Trump embracing potential for trade war, rebuffs allies looking for exemptions
Action breaks with a Pentagon recommendation, which warns a wide-ranging move would jeopardize national security partnerships.
WASHINGTON — President Donald Trump is embracing the potential for a trade war after announcing his intent to place tariffs on imported steel and aluminum, as he rebuffs allies who have pushed to be exempted from the stiff duties. And he is reaffirming that two close allies of the US will be affected by his planned import tariffs on steel and aluminum.
In a pair of morning tweets, Trump is reiterating his displeasure with trade deficits with Mexico and Canada. He says the metals duties will only be removed on the American neighbours to the north and south when a “new and fair” free trade agreement is signed.
Trump has long criticized the North American Free Trade Agreement. The latest round of a nearly year-long renegotiation effort is concluding this week in Mexico City.
Trump also calls on Canada to “treat our farmers much better” and Mexico to do “much more” on stopping the flow of illegal drugs into the U.S.
The latest round of NAFTA talks are concluding this week in Mexico City.
Finance Minister Bill Morneau says Canada should be exempted from the aluminum and steel tariffs. He says Canada is a “staunch ally” of the US and that it has been “firm” in its opposition to the tariffs. Speaking at a women’s entrepreneurship event in Toronto, he stressed the tariffs are not advantageous to either country or national security.
The Trump administration has been citing national security as the reason why it’s eying tariffs of 10 per cent on aluminum and 25 per cent on steel.
House Speaker Paul Ryan is raising concerns that President Donald Trump’s plan to impose new tariffs on steel and aluminum imports could start a trade war. The speaker is “extremely worried about the consequences” and is urging the White House “to not advance with this plan,” according to a statement issued by his office.
Ryan notes through his spokeswoman that the new tax overhaul “has boosted the economy and we certainly don’t want to jeopardize those gains.”
The statement from the top Republican in the House comes as the Trump administration is arguing that the tariffs are needed to preserve American steel and aluminum and warning that North American neighbours Canada and Mexico will not get any relief unless they agree to a fair trade deal.
Republican leaders of the House Ways and Means Committee are circulating a letter opposing President Donald Trump’s announcement that he’ll boost tariffs on imported steel and aluminum.
Committee spokeswoman Lauren Aronson says the letter expresses lawmakers’ concerns about “the prospect of broad, global tariffs” on the two materials. Aronson says any tariffs should be aimed at “unfairly traded products.”
The letter doesn’t mention any countries as potential targets.
It’s the latest indication of resistance to Trump’s plan by Republicans in Congress.
The letter says the administration and Congress should pursue trade policies that build off the economic momentum from the GOP-approved tax cuts and shouldn’t disrupt trade.
The letter was drafted by committee chairman Kevin Brady of Texas and Washington state’s Dave Reichert, who heads the panel’s trade subcommittee.
The protectionist policy will be made official in the next two weeks, White House officials said March 4, as the administration defended the decision from critics in Washington and overseas.
Trump appeared unbowed, as he tweeted that American “Steel and Aluminum industries are dead. Sorry, it’s time for a change!”
Trump’s pronouncement that he would impose tariffs of 25% and 10%, respectively, on imported steel and aluminum, roiled markets and rankled allies. While his rhetoric has been focused on China, the duties will also cover significant imports from Canada, Mexico, South Korea, Japan and the European Union.
Speaking on CNN’s “State of the Union,” White House trade adviser Peter Navarro said: “At this point in time there’s no country exclusions.”
The across-the-board action breaks with the recommendation of the Pentagon, which pushed for more targeted tariffs on metals imports from countries like China and warned that a wide-ranging move would jeopardize national security partnerships. But Commerce Secretary Wilbur Ross, whose agency oversaw reviews of the industries that recommended the tariffs, said March 4 ABC’s “This Week” that Trump is “talking about a fairly broad brush.”
Republican South Carolina Sen. Lindsey Graham said the sweeping action would let China “off the hook,” adding the tariffs would drive a wedge between the US and its allies.
