Trump has repeatedly said he would protect American farmers in the trade war, last week setting aside $12 billion to help them, but he is facing pressure to extend aid to other industries if the tariffs remain in place or get extended to more products.
Extending those bailouts would be an expensive proposition. The U.S. Chamber of Commerce on Monday estimated the total price tag could hit $39 billion if Trump compensated the losses across all industries. It would take $7.6 billion to help car and automobile parts manufacturers alone, the Chamber said, calling it a “slippery slope” for Trump to determine who gets help and who doesn’t. The Chamber has been a vocal critic of the tariffs.
Critics of Trump’s trade policy are calling on him to de-escalate the trade war rather than try to bail out the businesses hurt by it. But if the trade fight continues and the midterm elections draw near, the White House stands to face pressure, including from Republicans, to extend more government aid.
That’s particularly true in states with contested races — including in Indiana, where Sen. Joe Donnelly (D) is trying to hold his red state seat against a GOP challenge.
Hardy’s company, Brinly-Hardy, has been in business since 1839. It survived recessions and the Civil War, but it might not survive a prolonged trade war. Hardy buys steel from U.S. companies, but Trump’s tariffs on foreign steel have caused domestic prices to rise, as well. Steel costs have jumped 33 percent since the start of the year, and Hardy says her costs are up even more. She was hit again by Trump’s first round of tariffs on Chinese products that went into effect in early July, another hefty cost eating into her bottom line. Other products she imports and says she can’t get domestically are on a list for a second round of tariffs on China likely to go into effect later this summer.
“We are collateral damage in this effort,” Hardy said. “We’re going to be in the same situation as the farmers of needing to save U.S. manufacturing.”
Trump and his top advisers insist this is short-term pain and that the end result will be a better trade situation for all U.S. companies. They point to the strong economy as a sign Trump’s policies are working, but the longer the tariffs stay in place, the more the negative impacts are likely to grow.
“We’ve seen tens of thousands of factories shut down as a result of failed trade policies of the past. The president is fighting for these workers and all those affected across the country," said a White House spokeswoman. She said Trump is a “free trader” and that the aid for farmers was “specific retaliation we were responding to.”
Small and mid-size companies are especially vulnerable to the tariffs because they are not able to absorb costs or shift production overseas as easily as larger companies. Hardy feels caught in a bind: If she raises her prices, foreign competitors will undercut her. Instead, she cut almost 40 percent of her 200-person workforce, most of whom are blue-collar production workers at the Brinly-Hardy plant in southern Indiana. It was the same tactic Mid-Continent Nail, the largest U.S. nail manufacturer, used earlier this summer when it laid off dozens of workers in Missouri because of Trump’s tariffs on Mexican steel. Mid-Continent has warned it may have to close its doors by Labor Day. Hardy is trying to stay optimistic, but if the tariffs are still in place by Thanksgiving, she will probably face devastating choices.
“We’re all in this together — farmers and manufacturers. I think everyone needs relief from this and certainty, one way or another,” said Joseph Cohen, the founder of Snow Joe, a company that makes snowmobiles and other lawn and garden equipment in New Jersey and employs about 300 U.S. workers. Cohen warned the White House last week that the tariffs are harming his business and may force him to halt a major expansion he has been planning that would add 100 workers.
Even larger companies are starting to take a hit or raise prices on consumers, making the impact of the tariffs more visible to Americans across the country. Harley-Davidson is moving some production overseas because of the tariff fight with Europe, Whirlpool blamed losses on the tariffs, and Coca-Cola and Caterpillar say they are raising prices because of higher steel and aluminum costs.
“The global steel costs have risen substantially, and in particular in the U.S., they have reached unexplainable levels,” said Whirlpool chief executive Marc Bitzer when the company reported disappointing earnings. Trump put tariffs on foreign washing machines in January thinking it would boost the fortunes of companies like Whirlpool, but the steel tariffs have canceled out the benefits.
Many in the business community, including Hardy, Cohen and the U.S. Chamber of Commerce, have been urging Trump to stop the trade war before the damage becomes more widespread. Most farmers and farm advocacy groups have also told the administration they want “trade, not aid.” But Trump celebrated the success of his steel tariffs last week at an event in Illinois, saying his strategy is working and that jobs are returning.
“This is the time to straighten out the worst trade deals we’ve ever had in the history of our country,” Trump said last week at a U.S. Steel plant in Granite City, Ill., adding that steel is a “special industry to me.”
These tariffs, he says, will force trading partners to negotiate, at which time Trump hopes to extract concessions, including lower tariffs on U.S. products sold overseas. His administration argues it has already had a victory with the European Union, which sent top officials to the White House last week to begin working on a trade deal.
China, Europe, Canada and other nations have responded to Trump’s trade actions with retaliatory tariffs directed at businesses in parts of the country that have hotly contested midterm election races. Many GOP lawmakers are concerned that headlines like the job losses from the nail company in Missouri and the lawn equipment business in Indiana will hurt the party at the polls.
"We appreciate the administration lowering the temperature with the E.U., but . . . I don’t have a solution yet for my bourbon industry,” said Rep. Garland “Andy” Barr (R-Ky.) who met with some of Trump’s top economic advisers last week to share his concerns about the tariffs other countries have put on Kentucky bourbon.
“I also stressed that there are a lot more jobs at Toyota Motor Manufacturing in Kentucky that are negatively impacted by these steel tariffs than there are at the aluminum smelters and the steel production facilities in Kentucky,” Barr said last week.
Rep. Bill Huizenga (R-Mich.) had similar worries about how the tariffs are harming auto parts companies in his home state and said he expressed those last week in a meeting with Trump’s top economic advisers.
“This is not just uncomfortable; it’s painful, and it’s damaging when my auto suppliers are supplying both domestic and foreign badge cars,” Huizenga said.
On Monday, Commerce Secretary Wilbur Ross compared the trade actions to “going on a diet” where it is “no fun at the beginning” but is worth it in the end. Top officials also stress that companies, especially manufacturers, can apply for exclusions from the tariffs. But that process has been slow and cumbersome, many business owners say, and there is a massive backlog in processing the applications.
Nearly 29,000 requests have come in to the Commerce Department for exclusions from the steel and aluminum tariffs, according to Ross. The vast majority of the applications were for relief from the steel tariffs, yet the department has made decisions about only 1,317 steel applications so far, according to the American Iron and Steel Institute, which has been tracking the process. Just under half of the decisions have been denials, meaning companies will still have to pay the 25 percent steel tariff.
“Timing is critical,” said Hardy, who is in the process of applying for exclusions for her company. “If things don’t get resolved before our next seasonal selling cycle this fall, it could be difficult for us.”
Erica Werner contributed to this report.