Trump’s National Security Tariffs

A regular series on the choices faced by international economic policymakers

When do economics threaten national security? President Donald Trump has concluded that steel and aluminum imports remain a threat and is reimposing tariffs through Section 232 of the Trade Expansion Act of 1962. Without exemptions, however, these tariffs are likely to negatively impact the U.S. defense sector, critical infrastructure, and U.S. allies. How these trade-offs are weighed hinges on how national security is defined. 

The story behind today’s tariffs begins in the aftermath of the 9/11 terrorist attacks, when security definitions started expanding. Previously, Section 232 cases interpreted national security narrowly and focused on requirements for defense and critical infrastructure. Just weeks after 9/11, however, the Department of Commerce argued, “‘National security’ can be interpreted more broadly to include the general security and welfare of certain industries . . . which are critical to the minimum operations of the economy and the government.”  

That expanded concept of national security was critical for justifying Trump’s original steel and aluminum tariffs. After all, U.S. industry can meet national defense needs, which only amounted to about 3 percent of production in 2018, as former Secretary of Defense James Mattis explained [PDF]. With the benefit of a broader interpretation, however, Mattis concurred that unfair trade practices “pose a risk to national security” by harming innovation and manufacturing.  

When it comes to sources of supply, however, Trump has narrowed national security. The Commerce Department under George W. Bush noted [PDF] that U.S. imports of iron ore and semifinished steel were from “diverse and ‘safe’ foreign suppliers,” especially U.S. allies in the Western Hemisphere, and viewed these reliable sources as enhancing national security. In contrast, Trump’s Commerce Department argued in 2018, “The fact that some or all of the imports causing the harm are from reliable sources does not compel a finding that those imports do not threaten to impair national security.” 

The result is two competing visions for economics and security: networked versus nationalist. Both approaches acknowledge the risk of overdependence on foreign suppliers. But the networked approach distinguishes among sources of foreign supply and views U.S. partners and allies as a source of resilience. U.S. dependence on foreign aluminum (see figure 1) looks less threatening when considering that the vast majority comes from Canada. Indeed, U.S. law treats Australia, Canada, and the United Kingdom as extensions of the U.S. defense industrial base. 

In contrast, the nationalist approach views the only truly reliable supply as being domestic. As the Commerce Department’s 232 report on aluminum highlighted in 2018, the United States had only one smelter producing high-purity aluminum for critical infrastructure and defense applications. “Imports from allies should not be relied upon in order to ensure domestic production facilities are sufficient to meet U.S. national security,” the same report concluded.  

But if policymakers do not trust that U.S. partners and allies will provide sufficient access to steel and aluminum during a crisis, it could be worth exploring arrangements that would increase confidence. Such measures could include, for example, pursuing agreements to prioritize shipments to the United States during emergencies or creating joint stockpiles, overseen in part by U.S. personnel and including locations within U.S. territory.   

Furthermore, if increasing domestic capacity is the goal, Section 232 tariffs are only one option. To ensure the operation of a strategically important smelter, to use the example above, the U.S. government could provide more direct support such as a grant, loan, or long-term contracts. Those options would have the advantage of minimizing the broader disruptions to American households, companies, and allies.  

Section 232 tariffs carry their own national security risks, especially if exemptions are not offered. U.S. companies previously received exemptions to avoid disrupting production of Humvees and other defense products. Other companies received exemptions to avoid harming critical infrastructure broadly defined, such as power generation and transmission infrastructure, medical items, and food packaging, among other applications. That is not to say the system for exemptions was flawless, only that national security costs will increase without a process. 

The risk to national security is not hypothetical. In 2021, the Commerce Department concluded that Section 232 tariffs had contributed to raising the costs of transformers and related components, and the reliance on foreign imports for these products threatened national security. In other words, the department was acknowledging that actions it had taken to protect national security had threatened national security.  

Diplomatic damage is real as well. Above and beyond the economic costs of retaliation, tariff disputes threaten to dominate the attention of governments, from top to bottom, that could otherwise be applied to managing common challenges. Difficult trade issues should, of course, be discussed. But as economics and security issues increasingly collide, compartmentalizing disputes becomes all the more difficult. Greater discord is a gift to Beijing and Moscow. 

Of course, it is possible that these latest tariffs are simply part of an opening salvo, and Trump is seeking maximum leverage for negotiations with trading partners. The longer they remain without an exemption process, however, the greater the likelihood of unintended damage. Depending on how they are applied, expanding definitions of national security can leave the United States less safe.