The U.S. government has released a proposal to limit imports of steel and other products in a rare hard-line approach that includes imposing high tariffs on products from trading partners such as China and Japan. President Donald Trump will decide by mid-April whether to implement the plan.
The main target of the U.S. government’s proposed import sanctions is China, as mass imports of low-cost Chinese-made steel have dealt a blow to U.S. manufacturers. The Trump administration is poised to step up its protectionist policies with the upcoming midterm elections in mind.
The Trade Expansion Act of 1962, which allows restrictions of imports if they are determined to be a threat to national security, has been cited as the rationale behind the proposal. The U.S. government argues that faltering performance of American steelmakers could have a negative impact on weapons production.
If the U.S. decides to take this move, it would be highly problematic. When a massive superpower unilaterally steps toward restricting imports, it runs the risk of sparking a trade war.
The World Trade Organization (WTO) prohibits import restrictions that are not in accordance with international rules, because the global economy would be thrown into chaos if countries were to institute such restrictions as they pleased.
The WTO, however, does allow import restrictions that are implemented for national security reasons. The U.S. is set to use this as its defense in putting restrictions on the import of steel and other products. The WTO’s exception to the rule, however, applies only to limited circumstances, such as military contingencies.
If the U.S. were to push forth its claim, other countries may fight back, citing the need for food and energy security. China and the European Union have hinted at the possibility of retaliatory action.
Import restrictions would deal a blow to the U.S. economy. If stiff tariffs were imposed on steel, the price of automobiles and various other products would rise, increasing the burden on consumers. Moreover, such restrictions would conflict with the very rationale behind them, which is to maintain national security.
The reason the U.S. government is considering imposing import restrictions across a wide spectrum of trading partners is because of suspicions that Chinese-made products are being imported into the U.S. via third countries. However, the U.S. conducts trade with many of its allies, such as Japan, South Korea and Germany. Unlike China, Japan exports high value-added products to the U.S. If the U.S. were to impose trade restrictions on its allies, it could have a negative impact on U.S. security.
Limiting its import restrictions to Chinese-made products only would not be the solution either; with the current tensions surrounding North Korea, it would be ill-advised for the U.S. to create and escalate conflict with China.
China’s policies undoubtedly have their problems. The Chinese government has protected inefficient state-owned companies, and has continued to produce steel in excess. Japan, the U.S. and the EU have urged China to change its ways in talks at the ministerial level, but what has been achieved through those meetings has been insufficient.
That does not mean, however, that the U.S. has the right to ignore international rules. Doing so raises the risk, rather, of provoking a backlash from China, and further delaying a solution. Japan and the EU must urge the U.S. to practice self-restraint.