When Donald Trump blurted the news earlier this month that he would impose tariffs on foreign steel and aluminum, it seemed as if he was finally getting ready to pick a fight over trade with the whole world. While the plan lacked detail, White House officials insisted that the duties would apply to imports from all over the map; important partners like Canada, Mexico, and Germany would not be exempt. “The president made clear these would be across-the-board tariffs with no exclusions,” an official told reporters. “One problem with exclusions is that it’s a slippery slope. Where do you stop?”
Flash forward three weeks, and the White House’s strategy has clearly changed. As a result, Trump’s global trade war now seems to be morphing into a contained showdown with China. That much was clear during the president’s flurry of actions on trade Thursday. With one breath, he announced tariffs on up to $60 billion worth of imports from China, as retribution for the country’s national habit of filching American intellectual property. With another, he officially handed out temporary exemptions on his steel and aluminum tariffs to a handful of important allies—Canada, Mexico, Brazil, Argentina, Australia, and South Korea—as well as the whole European Union. Some friendly countries haven’t won a dispensation yet—most notably Japan, where steel industry folks are apparently outraged that they haven’t received the same treatment as South Korea. But they’ll likely have a chance to negotiate: The official proclamation invited other nations to talk about “alternative ways to address” the steel and aluminum issue.
Countries that are spared from the tariffs may still face some restrictions on how much steel and aluminum they can ship to the U.S. “Every country that is not facing tariffs that we are going to negotiate with will face quotas so that we protect our aluminum and steel industries,“ White House trade policy adviser Peter Navarro told CNN. The idea behind this is to stop countries targeted by trade tariffs, such as China, from avoiding them by shipping their products through other nations, like Canada or Mexico, that are not. It’s a softer approach to protectionism that other nations may find grating, but not necessarily worth retaliating over.
Overall, this is a good thing, given the obvious downsides of the Rambo-esque, us-vs-everybody approach to trade Trump seemed to be embracing. Every country Trump hit with tariffs was another country with a reason to retaliate against American exports. And alienating allies could make it harder to organize an international response to some of China’s trade practices, such as its massive overproduction of steel.
Of course, a trade war with China alone is still going to upset plenty of executives and investors (see this week’s plummeting stock prices). But some of the concerns people commonly voice about ticking off the Chinese are a bit overwrought. For instance, the idea that China can kneecap the United States by selling off treasury debt, as one of its officials hinted it might this week, is the myth that won’t die. And as the Wall Street Journal’s Greg IP wrote Friday, it’s obvious at this point that the People’s Republic and the U.S. have been quietly battling it out on trade for a while. The transparent efforts of China’s government and its corporations to leech trade secrets and tech from American companies that want to do business there has been a longstanding tension, and it was bound to come to a head at some point. Realistically, Trump is escalating a cold war into a hot one. But at least some officials in the administration seem like they’re hoping to avoid conflict. While downplaying the size of the tariffs, Commerce Secretary Wilbur Ross told CNBC he thought they would lead the U.S. and China to work out a deal. “There may be some firing shots over the bow and things like that but I believe at the end of the day this will end up in a negotiated settlement.”
Could things still get out of hand? Of course they could. This is the Trump administration, where all things are provisional and policy swings with the president’s cable news consumption. But for now, there are signs the White House is at least picking its battles, which is a step up from where we were at the start of this month.
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