Trade associations from the U.S. Chamber of Commerce to the National Retail Federation and even the International Monetary Fund have joined the chorus of voices warning against the imposition of widespread tariffs on steel and aluminum imports.
The chorus of voices warning the United States against the imposition of widespread tariffs on steel and aluminum imports is growing, and getting louder.
In the past few days alone, a group of nearly four dozen industry advocacy groups, ranging from the U.S. Chamber of Commerce to the National Retail Federation and Agriculture Transportation Coalition, as well as Christine Lagarde, head of the International Monetary Fund (IMF), have come out in opposition to the proposed tariffs.
In a letter sent to President Trump on Sunday, the trade associations urged the Administration “not to impose tariffs and to work with the business community to find an effective, but measured, solution to China’s protectionist trade policies and practices that protects American jobs and competitiveness.
“Imposition of sweeping tariffs would trigger a chain reaction of negative consequences for the U.S. economy, provoking retaliation; stifling U.S. agriculture, goods, and services exports; and raising costs for businesses and consumers,” the group wrote.
“Tariffs on electronics, apparel, and other consumer products would increase prices for U.S. consumers and businesses, while doing little to address the fundamental challenges posed by unfair and discriminatory Chinese trade practices. These increased costs would effectively levy a tax on U.S. consumers and businesses, negating gains for American workers from U.S. tax reform,” it added
The associations argue tariffs “would not only affect Chinese shippers, but also harm U.S. companies that sell component pieces of final products exported from China,” as well as “hurt U.S. exports by making it more expensive to obtain key inputs and disrupting existing supply chains,” and depress financial markets.
“Imposition of unilateral tariffs by the Administration would only serve to split the United States from its allies, hinder joint action to effectively address shared challenges, and ensure that foreign companies take the place of markets that American companies, farmers and ranchers must vacate when China retaliates against U.S. tariffs,” the group said.
“Consistent with Section 304 of the Trade Act of 1974, we request that the Administration allow industry experts the opportunity to comment on these issues, including the economic impact of any potential actions.”
Meanwhile, in an IMF blog post, Lagarde wrote of the need for the finance ministers from the Group of Twenty (G20) nations to guard against the downside risks posed by a potential tariff tit-for-tat.
“The good news is that the growth momentum has continued to strengthen, involving three- quarters of the world economy,” she wrote.
“But even though the sun still shines in the global economy, there are more clouds on the horizon. Think of the growing concerns over trade tensions, the recent spike in volatility in financial markets, and more uncertain geopolitics. Moreover, the pick-up expected for 2018 and 2019 will eventually slow, which implies a challenging medium-term outlook for many countries, especially in advanced economies.
“That is why countries need to implement policies to guard against downside risks, strengthen resilience, and foster medium-term growth that benefits everyone,” added Lagarde. “Now is the time to take bold policy actions, and make the most of this period of global growth.”
In order to accomplish this, Lagarde said fiscal policy makers should focus on five key objectives: steering clear of protectionism, guarding against financial risks, stepping up economic reforms, fostering more inclusive growth, and strengthening international cooperation.
“Policymakers need to work constructively together to reduce trade barriers and resolve trade disagreements without resort to exceptional measures,” she wrote. “They should ensure that the recently announced U.S. import tariffs do not lead to a wider escalation of protectionist measures.
“Economic history clearly shows that trade wars not only hurt global growth, but they are also unwinnable.”
“We also know that protectionism is pernicious, because it puts the biggest strain on the poorest consumers who buy relatively more low-priced imports,” she added. “In other words, harming trade is bad for the economy and bad for people.
“Moreover, the way to address global economic imbalances is not to raise new obstacles to trade. Using fiscal means to address global imbalances is critical.”
Trump’s steel, aluminum tariffs spark widespread opposition
