Northwest Arkansas Democrat-Gazette
Ryan, Trump tangle on tariffs
President links possible exemptions for neighbors to NAFTA negotiations
WASHINGTON — House Speaker Paul Ryan and other Republican allies of President Donald Trump pleaded with him Monday to back away from his threatened international tariffs, which they fear could spark a dangerous trade war. Trump retorted: “We’re not backing down.”
The president said U.S. neighbors Canada and Mexico would not be spared from his plans for special import taxes on steel and aluminum, but he held out the possibility of later exempting the long-standing friends if they agree to better terms for the U.S. in talks aimed at revising the North American Free Trade Agreement.
“We’ve had a very bad deal with Mexico; we’ve had a very bad deal with Canada. It’s called NAFTA,” he declared.
Trump spoke shortly after a spokesman for Wisconsin’s Ryan, a Trump ally, said the GOP leader was “extremely worried” that the proposed tariffs would set off a trade war and urged the White House “to not advance with this plan.”
Likewise, Republican leaders of the House Ways and Means Committee circulated a letter opposing Trump’s plan, and GOP congressional leaders suggested they may attempt to prevent the tariffs if the president moves forward.
The tariffs will be made official in the next two weeks, White House officials said.
Trump’s pledge to implement tariffs of 25 percent on steel imports and 10 percent on aluminum imports has roiled financial markets, angered foreign allies and created unusual alliances for a president who blasted unfavorable trade deals during his 2016 campaign. Union leaders and Democratic lawmakers from Rust Belt states have praised the planned tariffs, joining with advocates within the administration including Commerce Secretary Wilbur Ross and White House trade adviser Peter Navarro.
But the president has been opposed internally by Defense Secretary James Mattis and White House economic adviser Gary Cohn, who warned against penalizing U.S. allies and undercutting the economic benefits of the president’s sweeping tax overhaul.
Likewise, the statement from Ryan’s office said, “The new tax reform law has boosted the economy, and we certainly don’t want to jeopardize those gains.”
Asked about that public rebuke, White House press secretary Sarah Huckabee Sanders said, “Look, we have a great relationship with Speaker Ryan. We’re going to continue to have one, but that doesn’t mean we have to agree on everything.”
The administration has argued that the tariffs are necessary to preserve the American aluminum and steel industries and protect national security. But Trump’s comments and tweets early Monday suggested he was also using them as leverage in the current talks to revise NAFTA. The latest round of a nearly yearlong renegotiation effort is concluding this week in Mexico City.
Canada is the United States’ No. 1 foreign supplier of both steel and aluminum. Mexico is the No. 4 supplier of steel and No. 7 for aluminum.
At the talks, U. S Trade Representative Robert Lighthizer said Monday that progress has been less than many had hoped and “our time is running short.”
“I fear the longer we proceed, the more political head winds we will feel,” he said. And he added that if threeway negotiations don’t work, “we are prepared to move on a bilateral basis.”
More upbeat about progress until now, Dan Ujczo, a trade attorney with Dickinson Wright PLLC in Columbus, Ohio, said, “We were moving toward the finish line in NAFTA.” But he added, “This has the potential to throw the NAFTA talks off track.”
He said neither Canada nor Mexico will want to be seen as giving in to U.S. pressure. Indeed, he said, Canada is probably already drawing up lists of U.S. products to tax in retaliation.
Separately, Mexican Economy Secretary Ildefonso Guajardo tweeted: “Mexico shouldn’t be included in steel & aluminum tariffs. It’s the wrong way to incentivize the creation of a new & modern #NAFTA.”
Members of the House Ways and Means Committee were also circulating a letter criticizing the tariffs, while high-ranking Senate Republicans voiced their own opposition. “My constituents are worried about the cost of their beer cans. It’s a concern,” said Sen. John Cornyn, R-Texas. “The price of cars. A tariff obviously is going to get passed on to the consumer eventually in the price of goods and that ought to be everybody’s concern.”
Amid mounting Republican dismay over Trump’s protectionist path, Sen. Orrin Hatch, R-Utah, chairman of the Senate Finance Committee, predicted the president ultimately will back off plans for the new trade levies.
“I think he’s thinking it through. We’ll see,” Hatch said Monday. “I think he’s shooting one across the bow and letting people know that we’re not being treated fairly in these international matters and, frankly, I don’t blame him.
As the president dug in on his position, any potential compromise with foreign trading partners and Republican lawmakers was expected to still include some form of tariffs.
“Trump is not someone who retreats,” said Stephen Moore, an economist with the conservative Heritage Foundation and a former campaign adviser. “He’s going to need to be able to declare some victory here.”
Republican critics on Capitol Hill and within the administration argue that industries and their workers that rely on steel and aluminum for their products will suffer. The cost of new appliances, cars and buildings will rise for Americans if the president follows through, they warn, and other nations could retaliate.
Two dozen conservative groups, including the Club for Growth, FreedomWorks and the National Taxpayers Union, urged Trump to reconsider, writing in a letter that the tariffs would be “a tax on the middle class with everything from cars to baseball bats to even beer.”
The Trade Partnership, a consulting firm, said the tariffs would increase U.S. employment in the steel and aluminum sector by about 33,000 jobs but would cost 179,000 jobs in the rest of the economy.
The end result could erode the president’s base of support with rural America and even the blue-collar workers the president says he’s trying to help.
“These are people that voted for him and supported him in these auto-producing states,” said Cody Lusk, president of the American International Automobile Dealers Association. Lusk noted that of the 16 states with auto plants, Trump won all but two.
China’s premier warned about rising global protectionism and vowed a “bolder” approach to change in a key address to parliament Monday, but experts said his government’s actions belie such rhetoric.
At the opening session of the annual meeting of the National People’s Congress, Li Keqiang painted a picture of a country on a courageous path of economic change and trade liberalization, in the face of rising global protectionism.
China, he said, would open up its economy to foreign investors and open its markets more widely to foreign trade, echoing promises made in previous years’ speeches.
“We must go further in freeing our minds, in deepening reform, and in opening up,” he said. “We need to give full play to the pioneering drive of the people, and encourage all localities, based on their own conditions, to dare to explore, dare to try things out, and dare to confront the toughest of issues.”
The irony is that, in some ways, China may be moving in the opposite direction, experts say.
Not only has its investment and trade opening largely stalled, with foreign investors increasingly grumpy at what they see as an uneven playing field, but the room for local officials to think freely, to adapt and explore — seen as a key factor in China’s past economic success — may have shrunk in recent years. Meanwhile the space for free speech, academic debate and the advocacy has also been dramatically curtailed.
“They’ve said the same thing for the past five years, so it’s difficult to take it seriously,” said Christopher Balding, an associate professor at the HSBC Business School in Shenzhen. “But what they seem to have learned is that if you say the rhetoric, it gets people’s attention, even if it is fundamentally untrue.”