Forget the notion that Donald Trump's attack on steel and aluminum imports is about national security.
The U.S. President quickly set aside those concerns this week in the case of Canada – the No. 1 U.S. supplier of both products. He promised to exempt Canada and Mexico from steep global tariffs pending the outcome of North American free-trade agreement talks.
Nor is it about jobs, or the economy. The targeted commodities represent a small share of total U.S. imports (roughly 2 per cent). The tariffs, coupled with expected retaliation from targeted countries, will inflict significant damage to the broader U.S. economy, destroying more jobs than it saves.
All of that is diversion from what's really going on.
Mr. Trump's ultimate target is the World Trade Organization (WTO), the fragile and embattled keeper of global trade rules. The steel and aluminum tariffs are Mr. Trump's unsubtle way of telling the rest of the world that he's mad as hell.
"What I think the President wants to do in terms of the World Trade Organization is send a very strong signal to them across the board on this issue of trade that we're not going to take it any more," White House director of trade and industrial policy Peter Navarro bluntly told CNN this week.
According to Mr. Navarro's dubious narrative, the United States is being swindled by the other 163 members of the WTO. The U.S. has the lowest tariffs and other trade barriers of anyone, and what it gets in return is "half-a-trillion dollars a year in trade deficits that put our wealth offshore and our jobs offshore," he argued.
"A lot of [those countries] simply don't like us," complained Mr. Navarro, an economist and long-time protectionist firebrand.
The trade deficit is proof for Mr. Navarro and his fellow trade hawks in the White House – Commerce Secretary Wilbur Ross and Trade Representative Robert Lighthizer – that the multilateral trade thing is no longer working for the U.S.
The tariffs on steel and aluminum are just one of the ways the Trump administration is working to undermine the WTO.
In recent months, the U.S. has been systematically blocking the naming of new judges to the organization's seven-member appeals body, a move that risks slowing down already sluggish dispute-settlement proceedings.
And at a December meeting of WTO trade ministers, Mr. Lighthizer lashed out at other countries for routinely flouting WTO rules and trying to win, through lawsuits, concessions that they couldn't "get at the negotiating table."
Behind the scenes, the United States is undermining the WTO's shaky consensus decision making. Mr. Lighthizer vetoed key wording in a statement at the December meeting that would have endorsed the "centrality" of the global trading system and the WTO's commitment to supporting development.
The dispute will inevitably wind up before the WTO as member countries seek to block the tariffs, and retaliate.
The irony is that the United States was a key architect of the rules-based trading regime created by the 1947 General Agreement on Tariffs and Trade (later folded into the WTO). Back then, the U.S. government saw the GATT's liberalized trade rules as essential to creating markets for American companies in the postwar global economy.
To make free trade more palatable – mainly to European countries – GATT framers inserted a limited exemption, which permits countries to skirt the rules in the name of protecting their national security interests.
Article 21 of GATT allows a member country to take "any action which it considers necessary for the protection of its essential security interests … taken in time of war or other emergency in international relations."
Unfortunately, the agreement doesn't define such things as "essential security interests," "time of war," or "emergency." In theory, the security free pass gives WTO members a lot of latitude, but countries rarely invoke it because it's akin to snubbing the entire rules-based trading system. That's precisely what the U.S. is doing by citing illegitimate national security concerns to impose tariffs.
Mr. Navarro and Mr. Lighthizer are convinced the United States is better off dealing with countries one-on-one rather than en masse through the WTO. Left unchecked, Mr. Navarro and company would happily let the system wither and die.
Years from now, historians may look back on Mr. Trump's steel and aluminum trade showdown as a key milestone in the demise of the WTO.
Asia's biggest exporters, including China and Japan, bristle over U.S. tariffs on steel and aluminium imports, fanning trade war fears.
Reuters