Trump Faces Tariff Blowback

Terry H. Schwadron

July 19, 2018

Imposition of the new international cross-tariffs over this last week has spawned a bigger protest than President Donald Trump may have expected.

The unwanted protests from Republican congressmen and business leaders as well as Democrats and defenders of international trade represent a self-forced error by the Trump government, of course.

But the trade wars are just slipping into a higher gear: The Trump government was making reading to lower tariffs on $200 billion worth of Chinese goods, along with the expected Chinese vow to match the tariffs dollar for dollar.

The immediate effects show early versions of the breadth and depth that these tariffs will wreak on the U.S. and world economy. Over and over again, we are hearing that no one outside of Trump himself understand what the goals of these building trade skirmishes are aimed at achieving.

Together with this week’s widespread criticism for the president over his pro-Russia remarks alongside Vladimir Putin and the continuing mess over failure to reunite children with their migrant parents, there is the evidence for just the very beginnings of fissue within the ranks of Republicans and even Trump supporters. Whether Trump can repair the damage is his focus, of course; whether the rift can widen is a question for Democrats.

The president stumbled once again yesterday, seeming to contradict his newfound support for U.S. intelligence in answer to a question, before the White House insisted that reporters and Cabinet members present misunderstood him. There is a lot of that going around, and it is starting to have some political problems for him. So, as the effects of the tariffs question swirl, there is a bit less to the insistent voter base to which Trump pledges allegiance.

One Republican senator from the Midwest noted in television interviews that there have been all kinds of promises from Trump on what to expect, but no results. China has not made a better trade deal with the United States, the NAFTA rewrite is lost amid anger from Mexico and Canada, the Europeans are waving angry fists, but there are almost no new bilateral trade agreements. There was announcement of a new deal with South Korea that generally re-endorsed the current state of trade between South Korea and he United States. The president claims all kinds of post-NATO agreements that will take years to take fruit, and whatever Trump discussed with Putin, there were no concrete proposals for follow.

Since last weekend, the cost of a Tesla in China went from $107,300 to $128,400, and some models to $140,000, all effectively killing the Chinese market for Teslas. Tesla’s reaction is to open a manufacturing plan in Shanghai.

BMW was quick to follow with plans for a Chinese plant for electric cars.

So much for America First — and for establishing the United States as the world’s hub for production of electric cars.

The Senate on Wednesday took a symbolic vote against Trump’s tariffs, voting 88–11 to add language to a spending bill that would give Congress more oversight on tariffs imposed for national security reasons. The reported that the vote doesn’t force action but reflects the rising level of anxiety on Capitol Hill over Trump’s trade actions.

Business groups are saying it is time for the U.S. and China to get back to the negotiating table and hammer out a deal. China has turned to buy its huge numbers of soybeans from Brazil, which in turn is no longer going to be able to supply other countries. Meanwhile, U.S. farmers say that they are losing all foreign markets.

The Trump administration’s was preparing a 10% tariff on $200 billion worth of Chinese goods, which is in response to Beijing’s retaliation for a previous round of U.S. duties. A final decision on the tariffs will be made sometime after Aug. 30. This follows tariffs and counter-tariffs on $34 billion worth of Chinese imports.

The latest list of targeted Chinese imports, which was released by the Office of the U.S. Trade Representative (USTR) on Tuesday night, comes on the heels of the U.S. move to levy a 25 percent tariff on $34 billion in Chinese imports.

Technology, manufacturing, agriculture and retailing groups are now publicly arguing that Trump’s tariffs will hurt U.S. consumers, businesses and jobs. “The last thing America’s manufacturing workers need is an escalating trade war,” said Jay Timmons, president and CEO of the National Association of Manufacturers. “America has China’s attention, so instead of more tariffs, the U.S. and China should immediately begin working toward a fair, bilateral, enforceable, rules-based trade agreement to end China’s market-distorting activities,” Timmons said.

David French, senior vice president for government relations at the National Retail Federation, told The that another $200 billion in tariffs “doubles down on a reckless strategy that will boomerang back to harm U.S. families and workers.”

“The administration has been pursuing tariffs now for months and we still don’t know what the endgame is,” he said.

To bolster its case for tariffs, the US Trade Representative Robert Lighthizer’s office produced a 200-page report highlighting how it said China’s forced transfer and theft of intellectual property and technology has damaged the U.S. economy.

Sen. Chuck Grassley (R-Iowa) said Trump’s tariffs on China have been “very detrimental” to his home state and that he is nervous about what will happen to exports of corn and soybeans. Senate Finance Committee Chairman Orrin Hatch (R-Utah) said that although he has supported the administration’s efforts to combat China’s unfair trade practices he said the latest decision “appears reckless and is not a targeted approach.” House Ways and Means Committee Chairman Kevin Brady (R-Texas) said that Trump and Chinese President Xi Jinping need to meet and hash out an agreement, that there is “

seemingly little action toward a solution.”

These are voices not generally critical of Trump. The political question is how deep or widespread the dissatisfaction in, and whether it will translate to the ballot box for November.