Trump action on tariffs triggers GOP alarm

Congressional Republicans and conservative groups are expressing worry that President Trump’s decision to slap hefty tariffs on imports will hurt consumers and the broader economy and lead to retaliation by major trading partners. 

Trump made his first hard move toward a more protectionist trade strategy Monday when he imposed significant tariffs on solar panels and washing machines. 

The White House’s move on tariffs came up during the Senate Republican lunch Tuesday in the Capitol. 

{mosads}Sen. Lindsey Graham (R-S.C.) said he’s worried about how the tariffs will impact a new plant in Newberry, S.C., where South Korea-based Samsung Group is building washers. He fears the company could reduce investment there or slow hiring in retaliation.

“It’s a delicate balance between trying to get people to play by the rules and not hurting our own economy,” he said. “Tariffs are things that, once you start, the other side can do it, too.”

Graham said he brought up his concerns and the potential to take legislative action to override Trump’s decision at the caucus lunch Tuesday.

“People were concerned, but there was no unified position,” Graham said.

Sen. Pat Roberts (R-Kan.), who is chairman of the Senate Agriculture Committee and has repeatedly pushed the president to keep farmers in mind while negotiating trade agreements, said the solar and washer tariffs are a bad idea.

“You always, when you put a tariff on things, invite a retaliatory measure that usually ends up with agriculture,” Roberts said.

The president defended the tariffs Tuesday during a signing ceremony, saying they will “benefit our consumers” and “create a lot of jobs.”

 “Our action today helps to create jobs in America for Americans. It will provide a strong incentive for LG and Samsung to follow through on their recent promises to build major manufacturing plants for washing machines right here in the United States,” Trump said, referring to two companies that import washers and other appliances.

Whirlpool Corp. Chairman Jeff Fettig welcomed Trump’s decision, saying it will lead to job creation.

“This is a victory for American workers and consumers alike,” he said in a statement. “By enforcing our existing trade laws, President Trump has ensured American workers will compete on a level playing field with their foreign counterparts, enabled new manufacturing jobs here in America and will usher in a new era of innovation for consumers everywhere.”

The tariffs are the most consequential trade move Trump has made since pulling out of the Trans-Pacific Partnership (TPP) shortly after taking office a year ago.

 While the Commerce Department is stacking up cases at the World Trade Organization, mostly against China, Trump has several big tariff decisions looming in the next several months. 

The president will have to decide whether the nation’s security is threatened by imports of aluminum and steel, and decide the U.S. position in another case against China over intellectual property protections.

Paul Nathanson, who works on trade and energy issues for law and government relations firm Bracewell, said previous attempts in the early 2000s to levy tariffs on products such as foreign steel have proven “why protectionism doesn’t work.”

“We didn’t think that President Trump ran on a platform of protecting two foreign-owned bankrupt companies who don’t employ that many people in the United States,” Nathanson said during an event at the Heritage Foundation on Tuesday.

“That’s not, I don’t think, a winning strategy and a pro-manufacturing, America First strategy,” Nathanson said.

Nathanson said he thinks “the administration thought this was an easy way to show they were going to be tough on imports” and get headlines that they are protecting domestic firms. 

“I think they think it could be good PR, it’s good politically, but I think they’re going to find out just as George W. [Bush] found out that there’s real consequences and the negative blowback by our trading partners, by consumers and by the manufacturing sector,” he said.

Nathanson predicted there would be a push from opponents of Trump’s tariffs to get them repealed.

Clark Packard, R Street Institute’s trade policy counsel, said the Trump administration’s solar decision would hurt the workers Trump vowed to protect.

“They want the political win for the State of the Union because we have a lot of loaded trade weapons pointed right at China right now,” he said at the Heritage trade event.

“It’s all part of a larger narrative,” he said. 

“We delayed a lot of the aggressive America First trade action during the first year of the administration, principally to get tax cuts done, but now it seems like they’re going to pivot and use this as a 2018 midterm campaign promise issue,” he said.

The conservative Heritage Foundation said it expects that Trump’s decision on solar panel technology and washers will not only raise prices for consumers but also cause damage to other sectors of the economy.

 One of the primary beneficiaries of Trump’s move on tariffs will be Whirlpool, but some question whether the company deserves the help.

 Packard argued that the struggling solar companies and Whirlpool failed to innovate and instead of improving their technology to better compete they looked to the government for help and “invested in good old-fashioned protectionism.”

 Overall, the tariff decision may temporarily pad Whirlpool’s bottom line but will most likely jeopardize American jobs and foreign manufacturing in the United States, Packard said. 

“Whirlpool is fighting against American companies and American workers,” he said. 

John Taylor, senior vice president for government relations at LG Electronics USA, said the company has answered Trump’s call to create more U.S. jobs, but the tariffs could stymie their efforts to expand here.

LG is building its corporate headquarters in New Jersey, a new electric vehicles components plant in Michigan and a new washing machine plant in Tennessee.

“The tariffs aren’t about unfair trade; there is no unfair trade in this case. And it’s not really even about domestic manufacturing,” Taylor said at the Heritage event. “What’s this really about?  It’s a textbook case of how certain companies really can game the process and use the trade laws to try to accomplish what they can’t in the marketplace,” he said. 

Other Republicans also expressed concern that the decision will hurt consumers and the economy.

Sen. Ben Sasse (R-Neb.) accused the GOP of abandoning free-trade principles.

“Here’s something Republicans used to understand: Tariffs are taxes on families. Moms and dads shopping on a budget for a new washing machine will pay for this — not big companies. You don’t fix eight years of bad energy policy with bad trade policy,” he said in a statement.

Rep. Mark Sanford (R-S.C.), in a statement, called the Trump administration’s decision “a mistake.”

“If increasing tariffs were the road to prosperity, then a whole host of economically forgotten places around the world would be vibrant. They are not,” Sanford said.

“Increased tariffs have proved themselves to sound great, but set countries on a financial road to ruin. This is shortsighted and will cost American jobs,” he said.

Under the plan that Trump signed formally on Tuesday, all imported solar panel cells and modules will get a 30 percent tariff, decreasing yearly to 15 percent in the final year, before ending entirely. The first 2.5 gigawatts of imports each year are exempt.

For the first 1.2 million washers, a 20 percent tariff will be imposed, falling to 16 percent by the third year. After those first units, a tariff of 50 percent will be levied in the first year, falling to 40 percent in the final year. Canada is exempt.