Few read the tea leaves of American public opinion as closely as congressmen, and the patterns forming on the bottoms of their cups since January have sent shockwaves around the world.
For what the congressmen saw was a growing anger on the part of a broad swath of Americans over record-high trade deficits, expected to soar to $150 billion this year, and the feeling that a major cause was unfair trading practices that poured imports to this country while restricting sales of U.S. products.
This backlash against imports has forced the White House to promise a new, aggressive approach to trade, frightened U.S. trading partners around the world and raised the specter of a global depression spawned by increased protectionism in the United States.
The congressional reaction exploded last month when President Reagan refused to restrict imports of shoes, despite a recommendation from the International Trade Commission that the domestic shoe industry be protected from surging foreign competition that cost Americans jobs.
"An appetite for a tough trade policy" developed on Capitol Hill during the August recess, said Chairman Dan Rostenkowski (D-Ill.) of the House Ways and Means Committee.
Republicans and Democrats said they returned feeling frustrated with the failure of President Reagan, who holds a strong philosophical orientation for free trade, to do anything about the trade imbalance, which was seen as threatening the future vitality of the American economy.
Congressional Democrats see the trade deficit as an opportunity to pick up more seats in the 1986 election, while Republicans, recognizing the political power of the issue, have joined in pressuring the Reagan administration out of a fear that the Democrats' hopes could come true.
Senate Majority Leader Robert Dole J. (R-Kan.), jumping into the issue with both feet, warned the White House that continued Republican control of the Senate is at stake. For Dole, moreover, trade appears to be an issue in which he can distance himself from two main rivals for the 1988 GOP presidential nomination -- Vice President George Bush, who is tied to the administration position, and Rep. Jack Kemp (R-N.Y.), the conservative candidate who takes an extreme free-trade stance.
"Dole," said one administration official, "is following an agenda of his own."
So now a classic confrontation looms between the White House and Capitol Hill as trade has supplanted tax overhaul as the major economic item on the congressional agenda. Myriad bills await action
The crowded basket of trade bills contains proposals that range from pure protectionism for individual industries -- with a bill sponsored by more than half the members in the House and Senate that would severely limit textile imports expected to be first to come to a vote -- to more complex measures designed to open markets for American products.
While the Reagan administration labels most of those bills protectionist, proponents insist that the market-opening proposals are using the stick of restricting U.S. imports to force other countries to buy more American products. Sen. Lloyd Bentsen (D-Tex.), for instance, calls a bill he has cosponsored with Reps. Rostenkowski and Richard Gephardt (D-Mo.) a "trade expanding" measure. "What we are talking about," Bentsen said, "is opening their markets, and we give them time to do it," although the bill threatens to limit access to the United States if major trading partners fail to buy more American goods.
The White House draws a similar distinction between protectionist acts and enforcing fair trade, arguing that its actions in pressing unfair trade cases is aimed at preserving the rights of American industries under international rules governing trade.
U.S. Trade Representative Clayton Yeutter said the United States tolerated unfair trade practices in the 1970s, but those days are over. "Perhaps we could afford to be magnanimous then because we had a relatively cheap dollar, exports were doing well, we had a big trade surplus. And so, basically, we had a tendency to turn the other cheek," he told a Sept. 7 White House briefing.
"The message the president was delivering this morning," he continued, "is that we've got a $150 billion trade deficit, we can't afford to turn the other cheek any longer and we're not going to do so. We will not be as tolerant of unfair trade practices as we have in the past."
"There's a fine line between tough trade policy and protectionism. My job is to try to find it," said Rostenkowski, whose sudden interest in trade bills underscores the subject's new importance.
Trade this fall finally has become the political issue that former vice president Walter Mondale hoped to make it three years ago in his bid for the White House. Members of Congress, lashing out at trading partners, especially Japan, are echoing the strong language used by Mondale early in the campaign and by former Treasury secretary John B. Connally in his 1980 bid for the GOP presidential nomination.
