Politics

Steel Trap

Donald Trump keeps divulging the real reason for his steel tariffs.

Donald Trump, steel.
Donald Trump, in front of bars of machine-grade steel, at the Pacific Machinery & Tool Steel Company on March 6 in Portland, Oregon. Photo illustration by Lisa Larson-Walker. Photos by Mandel Ngan/AFP/Getty Images, Natalie Behring/Getty Images.

The United States has a creative excuse for slapping tariffs on foreign steel and aluminum.
Without the tariffs, the Trump administration argues, American producers of these metals would continue to decline, jeopardizing our military. This rationale has a legal purpose: to exempt the tariffs from adjudication by the World Trade Organization, which defers to claims of national security. But the rationale is a fraud. We know this because President Trump keeps blurting out the truth: The tariffs aren’t a military necessity. They’re a bargaining chip.

The administration is exploiting a loophole in the WTO’s underlying document, the General Agreement on Tariffs and Trade. Article XXI of GATT states: “Nothing in this Agreement shall be construed … to prevent any contracting party from taking any action which it considers necessary for the protection of its essential security interests.” Those interests, according to the relevant clause, must pertain to “traffic in arms, ammunition and implements of war and to such traffic in other goods and materials as is carried on directly or indirectly for the purpose of supplying a military establishment.”

The security exemption was never meant to apply to economic competition. At the 1947 conference that formulated GATT, the U.S. delegate, J.M. Leddy, explained that the exemption was narrowly drawn to prevent countries from imposing “under the guise of security … measures which really have a commercial purpose.” In 1985, the United States invoked Article XXI to defend its trade embargo against Nicaragua. The U.S. argued that it was entitled to judge what was essential to its own security. The WTO’s predecessor, the GATT Council, accepted that premise. But the context of the case was military conflict.

Article XXI has almost never been invoked to protect a domestic industry. The last time was in 1975, when Sweden introduced quotas to limit imports of certain boots and shoes. The Swedes admitted that they were doing this to protect their footwear producers and that the underlying problem was “the relatively high production costs in Sweden.” But they argued that the items in question were “essential products necessary to meet basic needs in case of war or other emergency in international relations.” As recorded in the minutes of a 1975 GATT Council meeting, other countries “expressed doubts as to the justification of the measure under the General Agreement.” The council, according to an academic summary, concluded that the quotas were a “misuse of the GATT security exceptions.” But before anyone filed a formal case against the Swedes, they dropped the quotas.

Trump is trying the same maneuver. Last April, he ordered the U.S. Department of Commerce to lay the groundwork for restricting foreign steel and aluminum. He cited a U.S. law, the Trade Expansion Act of 1962, which authorizes the president to “adjust the imports” of any item “so that such imports will not threaten to impair the national security.” In June, at a WTO meeting, delegates from other countries protested that Trump’s case didn’t fit Article XXI. They warned that if the WTO were to accept such an abuse of the security exemption, everyone would copy the trick, gutting the trade-adjudication system. But the U.S. delegation insisted that steel and aluminum were crucial to our national defense.

Every statement written for Trump about the tariffs, including the March 8 proclamations in which he announced them, has focused on national security. But Trump can’t stick to the script. He keeps giving away that his real motives have little to do with security. Since March 1, when he signaled that the tariffs were imminent, his constant refrain in tweets, press conferences, and rallies has been that other countries have “screw[ed],” “mistreated,” and “taken advantage” of us, not just in trade generally, but specifically in steel and aluminum.

Trump always says he’s protecting “companies” and “workers.” He has to be reminded to talk about national security. On March 1, he met at the White House with executives from American steel and aluminum companies. The meeting, staged for TV, was supposed to promote the security rationale. But Trump forgot to mention that point. One of the executives had to prompt him. Eventually, Trump picked up the theme, but he spoke of it as an afterthought. “We need it even for defense, if you think,” he said of the metal industry.

If Trump’s tariffs were for national security, he would treat U.S. allies differently from hostile or nonaligned countries. Instead, he announced that the tariffs would cover everyone, with only temporary exemptions. He said our allies weren’t really allies. And he offered to trim or withdraw the tariffs in exchange for concessions completely unrelated to national security. On March 5, Trump tweeted that he would exempt Canada from steel and aluminum tariffs if Canada agreed to “treat our farmers much better.” He offered the European Union the same deal “[i]f they drop their horrific barriers & tariffs on U.S. products,” specifically “our farming goods.” You can’t offer to drop steel tariffs in exchange for farm exports and then tell the WTO that the steel tariffs are essential to your national security.

If you want to know what’s really behind the tariffs, ignore what Trump reads from a script. Listen instead to what he says extemporaneously behind closed doors. Last Wednesday at a fundraiser in Missouri that was closed to the press (but captured in a leaked audio recording), he confessed that “the tariffs are just a form of, like, ‘You just can’t keep doing this’ to the outside world … we have to get back the respect.” He explained:

When I did the tariffs — and basically what I’m really saying [is], it’s not so much tariffs. It’s really saying we can’t be tak[en] advantage of anymore by these people that come in and dump everything into our country and destroy our mills and destroy our workers and destroy everything. So when I did the tariffs, most people understand what I’m doing is fighting for them. I’m fighting for these companies that are being abandoned and the jobs that are being abandoned.

That’s fine. You can make a case—a misguided case, but a sincere one—that the tariffs will save American jobs, earn global respect, or force concessions from trade partners that will leave us better off. But if that’s your game—if tariffs on steel and aluminum are a play for leverage, and you’re ready to trade them away for a better deal on exporting wheat or cars—then what you’re telling the WTO is a lie. This isn’t about national security. It’s about commerce, and it should be judged accordingly.

Some experts in trade law are concerned about WTO intervention in this case. They note that the WTO has never formally rejected a national security claim. But it has never formally validated such a claim, either. Even on the broadest reading of Article XXI, there’s room to scrutinize exemptions. Whether a country truly considers a measure necessary to its security can be tested by evidence. Trump’s tariffs fail that test. The evidence is in his own words and deeds.

The other concern about WTO intervention is that Trump might respond to an unfavorable ruling by pulling the United States out of the WTO entirely. He made that threat as a candidate, and as president he has already withdrawn from the Paris climate accord and the Trans-Pacific Partnership. But the alternative is worse. If Trump gets away with using Article XXI to shield his tariffs, other governments will follow suit, and the whole trade-adjudication system will unravel. Like every other institution, the WTO must decide whether to let Trump destroy it.