The economics of international trade are notoriously tricky. The World Trade Organization was formed for the express purpose of getting countries to play nicely when it comes to the often dangerous and always intricate matters of global trade.
But President Donald Trump, evidently, doesn't want to play anymore.
With a few comments in late February 2018, a couple of follow-up tweets and some quick comments to reporters on March 5, 2018, Trump has fired the first shot in what many — across the U.S. political spectrum and around the globe — fear could become a full-fledged trade war.
What that could mean, those most fearful say, is a worldwide tit-for-tat on trade that may lead to the loss of thousands of American jobs and — hold on to your wallets — a coming recession.
All that because the president, citing an $800 billion trade imbalance, threatened a 10 percent tariff on aluminum and a 25 percent tariff on steel coming from other countries into the United States.
"This is a terrible idea for the United States. It's something that will be harmful to the U.S. economy," Bryan Riley, the director of the Washington-based National Taxpayers Union's Free Trade Initiative, says.
To slam this in reverse for just a second, let's explain exactly what a tariff is. It's a tax, basically, levied on products coming into a country — imports. So if Trump's aluminum/steel tariffs are enacted, and a U.S. company wants to buy $1 million worth of steel from, let's just say, China, it would cost that U.S. company $1.25 million with a Trump tariff. The extra $250,000 goes to the tax man.
The idea is that, instead of paying that extra $250,000 tax, U.S. companies in need of steel or aluminum will buy from U.S. manufacturers, boosting those hard-hit industries, which in turn will hire more workers to keep up with the increased demand. Everybody in all those Rust Belt states will be happy. The Chinese, maybe not.
But, again, none of this happens in a vacuum. Despite the president's declarations to the contrary, it gets complicated.