Finance

GOP to step up pressure on Trump as trade war intensifies

Greg Nash

Frustrated Republican lawmakers plan to step up pressure on President Trump to back off from his aggressive trade policies, which have cast a shadow over the U.S. economy, hurt farmers and prompted some companies to curtail domestic manufacturing.

Senior administration officials promised Republican senators from agriculture-dependent states last month that they would be able to wrap up negotiations with Canada and Mexico, two of the United States’s biggest trade partners, by Labor Day. But that timeline is starting to slip. GOP lawmakers are worried about the effect on domestic manufacturers and commodity prices when the fall harvest arrives amid the home stretch of the midterm elections.

{mosads}Lawmakers will be closely watching the outcome of Wednesday’s meeting between Trump and European Commission President Jean-Claude Juncker, who is traveling to the nation’s capital to head off a full-blown transatlantic trade war.

“We’re trying to figure out tactically what’s the right step forward,” said Sen. Pat Toomey (R-Pa.), who is working with colleagues to rein in Trump’s trade policies.

About a dozen Republican senators met last week to discuss how to stop Trump from moving forward with new rounds of tariffs that could stall what has been consistent economic growth so far this year.

“I think there’s likely to be a group of senators who go over one more time, very soon, to talk to them about reconsidering what they’re doing,” said Sen. Bob Corker (R-Tenn.), who has teamed up with Toomey on a bill that would give Congress authority over the president’s power to impose tariffs.

Republican senators have been lobbying the president for months to ease off his threat of tariffs but have little to show for it.

The economy has only gained momentum this year, with growth projected to hit 3.8 percent or higher in the second quarter.

But Republicans on Capitol Hill worry that once the effects of a trade war show up in the macroeconomic numbers, it will be too late to repair the damage as companies will have already moved manufacturing overseas and commodities markets will have signed contracts with other exporters.

German auto manufacturer BMW, which has a major plant in Spartanburg, S.C., announced this month that it would increase production in China in response to Trump’s tariff policies.

Wisconsin-based motorcycle manufacturer Harley-Davidson announced in June that it would move production overseas to avoid retaliatory tariffs from the European Union.

Yet, Trump’s poll numbers remain strong, and he appears immune to pressure to soften his aggressive policies.

Administration officials argue that now’s the perfect time to take on China, the European Union and other partners over what they see as unfair trading practices, when the U.S. economy is humming.

The S&P 500 is up 31 percent since Trump beat Democratic nominee Hillary Clinton in the 2016 election.

“This is the time. You know the expression: We’re playing with the bank’s money,” Trump told CNBC in an interview Friday. 

The president upped the ante last week by threatening tariffs on more than $500 billion worth of Chinese goods.

Experts warn that Trump’s trade policies may wind up taking a significant bite out of corporate profits and growth.

JPMorgan Chase CEO Jamie Dimon told CNN Money in an interview published Monday that Trump could wind up erasing the stimulative effect of last year’s tax-reform package.

“If you do another $200 billion of tariffs and this national security thing about cars, I think that you’re getting pretty close to reversing some of the benefits you’ve seen in the economy,” he said.

Larry Fink, the CEO of BlackRock, warned last week the stock market could drop 10 to 15 percent and gross domestic product could dip in 2019 unless Trump pulls back on tariffs.

GOP leaders are concerned as well.

“Any uncertainty over the trade issue or retaliatory tariffs can definitely be a wet blanket on our economic recovery,” said Senate Majority Whip John Cornyn (R-Texas).

Sen. John Thune (S.D.), the chairman of the Senate Republican Conference, also worries that Trump’s tariff threats could eclipse the economic benefit from his tax and regulatory policies.

“I hope we don’t distract from that with issues like tariffs and trade. I think that has a potential to step on a lot of the economic progress that we made, and I’m hoping the president and his team will come to that conclusion,” he said.  

The Senate voted overwhelmingly, 88-11, this month to pass a nonbinding resolution expressing support for Congress taking back tariff authority from the president.

The proponents of that measure want to pass legislation with more teeth limiting Trump’s authority before the end of the year.

Corker says if Trump moves ahead with tariffs on auto imports it would change the political calculus among Republicans in Congress.

“Definitely,” he said. “It would be a tipping point.”

Corker says he is looking for a revenue bill on which to attach a trade-related measure.

GOP legislators think Trump’s controversial embrace of Russian President Vladimir Putin could make colleagues more sympathetic about passing trade legislation to help NATO allies.

“The question is whether it may have moved some sentiment in our direction,” Toomey said.

Corker says a smart way to counter Russian influence is for Congress to “take back this power on tariffs, which has unsettled all of our allies.”

Republican members of the Senate Finance Committee, led by Sen. Rob Portman (R-Ohio), are also looking at legislation that would narrow the national security justification Trump has used under Section 232 of the Trade Expansion Act to impose tariffs.

Corker and Sen. Jeff Flake (R-Ariz.) say that doesn’t go far enough.

But Corker, Toomey and their allies have more work to do to convince the GOP leadership to schedule a vote on legislation that would undercut Trump’s negotiating ability.

Cornyn says the passage of the nonbinding resolution is enough for now.

“I think we had a vote on some element of that,” he said, when asked about a vote on new legislation to curtail Trump’s tariff authority.

Tags Bob Corker Donald Trump Hillary Clinton Jeff Flake John Cornyn John Thune Pat Toomey Rob Portman
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