Weapons of Mass Trade Destruction Are Proliferating

A couple weeks ago, I suggested that it was possible the Trump administration had already made up its mind on the Section 232 investigations, and would almost certainly find that steel and aluminum imports have impaired national security, giving the President the authority to impose trade restrictions in response (the "nuclear option" of international trade law).

But I also wondered if perhaps they would not actually impose restrictions. Instead, maybe they just planned to use the threat of restrictions as leverage in trade negotiations.

Either way, other countries would be forced to respond when faced with potential trade restrictions of this kind. One possibility is that they would adopt similar measures of their own. But setting up a process for making these determinations could take time.

With President Trump's decision to withdraw from the Paris Accord, however, perhaps now they have a simpler option. If the United States invokes national security reasons for trade restrictions, other countries might respond with carbon tariffs, as a punishment for the failure of the U.S. to act on climate change (the nuclear/solar/wind option?).

Of course, both sets of restrictions could be challenged at the WTO. There would then be a years long litigation process, with an unpredictable legal outcome (is the Article XXI exception unlimited? in the real world, can carbon tariffs be constructed in a way that is not arbitrarily or unjustifiably discriminatory?), and an even less certain political result.

In essence, what we would have is both sides pointing some pretty big trade weapons at each other. Maybe the best hope is that the mutually assured trade destruction that would result will prevent anyone from actually using these weapons.