Chips, Steel, and Lawnmowers: What Trade Is Strategic?

In Washington and other capitals, the term “strategic” is the salt that makes policy proposals appetizing. A dash here and there can be essential for elevating issues and spurring action in the name of national security. But as today’s debates about tariffs illustrate, the challenge is one of proportion.   

President Donald Trump, his advisors, and Congress have different ideas of what products, sectors, and markets are strategic. Last month, some Trump advisors were exploring an approach that would apply tariffs to all countries but only on critical goods related to defense, medical supplies, and energy production. “Fake News,” said their boss.  

Meanwhile, Congress is taking aim at China. Congressmen John Moolenaar (R-MI) and Tom Suozzi (D-NY) propose hitting China with a 35 percent minimum tariff on all non-strategic goods and a 100 percent tariff on all strategic goods. Their Restoring Trade Fairness Act is refreshingly candid and precise. Rather than invoking “strategic” in a general sense, or assigning the hard work of setting priorities to someone else, they identify specific goods based on the Biden administration’s list of advanced technologies and Beijing’s Made in China 2025 initiative.  

Whether Moolenaar and Suozzi’s approach looks like a scalpel or a shotgun depends on your perspective. By focusing on China, it is narrower than the global approach contemplated by some Trump advisors. As illustrated below, the strategic goods list proposed by the congressmen is heavy with electronics and includes radioactive elements, industrial robots, and military equipment, among other items. Altogether, the 100 percent tariff would apply to roughly $200 billion in goods, slightly less than half of all U.S. imports from China by value.  Buried among the strategic goods, however, are a few oddities. For example, although lawnmowers can cause injuries, they seem unlikely to tip tomorrow’s balance of military or technological power. In a worst-case scenario, Americans could surely endure unkempt lawns. 

Strange as it sounds, lawnmowers were likely deemed strategic because agricultural equipment is part of the Made in China 2025 initiative. Moreover, China has made progress in this sector in recent years. But this raises the question of whether all of China’s industrial priorities should become U.S. strategic priorities. Doing so effectively allows Beijing to design U.S. strategy rather than charting a course that harnesses the United States’ own advantages. 

Of course, not all strategic goods are immediately obvious. Ship-to-shore cranes, as their name suggests, are vital for loading and offloading goods at ports. The United States imports most of these cranes, nearly 80 percent of which are produced by a single Chinese state-owned enterprise, ZPMC. Last year, the Biden administration included them in its own tariff hikes on $18 billion of strategic goods from China (less than one-tenth of the more recent congressional proposal). 

There is also the broader lens of economic security to consider. Hypothetically, protecting lawnmowers could be necessary to preserve manufacturing capacity and associated jobs, including for more essential equipment to plant and harvest crops. For the nearly seventy-thousand Americans working in the farm machinery and equipment sector, the stakes are surely high. In this scenario, tariffs would aim to protect broader capabilities. 

In reality, however, several American companies that make farm equipment are more concerned about the risks that U.S. tariffs pose, including driving up costs, disrupting supply chains, and triggering retaliation. They are right to worry—Beijing has already hit back with a 10 percent tariff on U.S. farm equipment. This raises an essential question that policymakers skip at their peril: After identifying a good as strategic, what is the best path to secure supply? 

Designing a strategy to meaningfully address dependencies and gaps in supply is exponentially more challenging than identifying strategic goods. Doing so requires analyzing supply chains, harnessing competitive advantages, and offering incentives. The cost of scaling supply domestically can vary dramatically depending on the product in question. For some goods, the United States should strike deals with trusted partners and allies. Tariffs, of course, are only one tool in the kit. 

But tariffs are Trump’s preferred tool, and his sense of strategic goods could be all-encompassing. He is taking aim at the United States’ friends and foes alike, and in recent days has threatened tariffs on autos, lumber, and in response to taxes on digital services. “Tariffs can be an effective tool for achieving economic and strategic objectives,” the White House explains in a factsheet on steel and aluminum tariffs, which are being justified on the grounds of national security.  

The longer the list of strategic goods, however, the more difficult it will be to craft a viable strategy to achieve those objectives. As new policies are cooked up, it can be tempting to add a dash of “strategic” to the mix. In moderation, it can even enhance the final product. But like all seasoning, there is a point beyond which the effects are overwhelming.