pressures. That's something that could've happened in the tax bill. So the administration is getting some things right. But unfortunately, their responses are wrong.

MARTIN: I want to get to what you see as possible prescriptions, though, for the problems you just outlined. But first, let's talk about your experience because you actually helped the George W. Bush administration in 2002 craft steel tariffs against China. And those are largely believed to have not worked. Why? What were the unintended consequences there?

HUBBARD: Well, first, I opposed the tariffs from President Bush as he knows well and got me in some hot water. But I think one of the reasons that things went wrong were the same reasons that happen today. While you do gain jobs and incomes in protected industries, you lose more in others. You know, it's not just makers of steel and aluminum. Steel and aluminum are inputs into cars, into cans, into metal that we use. And consumers are worse off, and people don't see that.

MARTIN: We heard elsewhere in our program from the head of the national steelworkers union in Canada who seemed to suggest that the Canadian government should think about following President Trump's lead on this and impose its own tariffs on China. Could this actually work? If unilateral tariffs from the U.S. wouldn't work to prevent the Chinese dumping, which is lowering the prices, if other countries sign on and do the same thing, would it have an effect?

HUBBARD: Well, it's certainly part of a general point, which is there has to be a multilateral solution here. You know, China is only the 11th-biggest seller of steel in the United States. Canada is actually No. 1 of overseas steel. So we really have to have a multilateral solution. It could be a series of tariff discussions. Hopefully, it's more likely a negotiation with the Chinese. Right now, the Chinese are in an enviable position of being able to watch as the U.S., Canadians and Europeans are fighting with each other, taking China off the stage. It's crazy.

MARTIN: So then what is the multipronged solution here?

HUBBARD: Well, I think the first thing is to engage China on why this behavior is not in China's interest. It's fine to say something isn't in our interest, but that's not of great concern to the Chinese, perhaps. But it's not in China's interest to have intellectual property thefts. It's not in China's own interests to have an uneconomic steel industry. They're just wasting their own resources. Then we could talk about actions ranging from tariffs to actions in other areas to get at it. But it has to be multilateral.

MARTIN: Glenn Hubbard is the dean of Columbia Business School, and he served as the chairman of the Council of Economic Advisers under the administration of President George W. Bush. Mr. Hubbard, thank you so much for your time this morning. We really appreciate it.

HUBBARD: My pleasure.

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