RACHEL MARTIN, HOST:
It was a busy day at the White House yesterday because before the Korean summit announcement, there was another big moment. President Trump signed a new set of tariffs on steel and aluminum imports into the U.S.
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PRESIDENT DONALD TRUMP: We want to build our ships. We want to build our planes. We want to build our military equipment with steel, with aluminum, from our country.
MARTIN: The president offered what he called flexibility by temporarily exempting Canada and Mexico from the tariffs while NAFTA talks continue and leaving the door open to carving out some exceptions for other trading partners down the line. In spite of those concessions, free trade advocates, including several congressional Republicans, believe this move could spark a trade war and hurt the American economy. For more, we are joined by the U.S. secretary of commerce, Wilbur Ross. Thank you so much for being with us, Mr. Secretary.
WILBUR ROSS: Sure. I'm delighted to be on.
MARTIN: As you know, as I mentioned, there are a lot of members of the president's own party who are against this move, including the majority leader, Mitch McConnell, the speaker of the House, Paul Ryan. They are concerned about the possible impact of retaliation against U.S. products. Are they wrong?
ROSS: Well, let's put it into perspective. The tariffs that have been potentially proposed by the European Union covers something like $3 1/2 billion of product. We have approximately an $18, $19 trillion economy. So this is two-tenths of 1 percent of our economy. That doesn't sound like much of a war to me. Further, under the WTO rules, the EU cannot put in these kinds of tariffs except after the WTO has found that the move by the U.S. violated the WTO rules. WTO rules include a specific carveout for national security and national defense. I think it's highly unlikely that the WTO would think that it can tell the United States government what's in its national security interest.
MARTIN: All right. Well, we spoke to Glenn Hubbard yesterday on the program. He chaired the Council of Economic Advisers under President George W. Bush. He helped craft steel tariffs against China back in 2002. And he says they did not work. Let's listen to this.
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GLENN HUBBARD: While you do gain jobs and incomes in protected industries, you lose more in others. You know, it's not just makers of steel and aluminum. Steel and aluminum are inputs into cars, into cans, into metal that we use. And consumers are worse off, and people don't see that.
MARTIN: As you know, prices are going to go up for these products that contain steel. So the American consumer will lose in the end.
ROSS: That's not the case at all. Let me give you, again, the actual numbers, not theoretical hypotheses. On a can of soup, on a can of beer, on a can of soda, the total impact of the increase in metal costs will be less than one-half of one cent. A fraction of one cent is not going to change life.
MARTIN: Although it's going to be - the price will accumulate on consumer goods with larger price tags, like vehicles. And over time, what you might consider to be a marginal increase will have a real impact on people living paycheck to paycheck.
ROSS: You really think one-half of a cent on a can of soda is going to destroy people's living? I don't. On an automobile, again, it would be under one-half of 1 percent of the price of the car.
MARTIN: We'll have to wait and see what the outcome is and what these effects are when that actually takes place. Secretary of Commerce Wilbur Ross, thanks for your time.
ROSS: You're welcome. Thanks.
MARTIN: Joining us now is NPR business editor Uri Berliner, who was listening in on that conversation. Hey, Uri.
URI BERLINER, BYLINE: Hey, Rachel.
MARTIN: So the secretary of commerce there clearly doesn’t think that these tariffs are going to start a trade war. I mean - but our allies are already considering retaliation, right?
BERLINER: Yeah. He thinks it’s pretty contained, and he points out that if the EU goes ahead with the retaliatory tariffs it’s contemplating, it’s just going to be a tiny fraction of the U.S. economy - $3.5 billion in a $19 trillion economy. He says, look, that’s really not going to have much of an effect at all. Don’t worry about it.
MARTIN: Is he right?
BERLINER: Well, the thing is, that is really small, but that assumes that this retaliation is contained in a nice, tidy, little box and that once the Europeans retaliate with their little $3.5 billion, it’s going to be over and there won’t be any more of a trade war. The trade war will be over, and it’ll be contained and over. But these things are pretty unpredictable.
MARTIN: They escalate usually.
BERLINER: They escalate. They can.
MARTIN: Right. He also talked about this as a national security issue, and he said the WTO - he basically dared the WTO to come in and decide against this, what he maintains is in America’s national security interest.
BERLINER: He said the WTO wouldn’t question what the U.S. says its - is in its own national security interest. But, you know, questions are going to be raised now about that argument that these tariffs were imposed for national security. The argument was that the U.S. needs a really strong steel industry to support critical defense needs. However, we’ve already started making exemptions. The biggest importer of steel to the United States, Canada, is already exempted. Mexico, one of the biggest, is exempted. Others may be on the way. So that argument that you need a really strong domestic steel industry to support defense, if you have all these exemptions, how does that argument hold up?
MARTIN: All right, NPR’s Uri Berliner for us. Thanks.
BERLINER: You’re welcome.
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