President Trump — the corporate tax-cutting, deregulating, stock market-touting Davos conqueror — is dusting off the protectionism that helped him sweep the Rust Belt. In a White House meeting Tuesday with a bipartisan group of lawmakers, Trump signaled he intends to crack down on steel and aluminum imports to prop up domestic industry.
The president said he’s considering a mix of tariffs and quotas to do so, decrying metal exporters abroad who are “dumping and destroying our industries.” By invoking an obscure provision of a 1962 trade law — Section 232 — Trump would move unilaterally to retaliate against what he calls unfair trade practices by foreign countries.
The push sends Trump back through the political looking glass, aligning him with labor-friendly Democrats while fraying nerves among free-trading Republicans. That dynamic was on display Tuesday as the handful of Democrats he included in his meeting encouraged him to get tough on the nation's trading partners, while Republicans urged caution and warned against touching off a trade war.
But Trump was unmoved, for example, when Sen. Lamar Alexander (R-Tenn.) said that President George W. Bush’s imposition of steel tariffs only jacked up the price for American end-users and forced automakers abroad. “Lamar, it didn’t work for Bush,” the president said. “But nothing worked for Bush.” Trump said that although he’s sensitive to cost concerns for U.S. manufacturers, “I also want to make sure that we have a steel industry and an aluminum industry, and we do need that for national defense.”
It isn’t clear what precisely Trump will do — or when. Commerce Secretary Wilbur Ross last month delivered a long-awaited report on the president’s options under the law, presenting him with a range of choices. In the Tuesday meeting, the former steel magnate suggested Trump could take a “surgical” approach, imposing tariffs on imports from selected countries (think: China) while applying quotas to others.
Defense officials have argued internally for exempting key U.S. allies, like NATO members and Japan. That course, the thinking goes, would stave off international resistance to a broader trade action against China the administration is eyeing next, under another little-used provision, Section 301 of the Trade Act of 1974.
One industry source tracking the issue tells me a decision could come as soon as next week, though Trump has until April to make a determination and the administration has frequently pushed back trade actions that looked imminent.
Those on both sides of the debate are wary of placing too much emphasis on Trump’s rhetoric, considering his famously shabby follow-through.
Already this week, to the surprise of his aides, the president pledged to soon unveil a “reciprocal tax” that sounded a lot like last year’s dead-and-buried levy on imports (it's still not happening). And the infrastructure plan the White House released Monday made no mention of the Buy American standard that Trump hammered on the campaign trail. “The president was not defending that in any way” in Tuesday’s meeting, says Rep. Robert B. Aderholt (R-Ala.), who attended and emphasized the importance of using domestic steel for public works projects here. “He was saying that’s something Democrats and Republicans can work on together.”
But a hawkish attitude toward trade has arguably formed the most consistent streak through Trump’s decades of punditry. After Trump iced U.S. participation in the Trans Pacific Partnership as one of his first acts in office, his administration over its first 12 months launched 94 investigations into alleged unfair trading practices by foreign competitors — a sharp increase — according to a Commerce Department report released Tuesday. Last month, he imposed his first tariffs, slapping them on imports of washing machines and solar panels.
“We’ve been careful in this process not to lean too heavily on the president’s words,” says Scott Paul, president of the Alliance for American Manufacturing, which favors tougher enforcement to protect the domestic metal industry. “But it was clear from the president’s rhetoric that he favors strong action.”
The staff turmoil currently roiling the senior staff ranks of the White House might shape the president’s final call, as well. Last April, Trump was set to announce he was withdrawing from the North American Free Trade Agreement when a last-minute appeal from Agriculture Secretary Sonny Perdue changed his mind — proof that proximity to the president can carry the day. Free traders lost an advocate in Rob Porter, the former White House staff secretary. But there’s now speculation the controversy unleashed by the domestic abuse allegations against Porter and his messy departure will prompt the president to replace chief of staff John Kelly. One rumored candidate to replace him: National Economic Council director Gary Cohn, the Trump team’s most potent free-trade defender.
Meanwhile, there's evidence that attitudes among corporate executives, traditionally a bastion of support for globalization, may be shifting. A new GE survey of 2,090 executives from around the world found 55 percent said protectionist policies would benefit their businesses.
"The rising protectionism that we’ve seen in many economies around the world and in Main Street sentiment may be creeping into the board room," says Karan Bhatia, a GE senior counsel and former deputy U.S. trade representative. "The numbers are surprising and to some extent concerning, and they counsel for companies and individuals who have concerns about growing protectionism to do a better job explaining the benefits of free trade."
