Texas GOP more critical of tariffs

Lawmakers say trade war risks economic gains

WASHINGTON — They’ve stuck with him through battles on Obamacare, Russia, immigration and taxes, but Texas Republicans are showing increasing unease over President Donald Trump’s push to impose costly new tariffs on imported cars, trucks and commodities like steel.

With Trump threatening new tariffs on imported cars, Texas U.S. Rep. Jeb Hensarling, chairman of the House Financial Services Committee, issued a blistering statement in opposition this week — marking a clear escalation of the muted criticism that has been growing out of a chorus of GOP lawmakers concerned about free trade, a central plank of Republican economics.

The business community, led by the U.S. Chamber of Commerce, fears Trump’s policies could reverse the economic and stock market gains Americans have enjoyed since the Great Recession of 2008.

The growing opposition among Trump’s allies in Congress serves as a counterweight to the populist promises of his 2016 presidential campaign about protecting American workers from foreign competition. The concern has been particularly acute among lawmakers from Texas, a major exporting state, as well as Houston, a port city and export hub.

Hensarling and other GOP lawmakers have been particularly upset by Trump’s resort to what they see as a spurious use of a national security statute to protect the domestic auto industry.

“The Honda Accord is not a threat to our national security. However, taxing it with trade tariffs is a

threat to the economic security of millions of hardworking American families,” Hensarling said. “Trade laws designed to uphold critical national security measures should never be used as an excuse for raw protectionism.”

Hensarling, speaking as NAFTA trade talks are coming to a head, also warned that the costs of an all-out trade war could cancel the benefits of the GOP tax cuts that will be the centerpiece of their 2018 midterm campaigns.

“All of the great gains President Trump has made with generational tax relief and bureaucratic regulatory reforms — the reforms that are fueling our economy — can be wiped out overnight if we end up in a global trade war,” he said.

Cornyn’s warning

Hensarling’s words echoed those of Texas U.S. Sen. John Cornyn, who told a Houston business group last month that Trump’s proposed tariffs on tens of billions of dollars’ worth of imported goods could offset the consumer benefits of the GOP tax cuts.

“The tariff issue dampens some of the economic enthusiasm we’ve seen from the tax cuts and the rollback in regulations,” Cornyn, the No. 2 Republican in the Senate, said at a luncheon talk hosted by the Greater Houston Partnership. “We need to have that growth to keep on going. It’s been a bit of a mixed message.” Cornyn’s warning came several days after House Ways and Means Chairman Kevin Brady, a Republican from The Woodlands, held a hearing featuring Kevin Kennedy, who owns a steel fabricating business in Splendora. Kennedy testified that he already had been hurt by Trump’s new tariffs on imported steel.

“Today, we are presented with an insurmountable obstacle that no U.S. manufacturer should have to face,” Kennedy told the lawmakers. “These tariffs have eliminated imported steel overnight, and without any competition, U.S. steel producers have raised prices over 40 percent.

“Before today,” Kennedy continued, “we were an exporter. We were competitive enough to manufacture drilling rigs and export them to countries like India, Russia and even Mexico. Not so today. We went from exporting our products to international buyers to having the U.S. government force our U.S. customers to import the products we make from our foreign competitors.”

Brady called Kennedy’s company “the perfect example of the dangerous impact that tariffs can have on American job creators and workers.”

Brady added that while Trump is “absolutely right” to go after China for its aggressive trade practices and theft of American intellectual property, “The challenge is to carefully target these tariffs so that businesses like Kennedy Fabricating are not negatively impacted as well.”

Texas oil and gas companies also are pushing back against Trump’s steel tariffs, arguing that his threat to extend them next month would cause job losses and bankruptcies.

The Texas Alliance of Energy Producers, which represents 2,600 smaller oil and gas companies, has asked the U.S. Commerce Department to soften or eliminate its restrictions on imported steel piping to the energy sector.

The concerns over trade, which have helped stall the financial markets in recent months, have been bipartisan. Last month, Texas U.S. Rep. Ted Poe of Humble teamed up with Massachusetts Democrat Bill Keating to introduce a resolution reaffirming the “vital importance” of the U.S. trade relationship with the European Union.

‘Deeply misguided’

The resolution urges the administration to issue a permanent exemption for the EU from the steel and aluminum tariffs.

The concerns have not been confined to Trump’s allies in Texas. A group of Republican senators reportedly gave Vice President Mike Pence an earful during a Senate lunch Thursday, raising concerns about the president’s tariff threat on auto imports.

Senate Finance Chairman Orrin Hatch told reporters afterward that the Commerce Department’s national security review of imported cars — announced Wednesday — was “deeply misguided. …Anytime you start raising taxes and tariffs, I’m not very happy about it.”

Another GOP senator, Shelley Moore Capito, said it was a hot topic at the luncheon and that “a lot of people are upset about it.”

The senators’ complaints were accompanied by a stinging rebuke Thursday from U.S. Chamber of Commerce President and CEO Thomas Donohue questioning the administration’s intentions.

“This isn’t about national security,” Donohue said. “The administration has already signaled its true objective is to leverage this tariff threat in trade negotiations with Mexico, Canada, Japan, the European Union, and South Korea. These allies provide nearly all U.S. auto imports and are among America’s closest partners. Neither they nor these imports endanger our national security in any way.”

National security

Donohue argued that the tariffs could ignite a global trade war that would jeopardize the rebounding U.S. auto industry. “The U.S. auto industry is prospering as never before,” he said. He noted that production has doubled over the past decade and that the industry employs nearly 50 percent more Americans than it did in 2011.

“These tariffs risk overturning all of this progress,” he said.

The administration’s announcement on auto imports comes as negotiations on NAFTA — the North American Free Trade Agreement — have reportedly snagged on policies covering duties the auto industry. Both NAFTA partners, Canada and Mexico, export cars to the United States.

Commerce Secretary Wilbur Ross said the administration would look at whether imported automobiles might pose a threat to national security under Section 232 of trade expansion laws. The review, he said in a statement, will include cars, SUVs, vans, light trucks and automotive parts, adding that years of imports have “eroded our domestic auto industry.”

The review follows a similar federal appraisal of steel and aluminum imports last year that resulted in a finding that dependence on imported metals could leave the nation unable to meet its military needs.

Trump followed up by imposing an across-the-board 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports that was cheered by domestic industries in the industrial Midwestern states of Wisconsin, Michigan and Pennsylvania — states that were critical to his election.

The steel tariffs followed similar protectionist measures aimed at imported solar panels and washing machines.

The administration, under pressure from other business groups on the steel tariffs, provided temporary exemptions for Canada, Mexico and the European Union. Unless they’re renewed, those exemptions expire June 1.