Washington, the nation’s most trade dependent state, must buckle up and brace for turbulence as President Donald Trump instigates a global trade dispute.
Trump’s usual technique of sowing confusion and changing plans at the last minute is especially dangerous on this stage.
His blunt approach may also prompt retaliatory tariffs that cause serious economic harm to Washington and the rest of the nation.
Resulting job losses would far outweigh the boost he’s giving to domestic metal producers, which includes a steel mill in Seattle and smelters in Ferndale and potentially Wenatchee.
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Of course, the United States had to respond more forcefully to China’s unfair efforts to dominate steel and aluminum markets. But Trump should have done so with care and precision, rather than announcing universal tariffs that alienated allies and trading partners, then partly backtracking.
At the behest of U.S. Rep. Dave Reichert, R-Auburn, and more than 100 other House Republicans, Trump changed course last Thursday, agreeing to temporarily exempt Canada, Mexico and other favored nations.
Reichert is trying to stay positive. But while there may be method to the madness, it’s hard to share the congressman’s optimism about the long-term outcome.
He said that, while the tariffs pose severe challenges and the ambiguity of Trump’s tactics are a problem, the administration is making progress on updating the North American Free Trade Agreement with Mexico and Canada.
Instead of following through on Trump’s threats to withdraw from NAFTA, the administration is earnestly negotiating updates, and a new agreement could be done this spring, Reichert said.
Then the U.S., Canada and Mexico would be in a position to return to the Trans-Pacific Partnership, the important trade agreement and counterweight against China that became a political punching bag in the 2016 election.
Trump formally withdrew from TPP right after taking office, but his administration has recently hinted that it might reconsider and join 11 other countries that have signed on.
“It’s definitely a change of direction in building that relationship,” said Reichert, chairman of the House trade subcommittee.
Resuming participation in TPP would be a great accomplishment for Reichert, who is leaving Congress this year, and for Trump.
Washingtonians should be prepared to set aside partisanship and support that effort if it actually happens. The national security and economic opportunities of TPP are enormous, especially for Washington industries such as agriculture and software that would benefit from TPP’s tariff reductions and intellectual-property protections.
One can hope, but resuming leadership of TPP seems like a reach for a nationalist president whose inconsistency, lack of diplomacy and haphazard policymaking succeeds mostly at creating uncertainty at home and abroad.
In the meantime, trade-dependent Washington is on edge, fearing the worst from the pugilistic tariffs.
Rising metal costs may create some jobs in Washington, especially if they prompt Alcoa to restart its Wenatchee smelter.
But higher metal costs may hurt cornerstone industries, including manufacturing of airplanes and trucks. Steel prices affect the cost of new apartment buildings and office towers, and even microbreweries and their customers are affected when aluminum prices increase the cost of their cans.
The tariffs will affect the ports of Seattle and Tacoma, which handled $2.7 billion worth of aluminum and steel imports last year.
But port officials say the greater risk is that Trump’s reckless approach could lead to retaliatory tariffs jeopardizing U.S. exports, such as Washington agricultural products that are dependent on foreign markets.
Exemptions may reduce harm to manufacturers and the risk of retaliation. But Washington state and the U.S. need a steadier approach to resolving trade disputes, preserving free trade and global leadership.