U.S. President Donald Trump on March 8 signed into law new tariffs on imported steel and aluminum despite anxious warnings from leading members of his own party, global trading partners and liberal economists. At the same time, he announced that Canada and Mexico would be exempt from the tariffs, pending the outcome of the re-negotiations of the North American Free Trade Agreement. The tariffs have support from a diverse coalition of interests, ranging from the largest labor union in the United States to right-wing advocates of Trump’s 'America First' political ideology. What would the tariffs mean for Latin American and Caribbean countries? Which players stand to gain or lose the most? How will concerns about a global trade war come to bear on the current talks to renegotiate the North American Free Trade Agreement?
For years, firms and workers in both the developed and developing world have supported action against unfair trade practices. In this century, China, in particular, has engaged in currency manipulation, denial of labor rights and overproduction—trade issues that the WTO and other multilateral forums have failed to address. The tariffs to protect U.S. national and economic security are overdue. They are a good step toward strengthening firms and protecting workers in the steel and aluminum industries, providing they are targeted to the countries that caused the problem, such as China. It is important to distinguish between trade enforcement and a trade war. Wall Street’s 'chicken little' rhetoric comparing this action to the Smoot-Hawley tariff has no basis in fact. More important, however, is that the global trading system needs comprehensive changes to prevent the kind of game-playing we have seen in global steel markets. Unions across the Americas are united in calling for sustainable, equitable trade rules that strengthen economies and create wage-led growth. In our globalized economy, workers are always better off with international—not unilateral—solutions. Since the United States, Canada and Mexico are already working to fix NAFTA, the three countries should develop a coordinated response to global economic challenges like dumping, overcapacity, tax avoidance and currency misalignment—even as they work on improving existing NAFTA labor and investment regimes. Just as inaction in the face of illegal trade practices harms working people, so will a go-it-alone strategy. If President Trump has an interest in hemispheric shared prosperity, he should abandon the nationalist rhetoric that plays into the hands of Wall Street critics of trade enforcement. Now is the time for the countries of the Americas to come together to address beggar-thy-neighbor trade strategies, abandon the race to the bottom and build economies that work for ordinary families, not just the global investor class.