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— Powell steady. Bloomberg's Rich Miller and Christopher Condon: "Federal Reserve Chairman Jerome Powell suggested that the U.S. central bank would push ahead with gradual interest-rate increases even as it remains on the lookout for threats to the financial system in the wake of the recent stock market rout. 'We are in the process of gradually normalizing both interest rate policy and our balance sheet,' he said Tuesday in the text of his ceremonial swearing-in speech in Washington, adding, 'We will remain alert to any developing risks to financial stability.' They were Powell’s first public comments since financial markets last week suffered their most severe bout of volatility in years, partly on concern that rising wages might spur inflation and prod the Fed into faster rate hikes."
— All eyes on inflation data. Reuters's Noel Randewich: "Wall Street climbed on Tuesday for a third straight session, buoyed by Amazon.com and Apple, while investors focused on inflation data on Wednesday that could upset the market’s fragile recovery - or clear the way for additional gains. Amazon.com rose 2 percent while Apple added 1 percent, both helping the S&P 500 shake off a negative open to the session and climb 0.26 percent by the close. Investors said data on U.S. consumer prices and retail sales due out on Wednesday will be key to where stocks move in the short term. Inflation and interest-rate fears sparked a stock market rout after U.S. jobs data was released on Feb. 2."
— Volatility violator. FT's Robbin Wigglesworth and Nicole Bullock: "A Wall Street watchdog is exploring whether the Vix index has been manipulated, intensifying the concerns over the US volatility benchmark that was blamed for exacerbating last week’s stock market turmoil. The Financial Industry Regulatory Authority is looking at whether traders have tried to move around the Cboe Volatility Index — often just called Vix, or the “fear gauge” in popular parlance — to influence the prices of derivatives based on the benchmark, according to people familiar with the matter. Finra is the finance industry’s self-regulatory body. It is overseen by the Securities and Exchange Commission and is charged with monitoring brokerages and financial advisers."
— Ryan: I'm a deficit hawk. Washington Examiner's Joseph Lawler: "House Speaker Paul Ryan defended his reputation as a deficit hawk Tuesday despite his recent support for tax cuts and spending hikes, saying that he still favors major entitlement reforms. 'Over the long term horizon, we’ve got to get this debt under control and the only way to do that is entitlement reform,' Ryan said in an interview on Fox Business. 'That’s why we’re never going to give up on entitlement reform.' Ryan was forced to defend his fiscal bona fides after host Maria Bartiromo challenged him for first passing a major tax cut and then agreeing to a deal to increase spending over the next two years. 'I still am' a deficit hawk, Ryan said. The spending deal was necessary to fund the military, he argued, and the tax cut was needed to keep companies from leaving the U.S. because of its tax system."
— Coats warns on debt. Politico's Josh Gerstein: "Director of National Intelligence Dan Coats used a Senate hearing Tuesday to do something unusual: take a swipe at both the Trump administration and Congress for allowing federal deficits and debt to spiral upward. Just one day after... Trump submitted a budget that fails to balance spending and revenue in the next decade — and less than a week after Congress struck a spending deal that would drive up the national debt by more than $500 billion — the former Republican senator from Indiana said Washington’s lack of fiscal discipline undermines national security. 'I'm concerned that our increasingly fractious political process, particularly with respect to federal spending, is threatening our ability to properly defend our nation, both in the short term and especially in the long term,' Coats said in his opening statement to the Senate Intelligence Committee."
— Key Republican defends spending deal. Reuters's Richard Cowan: "The full amount of non-defense spending pledged to Democrats last week in a two-year budget deal will be appropriated, a senior Republican in the U.S. Congress told Reuters on Tuesday, despite White House suggestions to the contrary. Just days after the $300 billion budget deal was enacted into law amid hopes that it would calm Washington’s turbulent fiscal infighting, the Trump administration and some Republican lawmakers were clashing over its terms. House... Appropriations Committee Chairman Rodney Frelinghuysen, asked whether his panel was writing legislation to fully fund the $131 billion non-defense increase included in the deal, said: 'I would expect so, yes.'”
— Louise Linton attempts some image rehab. Based on the early reviews, it didn't work. Elle's Carrie Battan: "All of Linton’s self-pity does not come without a sizable dose of self-hatred and self-doubt, I would learn over the tearful two hours that followed. “I was so stupid,” Linton says so forcefully in her Scottish accent that I half expect she will lean over and begin banging her head on the table next to the last remaining chicken finger. She gathers herself and sums up that day, the day when an absent-minded Instagram post set off a seismic shift in her life: 'I wish I could take it back.' ... Other ordinary-girl things: Linton loves calligraphy and big-band jazz. She enjoys taking cute selfies with Mnuchin using the Snapchat filters that make people look like puppies and piglets. Against her husband’s wishes, she shows them to me. (“I didn’t even know she had Snapchat,” her press rep says, faintly concerned.)"
