The more frequent case for tariffs is that it is a tool for getting attention and changing behavior. Country X is doing something you don’t like: Either it’s making it too hard for your own companies to sell to Country X’s customers, or it’s making it too easy for Country X’s own companies to undercut yours in competition around the world. You apply a tariff to offset what you consider an unfair advantage. And these days, you also get ready to convince an adjudicator at the World Trade Organization that you’ve got a legitimate grievance, because Country X is sure to complain about your tariff to the WTO.
Your real goal is not to keep the tariff but instead to change the other country’s behavior—to make its subsidies or unfair practices painful enough that eventually it drops them, and you can get rid of your tariffs as well. Tariffs in this sense are like other resorts-to-force: a means toward altering behavior, never an end in themselves. The best tariffs are the ones you can drop most quickly because they’ve done the job of changing the other side’s mind.
(If you want more backstory on how this logic applied during the 1980s and early ’90s, when Japan’s export-driven mercantilism was in its most powerful phase, please refer to this item from last month. Or to this one from back in that era, which gave illustrations of strategic uses of tariffs to cope with the “Asian developmental model.” Or to this book from 1989, which argued that the right U.S. response to Japanese mercantilism was not become more like Japan but instead to be “more like us,” which was the book’s title—more open, more diverse, more adaptable, and more resolute about combatting class, racial, and ethnic barriers.)
For a tariff to do any good, let alone to seem justified, it must have two elements: a reason for starting, and a reason for ending.
The reason for starting, the cause for applying the tariff in the first place, is whatever the other country has done that you find objectionable. The reason for ending is that the other country has halted or changed that practice. The whole object in applying the tariff is to get back to the position where you can remove it, because the other country has stopped doing what you considered wrong.
By these standards, how do the new steel and aluminum tariffs measure up?
Based on all the evidence now available, they fail on both counts. Badly.
The countries being punished—Canada, Mexico, those of the European Union, and others—aren’t doing anything about steel or aluminum that the United States could plausibly call wrong or unfair. They sell a lot of steel to the U.S. Canada is the largest supplier of imported steel to the U.S.; it’s also by far the biggest customer of U.S.-made steel. (Both patterns are because so many industries in the U.S. and Canada are so tightly integrated, with so many components and subassemblies moving back and forth across the border.) But that’s no more a proof of “unfair” practices than the fact that the U.S. sells a lot of soybeans to Japan and a lot of Boeing airliners to China. I’m quick to disclaim any status as an authority on the metals industry. But from following the trade news over the decades, I’m not aware of serious arguments that the European, Canadian, or Mexican industries have been predatory in their dealings with the U.S. The clinching evidence here comes from the administration’s own statement yesterday announcing the tariffs. It justifies this move not on economic or trading grounds, but for “national security” reasons. It’s worth noting that the exercise of a national-security provision is being applied not to, for instance, Russia, but instead to countries that include America’s two immediate neighbors, its other most important diplomatic and strategic allies, and its most closely integrated economic and trading partners.