The promise of e-commerce and digital trade is that it can empower individuals and firms from anywhere to find customers, suppliers, and engage in trade globally. It has enabled the tiniest companies to become “micro-multinationals.” A first customer can literally be found across the world. But this promise is sometimes harder to implement than it first appears. In Fiji and other Pacific island states, the potential seems to remain largely just that—a promise rather than a reality. Why this might be so is a bit puzzling.
Moreover if the US tries to justify a broad-based tariff or quota for all steel products on the grounds of 'national security,' it will embolden other countries to use the same justification on other categories of products leading to retaliation. Restrictive unilateral actions will not provide lasting solutions either. In short, labelling steel imports as a national security threat is neither necessary nor supportable by the facts. President Trump could take more moderate actions that may be enough to claim political victory while avoiding retaliation from global trading partners. But such a rational decision may not be so likely.
If the Trump trade team implements Section 232 for steel, it may use the same tool for other products in the future (and a similar investigation for aluminum is already underway). The Department of Commerce has been tasked to conduct the investigation, and to prepare a report for Trump within 270 days from the investigation’s initiation. Upon the submission of the Department of Commerce’s findings and recommendations, Trump will have up to 90 days to decide if he concurs, and to take action to ‘’adjust the imports of an article and its derivatives.’’ This Talking Trade post examines the 1,598 pages of public comments received by the Commerce Department in relation to the steel case from three key groups - domestic steel producers, downstream manufacturers reliant on steel inputs, and steel producers from other countries including Brazil, Canada and China.
Because the United States is the world’s greatest market, it should—by definition really—run trade surpluses in goods with everyone. The fact that it does not is therefore automatic evidence of cheating. Bigger trade deficits are confirmation of deeper duplicity on the part of trade partners. The rest of the trade agenda, therefore, should be turned to figuring out how to stop everyone else from cheating by cracking down on such unfair practices and return the US to nothing but surpluses again. This may mean using novel interpretations of laws or regulations to eliminate devious behavior from others. Admittedly, this trade agenda is not stated quite so baldly, but if boiled down to the essence, this is what it looks like. There appears to be no use in trying to use logic to unpick any element of this agenda and show how and why it is wrong, unlikely to bring about the desired results, or just plain crazy. This is not an agenda that can be untangled by data, altered by evidence, or adjusted by argument.
The NAFTA negotiations have implications for Canada beyond simply the talks in Washington. If the United States is no longer a reliable partner, then Canada needs to start thinking about a different approach. It needs to think about this now and it needs to do so quickly. Canadian officials appear to have adopted a similar strategy to many other countries. First, they have tried to figure out what the US is likely to want. They have dispatched various delegations to DC to have conversations with the President and others. Second, they have started discussions with other countries. For Canada, this means starting negotiations with China on a free trade agreement. These talks will likely take time to conclude, hence the urgency in beginning now.