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George Will

George F. Will: No bad deed unrewarded with protectionism rampant

| Saturday, Jan. 27, 2018, 9:00 p.m.
President Donald Trump hands the pen he used to sign Section 201 actions to U.S. Trade Representative Robert Lighthizer during a ceremony in the Oval Office of the White House in Washington. Trump says he is imposing new tariffs to 'protect American jobs and American workers.' Trump acted to impose new tariffs on imported solar-energy components and large washing machines in a bid to help U.S. manufacturers. (AP Photo | Carolyn Kaster)
President Donald Trump hands the pen he used to sign Section 201 actions to U.S. Trade Representative Robert Lighthizer during a ceremony in the Oval Office of the White House in Washington. Trump says he is imposing new tariffs to 'protect American jobs and American workers.' Trump acted to impose new tariffs on imported solar-energy components and large washing machines in a bid to help U.S. manufacturers. (AP Photo | Carolyn Kaster)

WASHINGTON

Like the Dutch boy who put his finger in the dike, the Trump administration last week acted to stanch the flood of foreign-made washing machines imported because Americans want them. This will be accomplished by quotas and stiff (up to 50 percent) tariffs collected at the border and paid by American consumers. They also will pay higher prices for domestic washing machines made by Whirlpool, which sought and instantly profited from this protectionism: In Monday's after-hours trading, its stock rose 3 percent. When protectionism is rampant, no bad deed goes unrewarded.

This drama about “putting (a faction of) America first” cannot be industrial policy — government, rather than the market, picking winners and losers — or government redistribution of wealth, or crony capitalism, because Republicans oppose those things and control policy. Soon will come a government decision about menacingly inexpensive steel imports. Yet more tariffs/taxes will be imposed; 24 already target Chinese steel — just less than 3 percent of steel imports. And America's supposedly embattled steel industry is producing more than it did during World War II.

New tariffs/taxes will be imposed solely by the president, exercising discretion granted by various laws, including one passed in December 1974, when Congress evidently thought Watergate had taught that presidents were not sufficiently imperial. Then, as now, Congress seemed to think it had more important things to do than set trade policy.

In his new book “Clashing Over Commerce,” Dartmouth economist Douglas A. Irwin says the steel industry was a powerful protectionism advocate until the 1892 opening of Minnesota's Mesabi iron ore range. Its cost advantages turned steelmakers' attention to export markets. The industry's trade problems began when, in July 1959, the United Steelworkers shut down domestic production for 116 days and steel-consuming industries found alternatives. Management purchased labor peace with increased wages that by the 1980s were 95 percent higher than manufacturing's average, and soon U.S. steel was priced out of foreign markets. Intermittently since then, the industry has sought and received protection.

Last June, Commerce Secretary Wilbur Ross said that “since we are the world's largest importer of steel, we're the main victim of the overcapacity” in the global industry. This puzzled regular Trib columnist Don Boudreaux of George Mason University, who wondered “just how our being the world's largest buyer of steel makes us victims of the alleged overcapacity.”

Fomenting spurious national-security anxieties is the first refuge of rent-seeking scoundrels who tart up protectionism as patriotism when they inveigle government into lining their pockets with their fellow citizens' money. The coming steel tariffs/taxes will mean defense dollars will buy fewer ships, tanks and armored vehicles, just as infrastructure dollars will buy fewer bridges. As Henry George said, with protectionism a nation does to itself in peacetime what an enemy tries to do to it in war.

George F. Will is a columnist for Newsweek and The Washington Post.

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