Will Trump Help the U.S. Return to Economic Prosperity?
The flimsy justification of national security doesn’t excuse the steel and aluminum tariffs placed on Canada, Mexico, and the EU, and Americans should be incensed at this treatment of their allies.
The U.S. produces nearly 70% of the steel we consume, and not in my lifetime has our primary supplier, Canada, nor any NATO member, been considered a national security risk. Rather, as Prime Minister Justin Trudeau emphatically pointed out, these countries have come to our side, and fought beside our soldiers in battle.
It’s unfortunate that rather than raising critical economic issues with Europe, we antagonize them and our northern and southern neighbors over trivial amounts of steel and aluminum. Yet not once has President Trump publicly raised the EU’s continuous economic attacks on the crown jewels of our economy—great American companies such as Apple (AAPL), Facebook (FB), and Google (GOOG).
From using ambiguous antitrust laws, to extorting billions in tax payments using new legal interpretations, to creating a privacy law with unprecedented reach primarily aimed at American companies, the EU has targeted these U.S.-based global innovators—and President Trump has chosen to be silent, and instead seek to resurrect an iconic smokestack industry with tariffs. Even union advocate Paul Krugman says the decision to move forward with steel and aluminum tariffs is based on “obviously fraudulent rationale,” adding, “this trade war will actually be a job-killer, not a job-creator.”
By redirecting our national agenda to fair economic competition, President Trump can regain both rational and economic high ground. Europe has great potential, but powerhouse Germany is starting to falter. Brexit is causing the EU to stumble, and only France—thanks to the progressive leadership of President Emmanuel Macron—and the Netherlands appear to have momentum. Still, the EU is our friend, and ill-guided and protectionist tariffs are an unhealthy tactic. While the EU and a few countries have recently announced various artificial intelligence strategies, most of the technology world sees the leadership contest as between the U.S. and China.
President Trump has approached China tariffs with a sounder economic argument. He advocates for American businesses and correctly says China treats them unfairly. China says it will loosen restrictions on companies partnering to do business in China. Its arbitrary legal system remains a risk for any American company achieving success. More, China continues to produce many successful large Internet companies. Its 2025 strategy is to focus on artificial intelligence and other significant technologies. For the first time since the 1800s, China’s technological leadership may surpass ours. That is significant.
Match this fact with China’s Belt and Road strategy of buying soft influence around the developing world with infrastructure, loans, and assistance, and we are at an inflection point. Tariffs are Trump’s worst choice. They don’t make us “great.” Instead, they lead to retaliation. And as the rest of the world moves forward with tariff-busting trade agreements such as the Trans-Pacific Partnership and other bilateral agreements, we will become further isolated as foreign markets shrink for our goods.
Since Trump became president, intraday trading swings of at least 2% in the S&P 500 has been tied to news about Trump heading closer to or acting on tariffs. When Trump won the election in 2016, I predicted a terrific economic boom and a rising stock market as I believed Trump likes measurements, and the stock market would be his favorite measurement. I was right until I was wrong. Even Trump credited the stock market’s upswing as a direct result of his presidency, saying, “The reason our stock market is so successful is because of me.”
Every recent president who has threatened to raise tariffs has reversed course. Let’s hope Trump does the same, so American businesses can continue to hire workers and we can all enjoy a return to economic prosperity.
Gary Shapiro is president and CEO of the Consumer Technology Association (CTA), the U.S. trade association representing more than 2,200 consumer technology companies, and author of the New York Times best-selling books, Ninja Innovation: The Ten Killer Strategies of the World’s Most Successful Businesses and The Comeback: How Innovation Will Restore the American Dream. His views are his own. Connect with him on Twitter: @GaryShapiro