Trump’s steel and aluminum tariffs may set his epitaph in stone… “Herbert Hoover II.”
History remembers Hoover as one of the worst American presidents.
Like Trump, he was a rich international businessman. He was also a political outsider. Hoover hadn’t held public office before his 1929 inauguration. And, like Trump, Hoover faced intense pressure from struggling American workers.
In 1930, he signed the Smoot-Hawley Tariff Act into law, raising tariffs on thousands of imported goods to record levels. This kicked off a tariff war, reducing American exports by half. It was a crushing blow to the American economy.
Nearly a century later, Trump seems determined to make the same mistakes…
Trump Started This Trade War Last Summer
Trump placed tariffs on steel and aluminum last week. China, of course, is the world’s largest producer of both.
The mainstream press called the tariffs “unexpected.” But they didn’t come out of nowhere.
Last month, I told readers of my advisory, Crisis Investing, that steel and aluminum tariffs were likely. (Paid-up readers can access the issue here.)
In fact, I’ve been pounding the table about a trade war—specifically a trade war with China—since September.
Frankly, I think Trump fired the first shot in this trade war last summer, when his administration launched an investigation against China using Section 301 of the Trade Act of 1974.
This rarely used provision allows Trump to “take all appropriate action… to obtain removal of any [trade] practice that is unjustified, unreasonable, or discriminatory, and that burdens or restricts U.S. commerce.”
Traditionally, World Trade Organization (WTO) members, including China and the US, have settled trade disputes through it. But Trump, using Section 301, has taken a unilateral approach.
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