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 TrumpTrump rallies in Nevada amid Supreme Court flurry: 'We're gonna get Brett' Trump: 'Good news' that Obama is campaigning again Trump boosts Heller, hammers 'Wacky Jacky' opponent in Nevada 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: Trump identifies first soldier remains from North Korea | New cyber strategy lets US go on offense | Army chief downplays talk of 'Fort Trump' Pompeo backed continued US support in Yemen war over objections from staff: report Stand with veterans instead of predatory for-profit colleges 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 ErnstGOP senator divorcing from husband GOP senators introduce bill to preserve ObamaCare's pre-existing conditions protections Pence: Trump’s national security will be as 'dominant' in space as it is on Earth 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 CoatsDem lawmakers slam Trump’s declassification of Russia documents as ‘brazen abuse of power’ Nunes: Russia probe documents should be released before election The Hill's Morning Report — Sponsored by Better Medicare Alliance — Cuomo wins and Manafort plea deal 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 McCainArizona race becomes Senate GOP’s ‘firewall’ Trump administration weakens methane pollution standards for drilling on public lands Another recession could hit US in 2019, says credit union association chief 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.”