In the dim light of this administration's indecisiveness about whether to impose tariffs on imports of steel and aluminum, our neighbors Canada and Mexico have been informed that this country has again postponed a decision on whether to slap tariffs on key commodities like steel and aluminum. But that announcement only postpones the day of reckoning instead of eliminating it.
As for our neighbors in the European Union, they have become forgotten allies -- and have reacted to the demotion with understandable resentment and defiance. To quote the EU's formal statement: "The U.S. decision prolongs market uncertainty, which is already affecting business decisions. The EU should be fully and permanently exempted from these measures, as they cannot be justified on the grounds of national security."
Those are words of wisdom, and this administration would do well to heed them. Washington has already made an agreement with South Korea about steel imports and reached a similar accord in principle with Argentina, Australia and Brazil that's all but formally adopted. Why leave out European friends and allies?
To quote a spokesman for German chancellor Angela Merkel, "Neither the EU nor the U.S. can have an interest in an escalation of their trade tensions." This sums up the impasse between our two nations. Who needs it? Only our common rivals.
Any potential damage to the venerable Western alliance posed by these steel and aluminum tariffs may be limited, but down the road lies the danger of escalation as both sides in this developing dispute pile more and more duties on each other's products.
"The imposition of tariffs might signal that the two regions are heading towards a more serious trade conflict," warns Stephen Brown, European economist at Capital Economics. His is a warning that should be taken seriously. A trade war is a game that all the players could lose.
Speaking of the risks to which this administration has exposed American businesses, John McDonald of Trans-Matic Manufacturing in Nashville, Tenn., which purchases $16.5 million worth of steel every year on the international market, says he is glad the tariffs have been postponed for now. "The uncertainty is going to continue," he's afraid. "We're struggling with supply availability, lead times." The moral is that uncertain leadership by an American president is bound to lead to uncertain times.
The minister in charge of keeping up with Germany's economy, Peter Altmaier, sounds hopeful that the United States will eventually get a grip on its roller-coaster of an economy and act like a solid partner instead of a bully. And the British seem equally ready to cooperate with this country--if only they could figure out what American economic policy is from day to day. But our old allies are having difficulty figuring out whether this country is with 'em or agin 'em as the world's economy continues to prove as volatile as ever.
The threat of a trade war has only worsened woes for an American economy that is having trouble finding workers, supplies and even trucks to meet the demands of an economy that's spinning wildly, says a report out of the Institute of Supply Management. For how manage supplies in a country whose head of state seems to have so much trouble just managing himself?
All signals are go for the American economy just now: Orders are backed up and business is "off the charts," according to one manufacturer of transportation equipment, while producers of computers and electronic equipment report that everything is looking rosy. Just as it did before the Roaring Twenties gave way to the depressing Thirties.
Only cockeyed optimists will believe that these good times are here to stay. So keep an ear tuned for further developments. Because the one sure thing economic prognosticators know is that they'll be plenty of them.