Five takeaways on Trump’s tariffs

Five takeaways on Trump’s tariffs

President TrumpDonald John TrumpAdvisor: Sanders could beat Trump in Texas Bloomberg rips Sanders over Castro comments What coronavirus teaches us for preventing the next big bio threat MORE’s plan to levy steep tariffs on steel and aluminum imports has rattled global markets, irritated members of his own party and sent key U.S. allies searching for an equivalent response. 

The announcement on Thursday came as a surprise to some in the White House, as a legal review on proposals sent to the president from the Commerce Department had yet to be completed.

Here are five takeaways on the most dramatic step yet by Trump on trade — a central issue in his successful presidential campaign. 

Trump is picking a fight with Republicans

Trump and Republicans in Congress — with the exception of a handful of GOP lawmakers representing high-tax districts — were remarkably unified on December’s tax-cut package.

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The result was a new law that is the White House’s crowning legislative achievement — and one the GOP hopes will preserve its majorities this fall in the House and Senate.

The imposition of steep tariffs on steel and aluminum, in contrast, is intensely disliked by seemingly most of the GOP. 

“Kooky 18th century protectionism will jack up prices on American families, and will prompt retaliation from other countries,” Sen. Ben SasseBenjamin (Ben) Eric SasseThis week: House to vote on legislation to make lynching a federal hate crime Overnight Health Care: Nevada union won't endorse before caucuses after 'Medicare for All' scrap | McConnell tees up votes on two abortion bills | CDC confirms 15th US coronavirus case McConnell tees up votes on two abortion bills MORE (R-Neb.) said in a Friday statement. “Make no mistake: If the president goes through with this, it will kill American jobs, that's what every trade war ultimately does. So much losing."

GOP leaders were nearly as critical, and Speaker Paul RyanPaul Davis RyanPaul Ryan says he disagrees with Romney's impeachment vote Trump doubles down on Neil Cavuto attacks: 'Will he get the same treatment as' Shep Smith? Trump lashes out at Fox News coverage: 'I won every one of my debates' MORE (R-Wis.) and other leaders have asked Trump to reconsider.

The party that is unified generally wins. On these tariffs, the GOP-led Congress and the White House is hopelessly divided. 

Trump’s plan is dividing his own White House 

There are deep divisions among Trump’s own team over the tariffs. 

A cadre of senior officials, including National Economic Council Director Gary Cohn, Defense Secretary James MattisJames Norman MattisFed chief issues stark warning to Congress on deficits Why US democracy support matters Hillicon Valley: DOJ indicts four Chinese military officers over Equifax hack | Amazon seeks Trump deposition in 'war cloud' lawsuit | Inside Trump's budget | Republican proposes FTC overhaul MORE and national security adviser H.R. McMaster, oppose the tariffs and for more than a year had succeeded in holding them off.

Their success came, in part, because of a weekly trade meeting run by former top aide Rob Porter. The gathering was designed to ensure that officials on both sides of the debate had their voices heard, but also resulted in retaliatory trade actions being delayed.

That all changed when Porter resigned last month over domestic abuse allegations. 

Trade hawks like Commerce Secretary Wilbur RossWilbur Louis Ross2020 census to run ads on 'Premio lo Nuestro' Can the US slap tariffs on auto imports? Not anymore On The Money: Slowing economy complicates 2020 message for Trump | Tech confronts growing impact of coronavirus | Manufacturing rises after five-month contraction MORE, trade adviser Peter Navarro and U.S. Trade Representative Robert LighthizerRobert (Bob) Emmet LighthizerGOP senator warns quick vote on new NAFTA would be 'huge mistake' Pelosi casts doubt on USMCA deal in 2019 Pelosi sounds hopeful on new NAFTA deal despite tensions with White House MORE were given a freer hand to make their case to Trump, who has long wanted to impose tariffs on imported goods.

The president's decision to buck the free traders could trigger yet another staff shakeup. Cohn is said to be considering leaving the White House over the issue.

Ross and his allies aren’t showing signs of backing down. “I believe that everybody should rally round the president’s decision,” he said Friday.

U.S. allies may be hit the hardest

Canada, which is the largest importer of steel and aluminum imports into the United States and the biggest consumer of U.S. goods, may bear the brunt of Trump’s tariffs.

At 16 percent, Canada is the top source of imported steel into the United States, sending 90 percent of its steel here. Canada also holds the top spot for aluminum, accounting for more than 40 percent of all U.S. imports of the metal. 

There is concern that the tariffs would significantly disrupt the intricate supply chain between the two countries. 

Supporters of the steel and aluminum tariffs also argue that Canada isn't the problem.  

Canada’s government, which isn't expected to get a hoped-for exemption, has already promised retaliation if Trump follows through. 

Canadian Prime Minister Justin Trudeau called Trump’s plan “absolutely unacceptable” and credited the integration of North American steel and aluminum markets with creating millions of jobs.

The tariffs aren’t that much of a surprise 

While Trump caught many people off guard with his announcement, his decision to impose tariffs really isn’t much of a surprise. 

Trump ran on a promise to protect U.S. workers, arguing they had been betrayed by politicians in both parties who had negotiated away their jobs. 

The steel and aluminum tariffs represent Trump’s effort to effectively fulfill a promise.

“The president has been consistent all the way from his campaign days to the present about doing something big to protect steel and aluminum,” Ross said. 

“So it should not have come as a shock.” 

Swing states may get the final say

Trump won the presidency because he captured victories in Pennsylvania, Wisconsin and Michigan, three states that a GOP presidential candidate hadn’t won in decades. 

There are various reasons for his win, but his tough message on trade was clearly a factor in those states, as well as the perennial swing state of Ohio.

The two senators from that state, Republican Rob PortmanRobert (Rob) Jones PortmanWhere do we go from here? Conservation can show the way GOP senators offering bill to cement business provision in Trump tax law Mnuchin defends Treasury regulations on GOP tax law MORE and Democrat Sherrod BrownSherrod Campbell BrownTrump pick for Fed seat takes bipartisan fire On The Money: Deficit spikes 25 percent through January | Mnuchin declines to say why Trump pulled Treasury nominee who oversaw Roger Stone case | Lawmakers trade insults over Trump budget cuts Mnuchin defends Treasury regulations on GOP tax law MORE, notably both offered various degrees of support for Trump’s move, insisting that it could help producers in their states competing with China. 

“I have argued that certain parts of our industry here do need immediate protection,” said Portman, who urged Trump to take a more targeted approach to the tariffs.

Foreign governments retaliating against the tariffs are likely to try to hurt these states. The European Union is already drawing up a possible retaliation list that includes motorcycles built by Harley-Davidson in Wisconsin.

How voters in these states ultimately judge Trump may be a deciding factor in what happens with the tariffs. 

Keep an eye on Michigan, where automakers have an interest in steel tariffs. 

Matt Blunt, president of the American Automotive Policy Council, said the tariffs “would place the U.S. automotive industry, which supports more than 7 million American jobs, at a competitive disadvantage.”