Trump tariffs create uncertainty for Pentagon

Trump tariffs create uncertainty for Pentagon
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Military officials are still grappling with President TrumpDonald John TrumpShocking summit with Putin caps off Trump’s turbulent Europe trip GOP lambasts Trump over performance in Helsinki Trump stuns the world at Putin summit MORE’s new tariffs on steel and aluminum, uncertain as to how they might affect the Defense Department.

Trump on Thursday ordered a 25 percent tariff on imported steel and a 10 percent tariff on imported aluminum — exempting Canada and Mexico — in an attempt to stop “aggressive foreign trade practices.” He said tariffs are meant to improve national security. 

Defense Secretary James MattisJames Norman MattisOvernight Defense: Fears rise over Trump-Putin summit | McCain presses Trump to hold Putin 'accountable' for hacking | Pentagon does damage control after NATO meet Mattis doesn't mention Russia by name at meeting with Balkan officials: report Trump references ‘legitimate media and fake-news media’ at meeting with NATO leader MORE, in a memo to the Commerce Department last month, agreed with the president that, “the systematic use of unfair trade practices to intentionally erode our innovation and manufacturing industrial base poses a risk to our national security.” 

But he added that the Pentagon was concerned “about negative impact on our key allies” from the tariffs.

In Congress, where opposition to the tariffs is strong among Republicans, lawmakers have warned the tariffs could damage some of the country’s most important military alliances.

A group of GOP senators raised that fear in a letter to Trump Thursday. Led by Sen. Joni ErnstJoni Kay ErnstOnly all-male state Supreme Court set to get female justice GOP senators introduce resolution endorsing ICE The real reason Scott Pruitt is gone: Putting a key voting bloc at risk MORE (R-Iowa), the lawmakers wrote that the tariffs risk “alienating key international partners that contribute to our ability to defend our nation and maintain international stability.” 

In several hearings this week, when the topic of tariffs and its effect on the national security came up, senior administration officials mostly demurred and moved on to other topics.

On Wednesday, National Intelligence Director Dan CoatsDaniel (Dan) Ray CoatsTrump stuns the world at Putin summit Trump: ‘Phony witch hunt’ drove wedge between US, Russia Press: Whose side is Trump on? MORE sidestepped a question from Ernst about the national security implications of the tariffs and the message it sends to allies and partners.

“There are pros and cons. The president's announcement recently has not been finalized, as you know,” Coats replied.   

“But our job in the intelligence community is to assess things after they've happened and — or are about to happen — and try to provide information to our policymakers so that they can make determinations on the policies. So, I really am not in a position to discuss policy on trade.”  

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Lawmakers and industry executives are also warning Trump’s tariffs could result in higher costs for weapons systems and infrastructure projects.

Mattis said in his memo that the military only requires about 3 percent of all the steel and aluminum made in the United States. Therefore, there would be no impact from the tariffs on the “ability of DOD programs to acquire the steel or aluminum necessary to meet national defense requirements.”

Under the Buy American Act, passed by Congress in 1933, the Pentagon must give preferential treatment to domestic sources of supplies and construction material; it is required to buy U.S. steel and aluminum unless the country does not have an adequate supply. 

But the cost of the domestic metals are likely to rise once the tariffs kick in, increasing the price of vehicles and aircraft in which steel and aluminum are a key component.

Steel is used in aircraft carriers, ships, tanks and submarines and construction projects, while aluminum is used for numerous military vehicles and aircraft.

Other countries could also push back on the tariffs by halting defense purchases with U.S. companies, as Canada did last year when it canceled a potential $5.15 billion order of 18 Boeing Super Hornet fighter jets. Canada put an end to talks after the U.S., prodded by Boeing, sought to impose tariffs on a Canadian-made commercial plane.

Senate Armed Services Committee Chairman John McCainJohn Sidney McCainGOP lambasts Trump over performance in Helsinki Trump stuns the world at Putin summit NY Daily News cover following Helsinki summit shows Trump shooting Uncle Sam MORE (R-Ariz.) this week argued that Trump’s insistence that that the tariffs will protect American interests “is simply not supported by the evidence.” 

“By potentially triggering significant increases in the price of steel and aluminum, President Trump’s new tariffs could harm our national defense by raising the cost of production for critical military systems needed to sustain the United States’ comparative military advantage against our adversaries, from ships, to armored vehicles, to fighter aircraft,” McCain said in a statement.

In a Wednesday House Armed Services Committee hearing on military acquisition reform, top Navy and Air Force weapons buyers admitted they weren’t yet sure how the tariffs would affect defense programs. 

“I think we're — some more studies are going to have to be done ... and as the policy becomes better understood and its final implementation is inside then we're going to have to look at what those implications, are and then what does that mean to each of the individual programs,” said James Geurts, the assistant Navy secretary for research development and acquisition. 

The assistant Air Force secretary for acquisition, William Roper, said the Pentagon did not have a department-wide position on the tariffs question.  

“I think for the Air Force's point of view, we're committed to work with the other services and the office of the secretary of Defense to make sure that whatever our response is, it's done together. But your point is well-taken that this will impact programs and we need to understand that sooner rather than later,” Roper said.

The country’s largest defense lobbying group, the Aerospace Industries Association, (AIA), meanwhile, said the tariffs would negatively impact U.S. defense and aerospace manufacturers across the board. 

The 10 percent aluminum tariff on its own “would create almost $2 billion in unnecessary costs to U.S. manufacturing,” AIA President Eric Fanning said in a statement following Trump’s announcement.

“We are disappointed that the president has decided to move forward with tariffs on steel and aluminum,” Fanning added.

“Our industry employs 2.4 million people and produced a trade surplus of $86 billion last year. Tariffs on aluminum and steel would jeopardize that surplus and put those jobs at risk.”