The Twitter consensus was not kind. A sampling:
The Post's Ashley Parker:
Remember when Desiree Rogers was ultimately forced out of hte Obama White House because of her WSJ Mag cover, where she touted "the Obama brand"...?— Ashley Parker (@AshleyRParker) February 13, 2018
The Atlantic's Adam Serwer:
The Post's Christopher Ingraham:
— Trump is Trump's best political customer. Bloomberg's Demetrios Pogkas and Bill Allison: "Trump’s campaign continued to spend big at Trump hotels, restaurants and the iconic Trump Tower, more than any other political committee. Republican groups spent a little over $1 million at Trump properties in 2017. Of that, almost 70 percent was from Trump’s own campaign and his joint fundraising committees. Most of Trump’s spending was on rent for his campaign’s headquarters at Trump Tower in Manhattan—where rent doesn’t come cheap—and his mounting legal fees... But when it comes to official campaign spending, whether for event space or lodging, Republicans have mostly spent their money elsewhere."
— AT&T preps antitrust challenge. WSJ's Brent Kendall and Drew FitzGerald: "AT&T Inc. is considering an unusual bid to seek testimony from the Justice Department’s antitrust chief in the coming trial over its $85 billion purchase of Time Warner Inc., TWX 0.75% part of the companies’ effort to challenge the legitimacy of the government’s lawsuit. In the months since the Justice Department sued to block the deal last November, AT&T has publicly questioned the department’s motives in light of President Donald Trump’s campaign pledge to disallow the deal and his repeated disparagement of CNN, a unit of Time Warner. AT&T and Time Warner have drafted a list of people they may put on the witness stand at trial, and, according to people familiar with the matter, the roster includes Justice Department antitrust chief Makan Delrahim, a Trump nominee who made the decision to challenge the deal in court."
— Hedge funders to Delaware. Bloomberg's Miles Weiss: "Wall Street’s fast-money crowd is returning to well-trodden ground to elude Trump-era tax laws: Delaware. Since late 2017, hedge fund managers have created numerous shell companies in the First State, corporate America’s favorite tax jurisdiction. These limited liability companies share a common goal: dodging new tax rules for carried-interest profits through a bit of deft legal paperwork. Big names appear to be embracing the maneuver, which requires setting up LLCs for managers entitled to share carried-interest payouts. Four LLCs have been created under the name of Elliott Management Corp., the hedge-fund giant run by Paul Singer. More than 70 have been established under the names of executives at Starwood Capital Group Management, the private-equity shop headed by Barry Sternlicht."
— Dems grill Mulvaney. American Banker's Ian McKendry: "When Richard Cordray ran the Consumer Financial Protection Bureau, staring down skeptical and even hostile GOP lawmakers in Capitol Hill in frequent hearings seemed a regular part of the job. Mick Mulvaney, the senior Trump administration official who now runs the CFPB on an acting basis, and in a very different manner from his predecessor, had his first taste of that Tuesday as Democrats on the Senate Budget Committee questioned him directly over his policies at the consumer bureau... Mulvaney also took heat over the agency's decision in January to drop lawsuits against a group of payday lenders — including Golden Valley Lending — associated with an American Indian tribe."
- The House Small Business Committee will hold a hearing on job creation and small businesses’ role in the economy.
- The House Science, Space and Technology Subcommittee on Oversight and Subcommittee on Research and Technology holds a hearing on bitcoin and blockchain technology.
- The Senate Commerce, Science and Transportation holds a hearing on various nominations for the Federal Trade Commission.
- The Senate Health, Education, Labor and Pensions Committee holds a hearing on the nomination of John F. Ring to be a member of the National Labor Relations Board.
- The Senate Small Business and Entrepreneurship Committee holds a hearing on the nominations of of David C. Tryon to be Chief Counsel for Advocacy of the Small Business Administration and Hannibal M. Ware to be Inspector General of the Small Business Administration.
- The American Enterprise Institute holds an event on the “bubble economy.”
- The Hudson Institute holds an event on the Trump administration’s global economic agenda.
- The Senate Finance Committee holds a hearing on the 2019 fiscal year budget request.
- CFTC chairman J. Christopher Giancarlo testifies before the Senate Agriculture, Nutrition and Forestry Committee on Thursday.
- The Senate Finance Committee holds a hearing on the proposed 2019 fiscal year budget on Thursday.
- The Economic Policy Institute holds a panel discussion on black women and the economy on Thursday.
"Here is the Republican idea of an immigration compromise," writes The Post's Tom Toles:
Yesterday, Sarah Huckabee Sanders faced repeated questions about the White House’s response to allegations of abuse against Rob Porter:
Watch Budget director Mick Mulvaney explains the "Blue Apron-type program" to replace food stamps:
Stephen Colbert shares President Trump's Valentine's Day card to Melania:
And on Jimmy Kimmel, White House-themed Valentine's Day cards: