How Europe may threaten Trump’s tariffs

In response to President Trump’s tariffs, Europe has threatened to impose tariffs on Wisconsin’s Harley Davidson and Kentucky Bourbon. The move is an implicit threat against House Speaker Paul Ryan (R-Wis.) and Senate Majority Leader Mitch McConnell (R-Ky.) and may be part of a broader strategy to encourage Republican resistance to Trump.

Europe’s announcement possibly encouraged Ryan to break with Trump, but the reality is that neither Ryan nor other establishment Republicans are protectionists anyway.

{mosads}The trouble with relying on Congress to keep the president in check is that it ignores the real driver of Trump’s policies: his populist political base.

Trump’s base hardly loves Ryan and McConnell. Far from paying heed to them, Trump’s base wants them to lose. And Trump dances for his populist base, not Republican leadership.

Thus, reaching that base is vital. If Europe were to try and start a conversation with Trump’s populist base, the political narrative is tailor-made for it.

Consider the last time a president tried steel tariffs. On Feb. 18, 2002, Wilbur Ross, now Commerce secretary, began buying near-bankrupt steel plants.  On Feb. 27, 2002 President Bush slapped a 30 percent tariff on steel imports, juicing the value of Ross’ assets. After larding $7.5 billion in pension payments on the U.S. government, Ross exited his investment with profits 14 times his initial investment.

Now Ross is surrounded by the “big steel” dream team: U.S. Trade Representative (USTR) Robert Lighthizer; Assistant to the President Peter Navarro; USTR General Counsel Steve Vaughn; and Under Secretary of Commerce Gil Kaplan, and Deputy USTR Jeff Garish, among others. All are long-time boosters of big steel.

The backdrop to this, of course, is that, contrary to the yarn put forth by Ross and his advocates, U.S. steel production grew 5 percent last year.

How much chicanery must taxpayers subsidize?

Another issue is that tariffs are wealth transfers to industry. Manufacturers that use steel and aluminum, and consumers that buy their products, will have to belly up to the bar. The things they make and that consumers buy will cost more. They pay more so that Big Steel can make more.

Moreover, those who are bearing the risk are not the ones benefiting. Big steel’s lawyers and financiers in Washington, D.C. and New York do not bear the risk that blue collar workers do — the people who comprise Trump’s base.

To secure 400,000 steel production jobs, or to enrich investors, the jobs of 6.5 million workers in other industries are being put in jeopardy. Case in point: In 2002, while Ross made billions off of Bush’s tariffs, 200,000 manufacturing jobs were lost.

Of course, this is even before we get to retaliatory measures that are sure to come.

Tariffs also lead to whacky policy outcomes. One manufacturer in Marinette, Wisconsin builds ships — out of steel — including the Navy’s new Littoral Combat Ship or LCS. Will more expensive steel equate to fewer ships?

If so, tariffs that force the Navy to make do is a peculiar way to make America great, especially when the tariffs are predicated on national security. And will fewer ships mean fewer jobs in this county that Trump won with 65 percent? 

A recent Quinnipiac poll shows that Republican voters are outliers in their support for the president’s trade war. Two-thirds agree with Trump that “a trade would be good for the United States, and could be easily won” in contrast to just 7 percent of Democrats and 19 percent of independents.

Top European steel or aluminum exporters to the U.S. — such as Germany — have a natural constituency in the areas where Trump’s base resides because of their manufacturing presence.

They won’t, however, reach Trump’s base through traditional diplomatic lines of communication. With Gary Cohn departing the White House, the trade portfolio is in the hands of Navarro and Ross. But if Europe can find a way to influence the Republican base, the president will find that a trade war, whatever his desires, is politically infeasible.

Kristofer Harrison worked for Defense Secretary Donald Rumsfeld and Secretary of State Condoleezza Rice and was a foreign policy advisor to Sen. Ted Cruz’s presidential campaign. He is a co-founder and principal of ITJ Strategies, a grassroots PR consultancy.