The Trade Guys talk about the U.S.-Turkey diplomatic spat that has spilled into the realm of trade. President Trump threatened tariffs on Turkish steel and aluminum in what the administration says is in the interest of national security. But are the Section 232 tariffs really called for? Plus, the Trade Guys discuss China, NAFTA, and trade’s relationship with wage stagnation.

What We’re Reading

"Trump Hits Turkey When It's Down, Doubling Tariffs"

New York Times

"President Trump said on Friday that he would double the rate of tariffs on steel and aluminum imports from Turkey, inflicting additional pain on President Recep Tayyip Erdogan, whose country is in the midst of an economic crisis."

"Mr. Trump's abrupt and unilateral action came amid worsening relations with Turkey, which has continued to detain an American pastor on espionage charges despite the United States' insistence that he be released."

Why it matters: Trump continues to play fast and loose with Section 232. He ordered tariffs on metal from Turkey be doubled via tweet and with no justification. The order comes as the Turkish lira plummeted against the U.S. dollar.

Key question: What does this action say about Trump's use of Section 232? Is it appropriate to use twitter to double tariffs that are supposed to be driven by national security needs?

"U.S. Car Makers Left in the Dust as China's Tariff Cut Boosts Europe, Japan"

Wall Street Journal

"Auto makers exported a record $7.4 billion worth of vehicles to China last month, as European and Japanese companies took advantage of a tariff cut that excludes their U.S. counterparts."

"The July 1 tariff reduction to 15% from 25% allows lower retail prices, which encouraged foreign manufacturers to ship 165,000 cars into China last month, breaking the previous record of 134,000 set in July 2014, according to customs data."

"U.S. auto makers are blocked from the bonanza, however, with China adding a punitive 25% tariff on U.S.-built vehicles last month—for a total of 40%."

Why it matters: Chinese retaliatory tariffs have frozen autos built in the U.S. out of its massive and growing market. Meanwhile, European and Japanese companies are taking advantage of a July 1 tariff cut.

Key question: What does this mean for the future footprint of U.S. autos in China? Will U.S. automakers be able to recover, or will they permanently cede the market in China to European and Japanese competitors?

"Apple could be used as a 'bargaining chip' in the trade war, Chinese state media warn"


"Apple has benefited from cheap labor and a strong supply chain in China and needs to share more of its profit with the Chinese people or face 'anger and nationalist sentiment' amid the ongoing trade war, an article in the state-backed People's Daily warned Tuesday. The article originally appeared in another state-backed publication, Global Times, last week."

Why it matters: Chinese state-media, largely considered to be a mouthpiece for the government and Chinese Communist Party, is openly threatening the largest tech company in the world and America's most valuable public company.

Key questions: How can China use Apple as a bargaining chip? Why not continue to use tariffs to punish U.S. exporters?