Trump pulls out rug from GOP on trade

Senate Republicans feel that President Trump has once again pulled the rug out from under them on trade, leaving GOP lawmakers frustrated over their inability to influence the White House’s policy on an issue that could have major economic and electoral ramifications. 

Days after a group of Republican senators relayed to Trump at a White House meeting their concerns about trade tensions with Canada, Mexico, Europe and China, Trump over the weekend threatened new tariffs on China, escalating a fight with Beijing and rattling markets. 

U.S. Trade Representative Robert Lighthizer said after the stock markets closed Monday that higher tariffs on China will take effect Friday, shortly after negotiations with a trade delegation from China are due to resume later this week. Lighthizer’s remarks are likely to rattle markets after they recovered most of their losses Monday afternoon as Wall Street strategists cautioned that Trump’s tough talk is a negotiating tactic and a deal with China is still possible.

{mosads}

The controversy over trade has come amid economic data released recently that demonstrates the U.S. economy is booming, which Republicans will lean into in the 2020 election. But some Republicans are worried that Trump’s actions on trade could boomerang and harm the economy.

News that Trump could impose tariffs on another $200 billion of Chinese goods came as a surprise to Senate Republicans who felt that bellicose posture flew in the face of what senior administration officials had told them about the talks’ progress.

Asked if anything was resolved at last week’s meeting with Trump, Sen. John Cornyn (R-Texas), a member of the Finance Committee, responded, “no,” adding that the president did not appear receptive to the entreaties of GOP lawmakers.

“It wasn’t necessarily a welcome message, but nothing was decided,” Cornyn said of the pleas from Senate Republicans for Trump to rein in his tariff policy.

Trump firmly stood by his penchant for slapping penalties on trade partners as an effective negotiating tool, even after GOP allies voiced concerns about the potential impact on the economy.

“He made clear that he liked tariffs as an instrument to bring people to the negotiating table,” Cornyn said. 

Other Republican senators who attended the meeting characterized it as a “debate” where neither side gave much ground.

Trump told GOP lawmakers that he didn’t think the Chinese would agree to what he would consider a good trade agreement unless Chinese officials felt the market for their exports to the United States was under serious threat, according to sources familiar with the meeting.

{mossecondads}

The GOP lawmakers raised the prospect of the Senate moving legislation to limit Trump’s tariff authority through competing proposals sponsored by Sens. Pat Toomey (R-Pa.) and Rob Portman (R-Ohio), that would either require Congress’s approval to impose tariffs or empower lawmakers to reject future tariffs through disapproval resolutions.

The lawmakers urged Trump to repeal tariffs on Canada and Mexico and to hold off on placing trade barriers on automobiles, which would hurt Republican states with auto-manufacturing facilities, such as Indiana, Texas, Tennessee, Kentucky and Alabama. 

Lighthizer, who attended last week’s meeting with GOP senators, and Treasury Secretary Steven Mnuchin had told GOP lawmakers that negotiations with China were progressing well. 

So it came as a surprise Sunday when Trump threatened to raise tariffs on $200 billion worth of Chinese goods from 10 percent to 25 percent and slap fees on an additional $325 billion in Chinese products.

Trump’s threat went in the opposite direction of what GOP lawmakers were hoping. 

One Senate GOP aide said ahead of the meeting that lawmakers hoped to convince Trump to wind down the 25 percent tariff he had placed on a first tranche of $50 billion in Chinese products, which the administration has signaled it plans to keep in place for the foreseeable future.

Portman, who was in the White House meeting with Trump last week, said he wasn’t expecting the latest threat against China, even though he wasn’t shocked either.

“I wasn’t surprised, but I also wasn’t expecting it. It’s not like he said he was going to do that,” Portman said of Trump’s ominous trade tweets.

Trump’s bombshell tweet raised concerns that it would prompt Chinese Vice Premier Liu He to cancel a trip to Washington this week for what was expected to be a pivotal round of talks. 

The stock markets rebounded losses Monday after it was reported that the Chinese visit was still on.

Sen. Martha McSally (R-Ariz.), who could face a tough reelection race in 2020, said she is “hopeful” that Trump will be able to reach a “breakthrough” with China soon. 

“I’m generally a free and fair trader and I was hopeful for a breakthrough on this, and I still am, but we do have to address the national security threat and the technology transfer and intellectual property issues that are very serious,” she said, referring to several sticking points in the negotiations.

Senate Finance Committee Chairman Chuck Grassley (R-Iowa) says he has a simple message for the president: “We don’t want auto tariffs and he’s got to take the tariffs off Mexico and Canada.”

But Grassley told reporters Monday that Trump didn’t give any ground to his and his colleagues’ concerns.

“I do come to the conclusion, though, that they’re still concerned about the trans-shipment of steel from China to Canada to the United States,” Grassley said when asked about the president’s response to pressure to drop tariffs on Canada and Mexico.

Grassley, who last June labeled Trump’s trade moves “a big gamble” that could net big wins for the country or be “catastrophic,” said he has received conflicting information on the status of trade talks.

The Iowa senator published an op-ed in The Wall Street Journal last week warning that the Finance Committee might not take up Trump’s new trade deal with Canada and Mexico, known as USMCA, unless Trump scrapped tariffs on those two major trading partners.

“If these tariffs aren’t lifted, USMCA is dead. There is no appetite in Congress to debate USMCA with these tariffs in place,” he wrote.

Jordain Carney contributed.