[The Editors' Verdict] President Trump's '15-Day' Tariff Proclamation

Roundtable on Japanese Government's Export Regulations, Professor Jeong In-kyo, Inha University. Photo by Kim Hyun-min kimhyun81@

A '15-day Donald Trump presidential proclamation' incident occurred, where tariffs were unilaterally announced, then retaliatory tariffs were imposed by the other country, and finally the tariffs were unilaterally withdrawn again. This time, the target was not China but Canadian aluminum.

Despite the need to be cautious with the upcoming November presidential election campaign due to the uncontrollable spread of the novel coronavirus disease (COVID-19), President Trump, aiming for re-election, visited the Whirlpool plant in Ohio on the 6th of last month (local time).

Four years ago, he mostly wore red hats, but this time, perhaps aware of the responsibility for the failure in COVID-19 prevention, he wore a special black mask. At the Whirlpool plant, President Trump said, "I signed a proclamation to reimpose tariffs on Canadian aluminum to protect American industry."

The six pledges for Trump's second term announced the next day for American workers include defeating COVID-19, recovering the U.S. economy, building a world-class medical and pharmaceutical manufacturing country, creating millions of manufacturing jobs by protecting national security-related industries, reshoring American companies (returning them domestically), and ensuring commitments to American workers. This adds COVID-19 response to the pledges from four years ago.

Here, President Trump argued, "To make America strong, it must become a manufacturing nation and not be led by many fools (existing politicians)." He also insisted that Washington politicians who emphasize open policies such as the Washington Consensus must be replaced. He repeated his usual remarks.

In the presidential election four years ago, he harshly criticized the North American Free Trade Agreement (NAFTA) as a 'terrible deal' and an agreement that made the American people bleed, and revised it to become the United States-Mexico-Canada Agreement (USMCA), which took effect on July 1st.

To use the USMCA's implementation as campaign publicity, Trump invited Mexican President L?pez Obrador and Prime Minister Justin Trudeau on July 8th, but Trudeau declined, probably because Trump's intentions were obvious.

A month later, when President Trump imposed additional tariffs on Canadian aluminum with absurd logic, Canada declared it would retaliate with tariffs of the same amount ('dollar for dollar') and was actually scheduled to announce a retaliatory tariff list worth 3.6 billion Canadian dollars on the 16th.

When rumors spread that Canada's list included items that could significantly affect the U.S. presidential election, the U.S. Trade Representative (USTR) unilaterally announced the withdrawal of tariffs just before Canada's announcement.

The U.S. explanation was that since the monthly increase in Canadian aluminum imports in May was the highest in the past 10 years, a 10% additional tariff was imposed, but based on recent import trends, the average monthly import volume was expected to be 50% lower than the average from January to July, so the tariff would be withdrawn effective September 1st.

In the end, on the 15th of the same month, a 15-day 10% tariff presidential proclamation was effectively issued. This is an absurd act unlikely to happen in any America other than under Trump.

However, conditions were attached. The withdrawal was decided based on the expectation that specific aluminum import volumes would not exceed 83,000 tons in September, 70,000 tons in October, 83,000 tons in November, and 70,000 tons in December. It was stated that if the import volume exceeds 105% of the U.S. estimate in any month, a 10% tariff would be retroactively imposed on all imports for that month.

Canada, judging that the countermeasure strategy worked, felt relieved by the tariff withdrawal but remains concerned about trade relations with the U.S. after the presidential election. Although the USTR said it consulted with Canada, the Canadian side criticized that everything was a unilateral decision by the U.S.

If Canada accepts what is effectively a quota system this time, it will not be difficult to predict future developments. The same applies to other countries. Unlike Canada, what will happen to countries that cannot retaliate against the U.S.? This concern cannot be ignored.

Jung In-gyo, Professor, Department of International Trade, Inha University