Mainly, this tariff only effects a very small small percentage of steel and aluminum imports. I believe the goal of this is to re-negotiate the terms of NAFTA and once that is done, this tariff will be lifted. The US economy has grown tremendously with Trump in office. His pro-business administration has demonstrated time and again that Making America Great Again is Priority One. Encouraging some companies to switch to US steel and aluminum will not be a giant catastrophe and it certainly won't start a trade war.
Tariffs are not "pro business". If you doubt that you can ask all the businesses that are complaining about it. Outside of the steel and aluminum business, no businesses are supporting this move. As for NAFTA negotiations, that seems to be tacked on after the fact after just about every business person in the President's team advised him not to start a major trade war with our largest trading partners. His original pronouncement did not carve out any exceptions.
Raising tariffs also does not encourage companies to switch to US steel, it encourages them to outsource their intermediate part supply to foreign countries. I was reading an interview with a guy whose company makes steel kegs. He figures this will just put him out of business since he was already competing with kegs from China and his costs will go up while theirs will go down. There are many businesses in the US like this, companies who use steel and aluminum to make the parts that other US companies use in manufacturing. Those end use companies are not going to say "sure, we'll pay you more", they are going to go with the lowest bidder which increasingly will not be a US company.
Secondly, the economy is vastly different than when Bush was in office and the world was in a different state of mind.
This is true, but not in the way you mean. Bush's tariffs were after 911, before the Iraq war, when there was a lot of positive sentiment about the US in the world. Today, the US is seen as increasingly throwing its weight around and reneging on agreements made in good faith under previous administrations. Regardless of how targeted these tariffs are, expect the EU to retaliate, not against steel manufacturers where the US is an importer, but against industries where the US is an exporter. The idea that the US is the 800lb gorilla because it is such a large consumer is erroneous. The market is not one global mash of activity, it is many separate, individual markets. The US might be a big steel importer, but it is a big exporter of aircraft, machinery and drugs. A punitive EU tariff in those areas would hammer the US economy.
Lastly, do you feel that something has to be done about US trade deficits? What do you have in mind?
Engage and trade with every country on Earth. The US has a huge advantage in infrastructure, financing and wealth compared with many places. The optimum thing to do would be to open foreign markets to US goods. We can already see the impact of not doing that. Canada is taking many markets that we were scheduled to open up with the Trans Pacific trade pact
, especially in Japan where tariffs on agriculture that prevent US shipments will stay in place instead of phasing out like they do for Canada. Our conflict with Mexico has stalled growth in our exports of agricultural products to that country as well as encouraging Mexico to look for other suppliers
As America threatens to close its agricultural export door, it has damaged Mexico’s confidence in the reliability of its major supplier — perhaps permanently. In a January 2017 Washington Post opinion piece, former Mexican president Ernesto Zedillo wrote that it was a “waste of time” to play “Nafta tweaking games with the Trump administration”.
Though Mexico currently has free trade agreements with 45 countries (more than any other country in the world), agriculture has consistently been the most sensitive issue in Mexico’s free trade agreements. Trump has changed that.
Today, the country is accelerating its search for new partners to meet its national agricultural needs. Sensing long-term opportunities, Brazil and Argentina — both major exporters of beef, wheat, soybeans and other prized U.S. agricultural products — are elbowing their way to the front of the queue. Neither currently has a free trade agreement with Mexico.
Mexico Deputy Economy Minister Juan Carlos Baker has said that the country is “pretty far advanced with Brazil. Argentina is a few steps behind”, confirming that Mexico could offer South American producers terms similar to those currently enjoyed by American farmers “if it suits us”.
Brazil Agriculture Minister Blairo Maggi has announced that the country is “back in the game”.
If the US is viewed as an unreliable trading partner, there are other players who can take up the slack - at the expense of US exports. But we can do it the other way was well, make win-win agreements around the world that expand US exports.