Business groups
White House says NAFTA partners might be spared
and Republicans in Congress brace for impending tariffs on steel and aluminum imports and appear resigned to more protectionist trade actions from the Trump administration.
WASHINGTON — Congressional Republicans and business groups were bracing Wednesday for the impact of expected tariffs of 25 percent on imported steel and 10 percent on aluminum, appearing resigned to additional protectionist trade actions as President Donald Trump signaled upcoming economic battles with China.
The White House said Trump was expected to make a final announcement as early as Thursday, and officials were working to include language in the tariffs that would give Trump the flexibility to approve exemptions for certain countries.
Mexico, Canada and other countries may be spared from planned steel and aluminum tariffs under national security “carveouts,” the White House said Wednesday, describing a move that could soften the blow amid threats of retaliation by trading partners and dire economic warnings from lawmakers and business groups.
Press secretary Sarah Huckabee Sanders said the exemptions would be made on a “case by case” and “country by country” basis, a reversal from the policy articulated by the White House just days ago that there would be no exemptions from Trump’s plan.
Treasury Secretary Steven Mnuchin said the administration was “definitely going to end up” with the across-the-board tariffs Trump is seeking — 25 percent on steel imports, 10 percent on aluminum.
“But, again, there will be a mechanism where, to the extent that the president wants to give waivers, the president can do that,” Mnuchin told Fox Business.
The looming departure of White House economic adviser Gary Cohn, a former Goldman Sachs executive who has opposed the promised tariffs, set off anxiety among business leaders and investors worried about a potential trade war.
More than 100 House Republicans wrote in a letter to Trump: “We urge you to reconsider the idea of broad tariffs to avoid unintended negative consequences to the U.S. economy and its workers.”
Commerce Secretary Wilbur Ross told CNBC that Trump already has “indicated a degree of flexibility.”
“I think a very sensible, very balanced degree of flexibility,” Ross said. “We’re not trying to blow up the world.”
Trump signaled that other trade actions could be in the works. In a tweet, he said the “U.S. is acting swiftly on Intellectual Property theft.” A White House official said Trump was referencing an investigation in which the U.S. trade representative is studying whether Chinese intellectual property rules are “unreasonable or discriminatory” to American business.
The official, who spoke on the condition of anonymity to discuss internal deliberations, said an announcement on the findings of the report — and possible retaliatory actions — was expected within the next three weeks.
Meanwhile, the EU’s trade commissioner, Cecilia Malmstroem, said Wednesday that the bloc is ready to retaliate with countermeasures, escalating the risk of a trade war. Many economists say such conflicts tend to hurt all sides because exporting producers suffer but so do consumers who face higher costs.
Malmstroem said the EU is circulating among member states a list of U.S. goods to target with tariffs so that it can respond as quickly as possible. The list includes U.S. steel and agricultural products, as well as products such as bourbon, peanut butter, cranberries and orange juice.
“This is basically a stupid process, the fact that we have to do this. But we have to do it,” EU Commission President Jean-Claude Juncker had said Friday. “We can also do stupid.”
Business leaders, meanwhile, continued to sound the alarm about the potential economic fallout from tariffs, with the president and CEO of the U.S. Chamber of Commerce raising the specter of a global trade war. That scenario, Tom Donohue said, would endanger the economic momentum from the GOP tax cuts and Trump’s rollback of regulations.
The president has said the tariffs are needed to reinforce lagging American steel and aluminum industries and protect national security. He has tried to use the tariffs as leverage in ongoing talks to revise the North American Free Trade Agreement, suggesting Canada and Mexico might be exempted from tariffs if they offer more favorable terms under NAFTA.
White House senior adviser Jared Kushner and staff from the State Department and National Security Council met Wednesday with Mexican President Enrique Pena Nieto and other top officials in Mexico City.
Kushner has been the designated point person for the United States’ relationship with Mexico since the 2016 presidential campaign. But ties have become more complicated in recent weeks, given that the White House recently downgraded Kushner’s security clearance, raising questions about how effective he might be in a meeting with a head of state or whether there are key issues he might not be informed about.
U.S. lawmakers opposed to the tariffs, including House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell, have suggested more narrowly focused approaches to target Chinese imports.
Republicans have lobbied administration officials to reconsider the plan and focus the trade actions on China, warning that allies such as Canada and members of the European Union would retaliate.
The White House is weighing contenders to succeed Cohn, and names circulating include Goldman Sachs executive Jim Donovan, Council of Economic Advisers Chairman Kevin Hassett, and trade adviser Peter Navarro, people familiar with the matter said.
Trump’s plan to slap tariffs on on steel and aluminum imports was promoted by Navarro.
Other names being floated for Cohn’s job include Mick Mulvaney, head of the White House Office of Management and Budget; CNBC contributor Larry Kudlow; Chris Liddell, assistant to the president for strategic initiatives; Deputy Director for Economic Policy Shahira Knight; economist Stephen Moore; Vice President Mike Pence’s chief economist, Mark Calabria; and Bob Steel, former under-secretary for domestic finance at Treasury under President George W. Bush, according to the people.