Report

Trump’s Trade Wars Prompt Congressional Pushback

As the U.S. trade war with China escalates, a growing number of GOP lawmakers want final say on tariffs.

A cargo ship at a port in Qingdao, China on March 8. (AFP/Getty Images)
A cargo ship at a port in Qingdao, China on March 8. (AFP/Getty Images)

U.S. President Donald Trump’s escalating trade war with China and other countries is beginning to prompt significant pushback from big business and even Republican lawmakers who fear that tariffs and other protectionist measures could impede the country’s strong economic growth.

Trump threatened on Monday to slap tariffs on an additional $200 billion worth of Chinese goods after already targeting $50 billion late last week, potentially penalizing twice the amount that Trump had previously said could be targeted.

It followed China’s retaliation over the weekend for the administration’s Friday decision to slap a 25 percent tariff on $50 billion worth of Chinese goods.

Trump says the tariffs are meant to curb China’s unfair trade practices. Most Republicans agree with the idea in principle. But they worry that in recent months, the administration’s trade policy is sparking a full-blown trade war, and does little to address the underlying problem.

“What we need is to take a scalpel to Chinese abuses, and instead what we have is a roundhouse kick that will hit Americans,” said Tori Whiting, an economist at the conservative Heritage Foundation.

The tariffs “are counterproductive to the administration’s own agenda,” she said.

The White House said that if China responds to the latest measures, it could up the ante once more and put tariffs on a further $200 billion worth of Chinese products.

“The other side may have underestimated the strong resolve of President Trump,” said Peter Navarro, a senior White House trade advisor.

He said the measures were meant to curb China’s “economic aggression” and “predatory practices.”

Chinese officials were quick to denounce the administration’s latest escalation. The Chinese Ministry of Commerce said Tuesday that Washington had “initiated a trade war,” and promised fresh retaliation of its own if the United States follows through with the new tariffs.

The new measures are just the latest in a raft of aggressive measures taken by the Trump administration, including tariffs on washing machines, solar panels, steel, and aluminum. The administration is also considering tariffs on imported autos, has pulled out of one big trade deal in Asia, and keeps threatening to withdraw from the North American Free Trade Agreement.

Last week, the administration announced that tariffs on an initial $34 billion worth of Chinese imports will go into effect  July, with another $16 billion under review. Additional steps to curb Chinese access to the U.S. market are also under consideration and will be announced at the end of the month.

Those moves came after the collapse of an apparent bilateral deal to boost U.S. exports such as oil and agricultural products in order to narrow the trade imbalance between China and the United States. Navarro said that Chinese offers to purchase as much as $70 billion in additional U.S. goods fell short of what the administration was expecting, and didn’t address China’s predatory practices.

“If they thought they could buy us off cheap,” he said, “that was a miscalculation.”

The administration’s initial moves to raise tariffs bewildered economists and worried free trade advocates — but, limited to certain sectors like solar energy or specialized steel, their economic impact was limited. Now, the dramatically raised stakes with China, along with the other trade policies and the looming threat of tariffs on cars and the still uncertain future of NAFTA, are sparking concerns that the administration will kneecap its own economic recovery.

Critics also worry the Trump administration is firing at the wrong enemy with U.S. steel and aluminum tariffs on close security partners like the European Union and Canada, making life tougher for U.S. companies and consumers.

Even when the administration takes aim at China’s appropriation of intellectual property, as it ostensibly is doing with the latest round of tariffs, it is going about it the wrong way, these critics say.

“The administration has done a great job with some economic policies like taxes and deregulation, but the problem is that these tariffs come from a different playbook — they don’t come from the economic growth playbook,” Whiting said.

“Plain and simple, a tariff is a tax, not the way to get China to change its behavior,” she said.

The latest move is especially puzzling because the tariffs stem from the Trump administration’s investigation into China’s theft of intellectual property and its coercion of U.S. firms to transfer technology as the cost of doing business there.

Yet the White House’s Navarro described the new tariffs as a way to prevent China from carrying out its own “Made in China 2025” program to gain global leadership in key economic sectors like aerospace and artificial intelligence.

“The initial mandate for the investigation was IP coercion and theft, which is not Made in China 2025,” said Derek Scissors, a scholar at the American Enterprise Institute.

Concerns about the administration’s hair-trigger approach to trade are becoming increasingly apparent in Congress, where a stable of pro-trade Republicans are trying to rein in the administration. On Wednesday, the Senate Finance Committee will grill Commerce Secretary Wilbur Ross on the administration’s trade policies, with an eye on the avalanche of reprisals taken by countries around the world.

Sen. Bob Corker, a Tennessee Republican who’s retiring this year, has been one of the most outspoken congressional critics of Trump’s reliance on tariffs. “I haven’t heard a single senator on our side that hasn’t expressed concern to the president directly about what’s happening with tariffs,” said Corker on the Senate floor last week.

He introduced legislation, co-sponsored with eight other Republicans and several Democrats, that would allow Congress to review the administration’s use of “national security” justifications to slap tariffs on imports, as it did with steel and aluminum and threatens to do with cars. It’s won the backing of a huge cross-section of American business groups worried the administration is abusing the idea of national security to take protectionist measures that will hurt the economy.

But Senate leadership hasn’t yet allowed it to come up for a vote; Corker’s office says it “will continue to look for ways to get an up-or-down vote on the floor.”

Sen. Mike Lee, a Utah Republican, and a handful of other lawmakers from both sides of the aisle are aiming even higher. They’ve co-sponsored a bill that would give Congress the final say over any decision to raise tariffs, essentially wresting back the power of trade policy from the White House.

That bill hasn’t been taken up in committee yet, but Sen. Lee’s office said “the bill has become more relevant” in light of the administration’s aggressive use of tariffs.

Some experts are skeptical that a majority of the Republican-controlled Congress is now ready to buck Trump on trade, especially in an election year. “Usually Congress is more protectionist than the president; it’s hard to get Congress to act in a pro-trade manner,” said Scissors.

But that could change quickly, Scissors and others said, if Trump follows through with the next round of tariffs on China, and especially if he slaps tariffs on imported cars — the impact of which could dwarf anything announced so far.

“I think we’re getting closer to where Congress reasserts its authority on trade,” said Gary Hufbauer of the Peterson Institute for International Economics.

If Republicans in Congress are starting to respond, that’s due in no small part to complaints from big business groups which have already suffered from several rounds of tariffs and gnawing uncertainty over the future of NAFTA. On Monday, more than 60 business associations told top lawmakers that they had “deep and increasing concern with the direction of America’s trade policy” and called on Congress to respond to the administration’s actions.

Many of the affected groups rely on imported goods to make finished, higher value products — but those businesses could be at risk thanks to higher tariffs.

“What we have here is a cascading effect,” said Ann Wilson, the senior vice president for government affairs at the Motor and Equipment Manufacturers Association, which represents the biggest manufacturing sector in the United States.

“It deeply troubles me and deeply concerns me that this administration is putting in place policies that hurt manufacturing,” she said.

Keith Johnson is Foreign Policy’s global geoeconomics correspondent. @KFJ_FP

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