A comment a Republican wrote at the Wall Street Journal: "Maybe Trump is as stupid as a box of rocks."

Wall Street Journal - Trump’s Trade Confusion

Auto tariffs, Nafta bullying and China disarray, oh my.

By The Editorial Board May 24, 2018 311 COMMENTS

President Trump wants everyone to know he is a master trade negotiator, but this week his volleys look more like a mess than mastery. His China policy is all over the place, Nafta is in jeopardy, and his new threat to impose a 25% tariff on auto imports undercuts his foreign policy and economic goals. But perhaps there’s some grand strategy that will eventually unveil itself and wow the crowds.

The Commerce Department on Wednesday initiated a probe under Section 232 of the 1962 Trade Expansion Act to decide if auto imports imperil national security. Yes, the killer Kia. This is the same law the Administration used this spring to impose 25% tariffs on steel and 10% on aluminum imports to protect domestic manufacturers. The auto investigation is even more dubious.

Commerce Secretary Wilbur Ross declared on Wednesday that “there is evidence suggesting that, for decades, imports from abroad have eroded our domestic auto industry.” There is? The real evidence is that America’s Big Three car markers became less competitive as an oligopoly, and foreign imports forced them to shape up and make better cars.

About 56% of cars sold in the U.S. in 2017 were made domestically. Canada, Mexico and Japan each made up about 11%. While President Trump has complained about BMW s and Mercedes flooding American shores, German-made cars account for 4% of American car sales. China accounts for 0.3%.

U.S. automakers aren’t asking for and don’t need protection. GM and Ford produce some small cars in Mexico to comply with fuel-efficiency mandates, but imports make up only about 1% of their sales. American manufacturers have been scaling back domestic production of some small passenger models, but that’s because of declining demand, not imports.

The Environmental Protection Agency plans to relax fuel standards, which will allow car makers to invest more in higher-margin trucks and SUVs. Tax reform should boost domestic investment in manufacturing, but another way to make the U.S. more competitive is to scrap aluminum and steel tariffs that raise costs.

Mr. Trump’s tirades against foreign carmakers are also misdirected. Foreign manufacturers operate a couple of dozens plants in the U.S., mostly in southern states where labor costs are lower. Nissan produces its Altima in Canton, Miss., and Smyrna, Tenn. BMW has a plant in Greer, S.C. Mercedes makes cars in Vance, Ala., and Ladson, S.C. About 70% of Toyotas and 94% of Nissans sold in the U.S. are made in the U.S.

Mr. Ross discounts the impact of steel tariffs on consumers, saying that “on an average car, $175 worth of steel increase is the maximum that would come from a 25 percent tariff increase. That’s not much.” Mere crumbs, as Nancy Pelosi might say. But a 25% tariff would raise the price of a small passenger car by around $5,000 to $6,000 and cost consumers about $48 billion per year.

We suspect the auto tariffs are one more attempt to bludgeon allies into trade surrender. Mr. Trump is frustrated that Mexico and Canada haven’t rolled over for U.S. Trade Representative Robert Lighthizer’s absurd demand that 40% of light vehicle content and 45% of pickup trucks be produced in “high-wage zones” with an average minimum wage of at least $16 per hour. So Mr. Trump may be trying to force Mexico to heel, though it could backfire and scuttle hope of any deal.

Earlier this year, Mr. Trump threatened tariffs on BMW and Mercedes if the European Union doesn’t reduce its 10% levy on U.S. auto imports. But the EU has responded to his steel and aluminum tariffs by teeing up duties of up to 25% on $3.5 billion in U.S. goods if Europe doesn’t get a permanent exemption.

All of which underscores Mr. Trump’s trade confusion. The Administration’s lack of strategy or defined goals was especially evident in the President’s seesaw on China this week.

On Monday he boasted that a weekend deal to withdraw tariffs was “one of the best things to happen to our farmers in many years!” The next day he complained that he was “not satisfied,” then tweeted Wednesday that “Our Trade Deal with China is moving along nicely, but in the end we will probably have to use a different structure in that this will be too hard to get done and to verify results after completion.” Glad he cleared that up.

As Ronald Reagan liked to joke about the boy who saw a stable full of manure, there must be a pony in there somewhere. Or maybe all this is merely a pile of impulsive, ill-considered threats that are increasing business uncertainty, slowing the economy, and irritating friends the U.S. needs on Iran and Korea.

Appeared in the May 25, 2018, print edition.