Donald Trump's trade policy in a sentence: "None of this stuff is good."
That's from the economist and LSU professor emeritus Loren Scott. He's right.
The president's policy of protectionism raises tariffs — essentially, taxes on American consumers of imported products — and threatens our trade relations with many countries, not just the Asian giant, China.
The government in Beijing is imposing 10 percent duties on a host of U.S. products, including liquefied natural gas, threatening a booming Louisiana industry, and chemicals, Louisiana’s third-largest export to China and a major industry statewide.
None of this is good.
The Chinese were once again aggravated by the presidential decision to raise tariffs, starting recently with some $200 billion worth of Chinese-made goods.
So now it is not only Louisiana soybean farmers and ranchers, both exporters to Asian countries, whose livelihoods are threatened by the Trump policies. Of course, the oil and gas industry vital to Louisiana has already been hurt by Trump tariffs on imported steel and aluminum, because costs of construction for pipelines and petrochemical facilities were increased.
Now, the American Chemistry Council said China's retaliatory tariffs apply to $11 billion worth of U.S. chemicals and plastics exports, putting nearly 55,000 American jobs and $18 billion in domestic activity in question.
The tariffs from China ratchet up pressure on developers trying to build multibillion-dollar liquefied natural gas export facilities, particularly in southwest Louisiana. More than $90 billion in potential investments are planned for Louisiana alone from about a dozen companies. Those firms are competing for long-term contracts from overseas buyers, including from China.
This tariff war is "going to continue to stall the development of LNG facilities in Louisiana until there’s more clarity on the issue,” said David Dismukes, head of LSU’s Center for Energy Studies.
China is an important growing market for imported natural gas. In 2017, when LNG exports ramped up at Cheniere Energy’s Sabine Pass terminal, China was the third-largest destination, behind Mexico and South Korea, according to the U.S. Energy Information Administration.
George Swift, head of the Southwest Louisiana Economic Development Alliance, said none of the projects eyeing the region have dropped out yet, and rising global demand from places other than China will continue to fuel the industry here.
We, too, believe the long-term outlook for energy exports, both oil and LNG, are positive. But the destabilizing impact of Trump policies is clearly bad for business, here and in farms and pastures as well as petrochemical manufacturing plants.
Further, the president is exercising a lot of presidential authority on the flimsy pretext of "national security," based on an expansive reading of a 1963 law passed at the height of the Cold War. Had President Barack Obama acted in this way, the Republicans in Louisiana's delegation in Congress would have reacted explosively. Because the party label at the White House has changed, we hear little from our GOP members.
We urge the president to reconsider and de-escalate the trade wars before things get out of hand, and Louisiana members of Congress should speak up to this effect.