Goldman Warns On Tariffs: ‘Expect Further Disruptive Trade Developments’

Well, the “reviews” continue to pour in on Donald Trump’s decision to rollback this:

That’s years of progress on globalization and trade openness and it’s in jeopardy now thanks to a failed real estate mogul turned-reality TV show host-turned WWE wrestler-turned populist President.

First thing Friday morning, Trump doubled down on the rhetoric, assuring everyone that trade wars are in fact “good” and not only that, they’re “easy to win”.

Of course that’s absurd for a laundry list of reasons not the least of which is that this is most assuredly not a zero sum game. I can’t imagine why Trump doesn’t understand that…

Analysts, economists, executives, and entire countries spent Thursday afternoon and Friday morning elaborating on how bad of an idea this is. You can read some of the reactions here and here, but they’re coming in faster than we can document them. Last night, for instance:

more tremendous reviews:

TRUMP'S TARIFFS RAISE `THE RISKS OF AN ALL-OUT TRADE WAR': ANZ
CSX CEO SAYS CUSTOMERS LIKELY TO SHOULDER STEEL TARIFFS: CNBC

— Heisenberg Report (@heisenbergrpt) March 2, 2018

And this morning:

HAASS: NATIONAL SECURITY CASE FOR STEEL TARIFFS IS PREPOSTEROUS

— Heisenberg Report (@heisenbergrpt) March 2, 2018

All of this comes on the heels of Trump’s absurd decision to start a residential washing machine war with the South Koreans and also to endanger ties with China by slapping tariffs on solar equipment.

For their part, Goldman says “expect further disruptive trade developments over the coming months, including stalled NAFTA negotiations and potential restrictions on Chinese trade and investment.” So that’s “good” news!

Here are some key points from the bank’s take.

Via Goldman

The tariffs, if finalized, would be the most substantial trade restriction the Administration has announced to date. The steel and aluminum decisions come following recent “safeguard” restrictions on imports of solar panels and washing machines. While these decisions are not surprising–we highlighted them in our 2018 political outlook two months ago–they nevertheless confirm, in our view, that the White House has finally begun to shift to a more restrictive stance on trade policy. We note that unlike routine antidumping and countervailing duty cases or less common safeguard cases, the Section 232 authority the President will apparently use is rarely used and more controversial, as it does not rely on any economic argument and instead imposes trade restrictions on national security grounds. This could lead to other trading partners taking similar actions and could ultimately weaken the international trade conventions, like WTO rules, more generally.

The potential announcement of steel tariffs could alleviate political pressure on theWhite House to pursue other trade restrictions in the near-term, but they also suggest to us a rising probability of trade-restrictive outcomes to other pending issues. The two most important remaining trade-related decisions awaiting the Administration are the ongoing NAFTA negotiations–talks are currently underway in Mexico City–and pending Section 301 investigation into China’s practices regarding intellectual property and technology transfer.