Democracy Dies in Darkness

How the Washington establishment is losing out to little-known Trump advisers on trade

By Damian Paletta, Josh Dawsey

March 7, 2018 at 11:02 AM

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The Washington Post’s Heather Long explores the arguments from each side of the debate on President Trump’s plan to levy tariffs on steel and aluminum imports. (Bastien Inzaurralde/The Washington Post)

Defense Secretary Jim Mattis and Secretary of State Rex Tillerson privately warned senior trade officials on Tuesday that President Trump’s proposed tariffs on steel and aluminum could endanger the U.S. national security relationship with allies, according to five people familiar with the meeting.

The morning meeting came as Republican lawmakers grasped for a strategy to persuade Trump to change his mind, with House Speaker Paul D. Ryan (Wis.), who had loudly criticized the plan on Monday, telling members in a closed-door meeting not to bully Trump on the decision. He said it could backfire and make things even worse.

And then on Tuesday evening, top White House economic adviser Gary Cohn, who had been furiously fighting the tariffs for months, announced his resignation. His exit will remove the most vocal critic of Trump’s new trade agenda from internal debates.

The trio of events showed in stark fashion how establishment figures in Washington — national security leaders, top lawmakers, the former president of Goldman Sachs — had suddenly found themselves in a losing battle with a small posse of Trump advisers who have nurtured the president’s long-running skepticism of foreign trade.

“We are urging caution,” Senate Majority Leader Mitch McConnell (R-Ky.) said Tuesday.

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Gary Cohn, President Trump’s top economic adviser, announced on March 6 that he is resigning amid disagreements over trade policy. (Bastien Inzaurralde/The Washington Post)

The last-ditch efforts to get Trump to scale back, if not reverse, the tariffs came after a power struggle within the White House where Cohn, Mattis and others routinely tried to dissuade Trump from launching what many fear will be a trade war that could rattle the world’s largest economies.

Yet the success of other officials, including White House aide Peter Navarro and Commerce Secretary Wilbur Ross, speaks to how Trump, in his second year in office, is fighting the constraints that have held him back from pursuing some of his most un­or­tho­dox positions.

“We’ve been mistreated as a country for many years, and it’s just not going to happen any more,” Trump said at a news conference Tuesday with Swedish Prime Minister Stefan Lofven. “When we’re behind on every single country, trade wars aren’t so bad.”

Trump announced the tariffs last week, invoking a rarely used national security provision of trade law, at a gathering of steel and aluminum executives who stand to benefit from the move — and were secretly brought to the White House without consulting Cohn or other top economic officials.

Within two hours, the stock market fell 400 points.

In one of his last moves before announcing his resignation, Cohn had tried to set up a meeting with executives from companies that would be harmed by the tariffs, but Trump blocked the move this week.

Ross and Navarro didn’t drive the decision to impose the tariffs, but they helped Trump craft it in secret, senior administration officials said, aware that lawmakers and other top advisers would try to torpedo any decision if they found out in advance. Cohn learned of Trump’s decision hours after he made it and was furious, according to five people who spoke to him. 

But Trump had made clear to advisers that he was sick of lawmakers urging caution. That’s why he had elevated Navarro, an economist who believes that China has abused free-trade rules and destroyed much of the U.S. manufacturing industry, back into his inner circle. Navarro advised Trump during the 2016 campaign, and their views overlapped on the need for a tougher approach to trade, particularly with China.

Trump wanted to give him a senior role in the new White House last year, making him head of a newly formed National Trade Council, but he was effectively demoted by the summer, reporting to Cohn, National Economic Council director. He was often relegated to an obscure floor in the Eisenhower Executive Office Building. The National Trade Council idea fizzled.

Navarro is slight and wiry, a distance runner who often patrolled the West Wing in a suit and sneakers with white headphones in his ears. He would linger outside the Oval Office, advisers said, looking for a reason to get his views in with Trump while not getting caught. He was sometimes followed inside and chastised by Rob Porter, the former staff secretary who led the trade process but resigned after spousal abuse allegations emerged from his ex-wives.

Cohn is big and exudes confidence, a Wall Street warrior from Ohio who commands the room. He has at times waxed and waned in the West Wing, going from nearly quitting over Trump’s incendiary comments over protests in Charlottesville to recently being rumored as a potential chief of staff replacement.

They engaged in philosophical and substantive debates, sometimes weekly, with the academic saying tariffs would revive U.S. manufacturing, and Cohn leaning on his experience as a Wall Street executive to counter that tariffs would only hurt American consumers and the economy. Cohn had the direct access to Trump, and Navarro’s views were rarely represented in the Oval Office. 

Navarro felt his views on trade were being filtered out of the formal presentations Trump would receive, people close to him said, but he persisted and would not leave the White House. During weekly meetings in the Roosevelt Room with Cohn and others, Navarro would allege that others in the meeting had lost touch with Trump’s electoral vision and his promises to manufacturing towns that were left behind in recent decades. These comments often grated on others in the room, and further polarized Trump’s economic team.

During 2017, Trump was champing at opportunities to enact protectionist trade decisions, but he was steered away by Cohn and a number of other advisers at almost every turn. 

Cohn and Treasury Secretary Steven Mnuchin had persuaded Trump to put his trade agenda on ice while they tried to unify Republicans around their push to cut taxes. Trump reluctantly agreed, and the tax law was enacted in late December.

