'Protectionism Harms,' Says Former Ex-Commerce Secretary On Steel Tariff Decision

Steel tariffs aren't a new idea. Former President George W. Bush briefly enacted steel tariffs. NPR's Michel Martin speaks with former Commerce Secretary Carlos Gutierrez about the consequences of steel and aluminum tariffs. 

MICHEL MARTIN, HOST:

Members of President Trump's administration have been out and about this weekend, promoting the president's proposal to impose steep tariffs on imported steel and aluminum. There's already been considerable pushback from members of their own party, who say that this proposal, which he announced suddenly last week, could trigger a trade war that will hurt American consumers. White House trade adviser Peter Navarro defended the president's proposal this morning on "Fox News Sunday."

(SOUNDBITE OF TV SHOW, "FOX NEWS SUNDAY")

PETER NAVARRO: First of all, the reason why the president is doing this is because if he doesn't do this, we will lose our aluminum and steel - aluminum industry very quickly and our steel industry very quickly thereafter.

MARTIN: This weekend, we've been calling people with different perspectives on this issue. In a few minutes, we'll hear from someone whose company relies on American steel. But first, somebody who was at the table the last time steel tariffs were in play, Carlos Gutierrez. He was confirmed as President Bush's commerce secretary after steel tariffs were rolled back in 2002. Carlos Gutierrez was kind enough to come by our studios in Washington, D.C. Mr. Secretary, good to have you on again.

CARLOS GUTIERREZ: Thank you. Always a pleasure. Thank you.

MARTIN: So first of all, can I just ask your initial thoughts about President Trump's proposal?

GUTIERREZ: I think it's very unfortunate. It is a - the opening salvo to what could be a trade war. We're talking about tariffs for all steel and all aluminum imports from everywhere in the world. And the justification for that is a national security mechanism that allows the president to claim that these imports are hurting national security. It's hard to do that when you realize that the Department of Defense only consumes about 3 percent of what we produce and less if you take into account imports. Our biggest exporter or our biggest source of aluminum and steel happens to be Canada, who's an ally. So it's not as if though there is an obvious national security circumstance here, and that just makes the probability of retaliation a lot greater.

MARTIN: Well, let's talk about a couple of those things that you mentioned. First of all, President Trump, as candidate Trump, has been talking about this for some time now, even before he was a candidate actually. So it's a promise that he has been making, and he has seemed to imply that, you know, China is the source of this. But as you just pointed out, you know, the U.S. imports - what? - maybe 2 percent of its total imports from China.

GUTIERREZ: Oh, yeah, exactly.

MARTIN: So what would be the point, given that the majority of the imports come from - what? - like, Brazil, Canada, Germany?

GUTIERREZ: Exactly. It really is designed to protect U.S. steel and U.S. aluminum. That's the theory. What we have learned over the years is that protectionism doesn't protect. Protectionism actually harms. And this is so much bigger than steel and aluminum because what we're doing is challenging the world trade system that we played an important part in bringing together. So that's a problem.

MARTIN: Well, the president seems to agree with that. I mean, he said - he tweeted on Friday morning, for example. The president tweeted that, quote, "trade wars are good and easy to win." What is your response to that?

GUTIERREZ: I would say trade wars are bad. No one wins. And they're very difficult to stop. That's what history has shown us. If we go back to the - probably one of the biggest economic mistakes we made in the 20th century was the Smoot-Hawley Tariff - ironically, also done by a Republican president. And the rationale was if we raise tariffs 25 percent, we will protect our industry. We will protect our jobs. And everything will be fine. What we didn't expect is that everyone else around the world raised tariffs 25 percent, and the whole global economy went into a recession - actually a depression. So this is not good.

MARTIN: You know, on the other hand, this country has lost thousands of jobs in the steel industry. President Trump has been saying for years that something needs to be done here. If this is a bad idea, what's the better idea to address that problem?

GUTIERREZ: Well, if there are actors dumping steel into our market or using their excess capacity to be able to do that, then we should be surgical about how we target as opposed to a blanket tariff. And the justification that it's national security - we can use that justification for a lot of things. The world changes. The world moves on. Let's remember that, one time, we had an agriculture economy. Yes, steel is important, but steel regrettably is not as important today as it once was. And when someone promises that we're going to go back to a scenario that existed in the 1980s, I would be a little bit suspicious of that.

MARTIN: That's former Commerce Secretary Carlos Gutierrez. He was kind of to speak to us from our studios in Washington, D.C. Mr. Secretary, thank you.

GUTIERREZ: Thank you very much, Michel.