March 8, 2018 at 4:00 PM
President Trump on Thursday imposed tariffs on imported steel and aluminum but offered relief to some U.S. allies, as the president bucked his party allies to pursue his long-held goal of rewriting what he views as rigged rules of international trade.
The tariffs, set to take effect in 15 days, mark Trump’s broadest step yet to favor U.S. industries over their foreign competitors, but they stop short of his earlier plan to impose sweeping tariffs that would have hit U.S. allies and rivals alike.
The tariffs contain an initial exemption for Canada and Mexico, as the administration seeks broader trade concessions from both countries as it renegotiates the North American Free Trade Agreement. And Trump is opening the door to exemptions for other countries as well, saying he will consider exemptions for other allies that change their trade policies with the United States.
These terms effectively invited every foreign ally to undergo a fresh trade negotiation with the United States, as Trump hopes to leverage the threat of tariffs to win more favorable terms from nations around the globe.
“I’ll have a right to go up or down depending on the country, and I’ll have a right to drop out countries or add countries,” Trump said Thursday while previewing his announcement in an appearance alongside his Cabinet. “We’re going to be very fair, we’re going to be very flexible, but we’re going to protect the American worker — as I said I would do in my campaign.”
But where Trump sees an opportunity to protect U.S. manufacturing and blue-collar workers, his fellow Republicans — joined by some Democrats, business leaders and many economists — fear he’s embarking on an impractical negotiating process that could escalate into a global trade war.
The fear of U.S. firms losing access to foreign markets was heightened Thursday when 11 Pacific nations signed their own agreement to lower tariffs — enacting a version of the Trans-Pacific Partnership that the United States initially pursued as a way to deepen trade with Asia.
While fellow GOP leaders expressed relief that Trump had at least initially spared some allies, they continued to push Trump to abandon his plans.
“I disagree with this action and fear its unintended consequences,” said House Speaker Paul D. Ryan (R-Wis.). “We will continue to urge the administration to narrow this policy so that it is focused only on those countries and practices that violate trade law.”
Immediately after Trump’s announcement, Sen. Jeff Flake (R-Ariz.), a Trump critic who is retiring from Congress, announced he would introduce legislation to nullify the tariffs. “Congress cannot be complicit as the administration courts economic disaster,” Flake said.
But despite the widespread GOP condemnation of the tariffs, few fellow Republicans appeared to have much appetite to challenge the move legislatively, especially given the difficulties of assembling a veto-proof majority to oppose a president of their own party. Republicans are particularly wary of crossing their party’s most visible figure ahead of a midterm elections in which they’ll need help from Trump supporters to protect slim majorities in the House and Senate.
The new terms give countries that export steel and aluminum strong incentives to seek exemptions. For countries subject to the tariffs, steel imports will be taxed at 25 percent and aluminum imports at 10 percent. If Mexico and Canada win permanent exemptions, tariffs on imports from other nations may be increased beyond 25 percent, a Trump official said Thursday on a call previewing Trump’s announcement.
The announcement capped a frenetic stretch — even by the new standards of the Trump White House — since the president shocked his party and even his own top advisers last week with an off-the-cuff announcement that tariffs were coming.
After an internal sprint to refine a tariff plan, many on Trump’s staff were caught off guard again Thursday morning when he wrote on Twitter he’d be making a tariff announcement that afternoon.
The meeting was not on the president’s daily schedule, which was released to the public Wednesday night. Several hours after Trump’s tweet, senior White House aides did not know whether the announcement would happen at all.
Details of the plan were still under discussion in the hours leading up to the signing ceremony, as foreign diplomats, industry leaders and Trump allies were still in the dark. Their outreach to senior administration officials seeking definitive answers was returned with shrugs or unanswered calls.
“The people in the building have no idea what’s about to happen,” one Trump donor who opposes to the tariffs and demanded anonymity to speak candidly said Thursday morning.
Sen. John Thune (R-S.D.) called the process “chaotic and confusing,” echoing complaints from many GOP lawmakers who were given little notice or guidance on the president’s sharp departure from his party’s economic orthodoxy.
The tariffs do a have a small coalition of supporters in Congress, including some Democrats from states whose industries stand to benefit.
“As big, multilateral trade agreements have been ratified and Wall Street and big corporations line their pockets, we’ve seen jobs pour out of West Virginia for cheaper labor markets in foreign countries,” said Sen. Joe Manchin III (D-W.Va.). “I’m glad we are finally standing up for ourselves, and I applaud President Trump’s leadership and willingness to hold places like China accountable for the damage they’ve done to our economy.”
Democrats have traditionally been more sympathetic to trade restrictions, in part because of the party’s close relationship with organized labor. But some party leaders criticized the decision anyway, criticizing the specifics of Trump’s proposal.
Senate Minority Leader Charles E. Schumer (D-N.Y.) said Trump was correct that China was taking advantage of the United States, but he said the proposal would do more to damage U.S. allies than to hit its economic rival.
Thursday’s announcement kicks off a period of additional economic and political uncertainty.
Before Trump finalized the tariffs, trading partners had threatened retaliation if he moved forward. Jean-Claude Juncker, the president of the European Commission, has identified potential targets that have political significance: bourbon from Kentucky, the home state of Senate Majority Leader Mitch McConnell (R-Ky.), and Harley-Davidson motorcycles based in Ryan’s home state of Wisconsin.
China, another major U.S. trade partner, stopped short of specific threats, but officials strongly condemned the tariffs last week after Trump announced they were coming.
“What an extremely stupid move,” said Li Xinchuang, vice secretary general of the China Iron and Steel Association. “A desperate attempt by Trump to pander to his voters, which I think in fact runs counter to his ‘America First’ pledge.”
The White House additionally faces strong pushback from outside conservative groups that have worked with the administration on other issues, including passing the new tax-cut law.
Tim Phillips, president of Americans for Prosperity, an advocacy group backed by the billionaire GOP donor Koch brothers, warned in an interview that the tariffs could harm Republican prospects in the November midterms, when Democrats hope to retake control of Congress.
“If American consumers are paying higher prices on a wide range of products just as the economy is starting to take off, it can slow the economic recovery,” Phillips said. “It could definitely impact the midterms.”
The tariffs also mark a shift in an internal White House power struggle, where free-trade advocates have jockeyed with economic nationalists to sway the president.
The new steel and aluminum levies marked a major victory for the latter faction, especially after Gary Cohn, Trump’s top economic adviser and one of the administration’s leading free-trade advocates, announced Tuesday he’d resign after disagreeing with Trump on the tariffs.
Now, business leaders are wondering if the steel and aluminum moves are a prelude to an increasingly protectionist administration. Some suspect upcoming moves will be aimed directly at China, which last year sold $375 billion more goods and services in the United States than what it had ordered, according to the Commerce Department.
“China’s the big target,” said Carlos Gutierrez, Commerce secretary under President George W. Bush. “They want to get on to China as quickly as possible.”
Josh Dawsey and Damian Paletta contributed to this report.