“China wins when we fight with Europe,” he said on CBS’s “Face the Nation.” ”China wins when the American consumer has higher prices because of tariffs that don’t affect Chinese behaviour.“
Trump has threatened to tax European cars if the EU boosts tariffs on American products in response to the president’s plan to increase duties on steel and aluminum.
British Prime Minister Theresa May raised her “deep concern” at the tariff announcement in a phone call with Trump.
May’s office says she “raised our deep concern at the president’s forthcoming announcement on steel and aluminum tariffs, noting that multilateral action was the only way to resolve the problem of global overcapacity.”
But Ross rejected threats of retaliation from American allies as “pretty trivial” and not much more than a “rounding error.”
Few issues could blur the lines of partisanship in Trump-era Washington. Trade is one of them.
Labour unions and liberal Democrats are in the unusual position of applauding Trump’s approach, while Republicans and an array of business groups are warning of dire economic and political consequences if he goes ahead with the tariffs.
Trade politics often cut along regional, rather than ideological, lines, as politicians reflect the interests of the hometown industries and workers. But rarely does a debate open so wide a rift between a president and his party – leaving him almost exclusively with support from his ideological opposites.
“Good, finally,” said Sen. Sherrod Brown, an Ohio Democrat and progressive as he cheered Trump’s move. Sen. Bob Casey of Pennsylvania, a Democrat who has called for Trump to resign, agreed.
“I urge the administration to follow through and to take aggressive measures to ensure our workers can compete on a level playing field,” Casey tweeted.
This moment of unusual alliance was long expected. As a candidate, Trump made his populist and protectionist positions on trade quite clear, at times hitting the same themes as one of the Democratic presidential candidates, Vermont Sen. Bernie Sanders.
“This wave of globalization has wiped out totally, totally our middle class,” Trump told voters in the hard-hit steel town of Monessen, Pennsylvania, during one of his campaign stops. “It doesn’t have to be this way.”
Trump’s criticism of trade agreements and China’s trade policies found support with white working-class Americans whose wages had stagnated over the years. Victories in big steel-producing states such as Ohio, Pennsylvania and Indiana demonstrated that his tough trade talk had a receptive audience.
Both candidates in a March 13 House election in Pennsylvania have embraced the president’s plans for tariffs. They addressed the topic Saturday in a debate that aired on WTAE in Pittsburgh.
“For too long, China has been making cheap steel and they’ve been flooding the market with it. It’s not fair and it’s not right. So I actually think this is long overdue,” said Democratic candidate Conor Lamb.
“Unfortunately, many of our competitors around the world have slanted the playing field, and their thumb has been on the scale, and I think President Trump is trying to even that scale back out,” said Republican candidate Rick Saccone.
But Trump’s GOP allies on Capitol Hill have little use for the tariff approach. They argue that other industries that rely on steel and aluminum products will suffer. The cost of new appliances, cars and buildings will rise if the president follows through, they warn, and other nations could retaliate. The end result could erode the president’s base of support with rural America and even the blue-collar workers the president says he trying to help.
“There is always retaliation, and typically a lot of these countries single out agriculture when they do that. So, we’re very concerned,” said Sen. John Thune, R-S.D.
Gov. Scott Walker, R-Wis., asked the administration to reconsider its stance. He said American companies could move their operations abroad and not face retaliatory tariffs.
“This scenario would lead to the exact opposite outcome of the administration’s stated objective, which is to protect American jobs,” Walker said.
The Business Roundtable’s Josh Bolten, a chief of staff for President George W. Bush, called on Trump to have “the courage” to step back from his campaign rhetoric on trade.
“Sometimes a president needs to, you need to stick to your principles but you also need to recognize in cases where stuff you said in the campaign isn’t right and ought to be drawn back,” he said on “Fox News Sunday.” ”The president needs to have the courage to do that.“
Tim Phillips, president of the Koch Brothers-backed Americans for Prosperity, noted that Trump narrowly won in Iowa and Wisconsin, two heavily rural states that could suffer if countries impose retaliatory tariffs on American agricultural goods.
“It hurts the administration politically because trade wars, protectionism, they lead to higher prices for individual Americans,” Phillips said. “It’s basically a tax increase.”
The president wasn’t backing down, at least on Twitter, where he posted this message: “Trade wars are good, and easy to win.”