Speaking of the United States' $28.5 billion trade deficit, half of it with Japan, Connally said the president should tell the Japanese, "If you are not prepared to take our citrus and our beef and equalize our trade account, then you'd better be prepared to sit on the docks of Yokohama watching your own television sets, because they're just not coming into the United States."
None of the about 300 pieces of trade legislation currently before Congress go that far, but some contain clear slaps at the Japanese, whose trade surplus with the United States is expected to reach $50 billion this year -- one-third of the anticipated worldwide U.S. deficit.
Congressional feeling is running so high against Japan, for instance, that the House voted to deny authority for the Japan-United States Friendship Commission to spend the interest from a trust fund that provides its financing.
And Rep. John Dingell (D-Mich.) has included a provision in National Highway Traffic Safety Administration legislation that would end the right of Japanese car makers to certify their products meet American safety and emissions requirements without inspection if U.S. auto companies can't do the same in Japan.
With Congress thrashing around wildly on trade, pulling in all directions like a stagecoach team run amok, the administration is trying to counter bills they feel would hurt the U.S. recovery as well as threaten the global economy by restricting trade.
Administration officials acknowledge that trade now holds a higher priority in the inner circle of the White House than it did six months ago, and President Reagan is expected to make a major speech next week outlining his new tough trade policy.
Still, the administration is concerned about the congressional agenda, especially the textile bill, which seems sure of passage. Even Dole, whose Kansas farm constituency led him to free trade positions that traditionall included strong opposition to protection for the textile industry, now says he intends to vote for that bill.
"Clearly, the issue has become extremely emotional. Most of us have regretted actions we have taken when we are emotional, rather than when we were thinking rationally," said Bruce Smart, the newly appointed undersecretary of commerce for international trade.
Thoughtful members of the House and Senate from both parties agreed that an emotion-charged Congress is no place to make trade policy, but blamed administration inaction for forcing them to take the lead. "I don't like the idea of Congress managing trade policy," said Sen. John C. Danforth (R-Mo.) who for months has been pressing the White House to act. President Assailed
"When the president won't do anything, the Congress has to look to its options to stop the hemorrhaging of the industrial base of this country," added Bentsen, the Texas Democrat with a long history of supporting free trade principles.
Dole, though,said "many of us in Congress would back off" trade legislation if the president announces an aggressive administration stance.
The administration, meanwhile, is trying a mobilize what Commerce Secretary Malcolm Baldrige called "the latent support for free trade" to become more active in opposing protectionist bills. Farm groups, who last year took the lead in opposing protectionist measures on the grounds that their overseas sales would suffer through retaliation, so far have remained silent on the textile bill.
"They are in such desperate straits because of their own problems that they are not focusing on trade," said one Capitol Hill trade specialist. U.S. farmers, furthermore, are so angry at what they consider heavily subsidized European and Canadian products that threaten American sales in third countries that sources believe their strong support for free trade is eroding.
Overseas, the congressional rush to pass trade legislation worries U.S. trading partners. The House sponsor of the textile bill, Rep. Ed Jenkins (D-Ga.), is probably better known throughout Southeast Asia, which would suffer most if the legislation passes, than he is in many parts of his home state. These countries fear a loss of jobs and their economic vitality if the bill is passed.
Underlying the whole international debate is a fear that U.S. trade restrictions would trigger a round of retaliatory actions and a full-scale trade war that could cripple the international economy and force heavily-in-debt Third World nations to default on their loans, which would be disasterous for the U.S. banking system.
There is, moreover, a growing concern in this country and abroad that the administration and Congress are focusing on symptoms of the trade imbalance, rather than its main cause, widely acknowledged to be the overheated dollar, which makes it harder to sell U.S. products overseas.
"There is a mistaken impression in Congress that changes in the trade policy would turn around the deficit," said C. Fred Bergsten, an assistant secretary of treasury in the Carter administration and director of the Institute for International Economics.
He estimates that ending other countries' unfair trade practices and protecting some American industries would shave $10 billion from the trade deficit