By January, there was little standing in the way of Trump’s trade agenda, and a number of Republicans started getting nervous. On Jan. 22, he imposed tariffs on imported solar panels and washing machines. Many GOP lawmakers were mortified. But those had been agreed to in weekly trade meetings, unlike the tariffs, officials said. 

They knew more was coming.

That’s because last year, Trump ordered Ross to launch a review of steel and aluminum and see if the large reliance on imports posed a national security risk. Ross launched these reviews, but they took months as they solicited input from industry experts, labor groups, and assembled data. The camps within the Trump administration mobilized early, however.

Cohn told others tariffs would be in­cred­ibly disruptive to the economy, and Mattis also argued that there wasn’t a national security case to make for blocking steel and aluminum imports from U.S. allies like Canada and Europe.

White House legislative director Marc Short also tried to warn Trump of the negative blowback, bringing in a parade of GOP lawmakers who held firm free-trade views and worried about major changes like tariffs. Mattis argued internally that the tariffs did not have a national security purpose and would be opposed by allies. Tillerson was also skeptical of the need. White House officials told Trump that Ross and Navarro were using faulty information. 

Those who opposed the tariffs were disappointed in Robert E. Lighthizer, an official involved in the discussions said, because he expressed skepticism in private but usually not in front of the president. And Jared Kushner, the president’s son-in-law, did not work to sway his father-in-law against the tariffs, senior officials said. 

The president considered the advice, but said he was skeptical of economists and their data. He had promised this sort of policy as a presidential candidate, and it was popular with his base. At the time, Porter, who opposed the tariffs, told others they would need to find new ways to sway Trump, people involved in the debate said. Almost everyone in the West Wing was opposed, two White House officials said. 

“I think there’s been an awful lot of advice,” said Sen. Ron Johnson (R-Wis.). “This president doesn’t seem to be taking it.”

While a number of advisers tried to pry Trump away from the idea of tariffs, Navarro was worried the problem had gotten worse. The Commerce Department’s national security review had spooked a number of global businesses, triggering a surge in the flow of steel and aluminum imports into the United States. U.S. buyers wanted to acquire as much product as they could before any restrictions were in place. Trump’s threat of a hard line was actually making the problem worse, Navarro warned, according to people familiar with his argument, and he wanted action to be taken soon.

Cohn’s grip on the process was weakening.

In early February, Porter resigned amid domestic-abuse allegations. Porter had helped Cohn bottleneck Navarro by limiting his access to Trump.

The Porter scandal engulfed Chief of Staff John F. Kelly, weakening his standing internally. Kelly hadn’t taken a strong position on trade policy but did try to reinforce chains of command within the West Wing, and this made it easier for Navarro to work closely with Trump on designing the steel and aluminum plan in secret.

On Feb. 14, the White House’s late-winter and spring agenda was rocked by a school shooting in Florida, an event that appeared to shift Trump’s focus away from bureaucratic budget battles and back toward campaign promises and his legacy.

Two days later, Ross released the recommendations of his investigation into the national security implications of steel and aluminum imports. 

Trump has told advisers he likes simple policy prescriptions he can describe to voters, and he latched on to the option that effectively represented this — big, across-the-board tariffs on steel and aluminum imports, regardless of the country of origin.

Navarro again took that argument to Trump last Wednesday night, unknown to other aides. He frequently warned Trump, including in a meeting just before Trump announced the tariffs, that he needed to be “strong” and deliver on his promises, a senior White House official said. 

Trump agreed to go forward with the tariffs. A scramble began.

Then, since the announcement, Cohn and other officials tried to persuade Trump to reverse course. In a senior staff meeting Monday, the former Goldman Sachs president said that he could not support the decision.

On Tuesday, Mattis and Tillerson met with Ross and Lighthizer to try yet again to change Trump’s mind.

“In a broad discussion, the secretary raised concerns about tariffs that had been mentioned to him by some allies, or are likely to be mentioned,” said Steven Goldstein, the State Department’s undersecretary for public diplomacy and public affairs.

Tuesday, after another meeting with Cohn, Trump reiterated at a news conference that the tariffs would be installed “lovingly.” Hours later, Cohn resigned.  

joshua.dawsey@washpost.com

Erica Werner, Mike DeBonis and Dan Lamothe contributed to this report.


Damian Paletta is White House economic policy reporter for The Washington Post. Before joining The Post, he covered the White House for the Wall Street Journal.

Josh Dawsey is a White House reporter for The Washington Post. He joined the paper in 2017. He previously covered the White House for Politico, and New York City Hall and New Jersey Gov. Chris Christie for the Wall Street Journal.

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How the Washington establishment is losing out to little-known Trump advisers on trade

By Damian Paletta, Josh Dawsey

March 7, 2018 at 11:02 AM

Watch more!
The Washington Post’s Heather Long explores the arguments from each side of the debate on President Trump’s plan to levy tariffs on steel and aluminum imports. (Bastien Inzaurralde/The Washington Post)

Defense Secretary Jim Mattis and Secretary of State Rex Tillerson privately warned senior trade officials on Tuesday that President Trump’s proposed tariffs on steel and aluminum could endanger the U.S. national security relationship with allies, according to five people familiar with the meeting.

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