U.S. President Donald Trump's tough trade talk has the world on edge. With the stroke of a pen, he could unravel the global trading system, raise prices on basic goods, make American businesses less competitive, drive a wedge between the United States and its European allies, and open the door for China to construct new national security based trade barriers.
The U.S. president would also be missing a genuine opportunity to establish a positive legacy on trade.
Trump's plan, which shocked markets last week, would raise tariffs — or taxes — on the steel and aluminum used to make everything from car engines to skyscrapers to beer cans. It's basic economics: When taxes go up on the inputs of manufacturing, higher costs are passed onto consumers. Economists agree that Trump's policy would threaten far more American jobs than it would protect.