Lawmakers, US allies sound alarm over Trump’s latest tariff moves
US President Donald Trump shows no sign of reconciling with China on trade
This story is published in a content partnership with POLITICO. It was originally reported by Megan Cassella and Doug Palmer on politico.com July 11, 2018.
President Donald Trump’s latest steps to slap tariffs on an additional US$200 billion in Chinese goods led markets to tumble on Wednesday and raised alarm among US lawmakers and trading partners that an extended conflict could have wide-ranging economic consequences.
In Congress, top Republicans raised concerns over the escalating tariffs and called on Trump to sit down with Chinese President Xi Jinping to address the conflict before it hurts more farmers, consumers and businesses in the world’s two largest economies.
On Wall Street, the Dow Jones Industrial Average fell more than 200 points to end at 24,700.45 after the administration announced plans to impose 10 per cent tariffs on thousands more Chinese products, drastically escalating the trade war that has been simmering for months. The broader Standard & Poor’s 500 index also slid 0.7 per cent.
Overseas, Beijing rejected the new tariff list as “totally unacceptable” and vowed to respond with counter-measures and an additional lawsuit at the World Trade Organisation – the third it has brought against the United States this year.
In Brussels, a top European Commission official, Vice-President Valdis Dombrovskis, said he was “concerned” about an “immediate economic impact” from not only the latest tensions but also about a broader unravelling of the multilateral trading system. Trump’s latest trade moves have also begun to unite other countries against the US: Germany, for example, appears to be in the early stages of an tenuous economic alliance with China.
“As relations with the US become increasingly difficult, the other economic giant will inevitably become more important to us,” said Volker Treier, the deputy chief executive of Germany’s Chambers of Industry and Commerce.
But Trump, for his part, showed no sign of reconciling with China. In tweets from Brussels, where he was meeting with Nato allies, the president blamed other nations’ policies for hurting US agriculture, despite the fact that farm exports have grown in recent years.
“Farmers have done poorly for 15 years. Other countries’ trade barriers and tariffs have been destroying their businesses,” Trump wrote.
“I am fighting for a level playing field for our farmers, and will win!”
...things up, better than ever before, but it can’t go too quickly. I am fighting for a level playing field for our farmers, and will win!
— Donald J. Trump (@realDonaldTrump) July 11, 2018
The latest duties are aimed at pressuring China to take US concerns about intellectual property theft and forced technology transfers more seriously and finally change what the administration and many in industry and Congress see as harmful practices.
But even those who agree with the administration on its principles in cracking down on China are increasingly uneasy with the president’s inclination to impose tariffs on an ever-increasing number of products. Members of Congress pushed back Tuesday night and early Wednesday against what they saw as harmful penalties that would leave American farmers and consumers caught in the crossfire.
House Ways and Means Chairman Kevin Brady said that tensions could escalate into a multi-year trade conflict. He also called for Trump to sit down soon with Xi to address their differences – a move that was then echoed by House Speaker Paul Ryan.
“I don’t want to hamstring the president’s negotiating tactics, but I have long said I don’t think tariffs are the right way to go,” Ryan said during a press conference Wednesday morning.
Representative Dave Reichert added that he “strongly disagrees” with the tariff plans, which he said would lead to “higher prices here at home for American families and less sales abroad for American workers and farmers as markets are closed to American-made goods through retaliation.”
Across the Capitol, Senator John Cornyn (R-Texas), the chamber’s No 2 Republican, said lawmakers were willing to “give the president the room he needs” to negotiate a good deal, but he said he worries that things could “escalate out of control.”
“I think the most important question that any of us can ask is where does this end?” he told reporters. “And I don’t think any of us know that exactly.”
The latest set of duties would not take effect until the end of August at the earliest, after the administration holds a public comment period on the affected products. But they would dramatically increase the amount of goods affected, as they come on top of the 25 per cent penalties on $34 billion in goods the Trump administration imposed last week and another set of tariffs on $16 billion in goods that could kick into effect as early as next month.
China retaliated in lockstep against the initial $34 billion – a move that directly led to Trump’s latest threat – and has pledged to do the same with the looming $16 billion.
But China imported only $130 billion worth of goods from the United States in 2017, while the US imported $505 billion worth from China – making it impossible for them to keep up with the dollar-for-dollar if Trump moves forward with tariffs on the full $200 billion list. But Beijing could fight back with other measures to make life difficult for American companies doing business in China.
Some lawmakers, frustrated by having to stand by as Trump imposes measures they see as harmful and protectionist, have begun to explore ways to rein in the president’s authority to unilaterally impose tariffs. The Senate on Wednesday handily passed a symbolic measure instructing lawmakers working to reconcile an unrelated spending bill to include language “providing a role” for Congress when the president invokes national security reasons to justify tariffs.
Such language, if passed, would not affect these tariffs against Beijing, but could affect penalties in place on nearly all imports of steel and aluminium – from China as well as US allies like Canada, Mexico and the EU.
“It’s just a step in the direction we’d like to go,” Sen. Bob Corker (R-Tenn.) said before what he called a “test vote” to see how willing Congress might be to push back against Trump’s use of a law that gives him broad authority to impose tariffs in an effort to protect national security.
“I hope to have legislation coming behind this where 15 senators – Republicans and Democrats and an independent – have come together on a piece of legislation to absolutely ensure that Congress has a role.”
Adam Behsudi and Jakob Hanke contributed to this report.