The trouble with tariffs

WASHINGTON—U.S. business leaders and some of President Donald Trump’s Republican allies are warning that increased tariffs on Chinese goods will bring economic pain to agricultural and manufacturing regions in the country where the president has enjoyed strong support.

The Trump administration announced last week it would increase tariffs from 10 percent to 25 percent on Chinese imports worth $200 billion and begin the process of imposing tariffs on all Chinese goods coming into the United States. Trade talks with Beijing broke down over China’s refusal to commit to U.S. demands on intellectual property rights, market access, and other sticking points. China in turn has leveled further retaliatory tariffs on U.S. imports.

U.S. business leaders have long sought changes to Chinese policies the United States deems unfair but have warned against the heavy use of tariffs to force China’s hand, noting that domestic companies and ultimately consumers would pay the costs.

“We want to see meaningful changes in China’s trade practices, but it makes no sense to punish Americans as a negotiating tactic,” said David French, a lobbyist for the National Retail Federation.

The Federal Reserve Bank of New York said consumer prices were higher last year as a result of the tariffs, and a study by Trade Partnership Worldwide found that Trump’s proposed tariffs on all Chinese imports could cost a U.S. family of four a total of $2,294 annually in increased expenses on household items, electronics, and other goods.

An economic analysis by the Brookings Institution concluded much of the burden of earlier rounds of retaliatory tariffs by China and other trading partners has already fallen disproportionately on agricultural and metal producers in rural areas and small towns that supported Trump in 2016.

“Trade policy is inextricably linked with politics, and the retaliatory tariffs seem geographically and industrially targeted to mobilize political angst,” the study found, noting that “counties that voted for President Trump are more exposed to the tariffs.”

In a letter to the president, Zippy Duvall, the head of the American Farm Bureau Federation, warned that the trade war was adding to economic uncertainty faced by farmers, “slashing our exports, destroying a once-promising market for agriculture, worsening the farm economy, and contributing to high levels of stress and uncertainty for many farm and ranch families and other Americans whose jobs are connected to agricultural production.”

Sen. Chuck Grassley, R-Iowa, pointed out the burden on his state’s farmers even as he called on China to end unfair practices and forcefully denounced the use of tariffs for contributing to global instability.

“As I like to tell the president when he says he likes tariffs, I try to remind him that Smoot-Hawley brought about the Great Depression, brought about Adolf Hitler, brought about World War II, brought about 60 million people losing their lives as a result of it,” he said this week at the National Association of Farm Broadcasting, referring to taxes on imports put in place in 1930. Grassley noted that the reduction in tariffs after World War II helped to increase standards of living around the globe.

The Peterson Institute for International Economics warned the additional penalties threatened by the president could push tariffs to levels like those imposed by Smoot-Hawley on an array of goods from clothing to electronics.

“Is his objective to negotiate a trade deal, or is it to make tariffs on Chinese goods a new normal in U.S.-China relations?” economists Chad Brown and Eva Zhang wrote. “The only certainty at this stage is that Trump’s tariffs are escalating toward historic levels.”

The president wants to level the playing field for U.S. companies and workers affected by Chinese misbehavior such as the theft of intellectual property and restricting access to its markets. The tariffs are aimed at pressuring China to change its ways by making its goods less attractive to U.S. consumers. “I think it’s going to turn out extremely well,” Trump told reporters Tuesday, declaring the United States was in a “very strong position.”

Treasury Secretary Steve Mnuchin (left) and U.S. Trade Representative Robert Lighthizer outside the Office of the United States Trade Representative in Washington on Friday Associated Press/Photo by Andrew Harnik

This week in Congress

In the House of Representatives

In the Senate

The Senate on Thursday, voting along party lines, confirmed Jeffrey Rosen to replace Deputy Attorney General Rod Rosenstein.

Treasury Secretary Steve Mnuchin (left) and U.S. Trade Representative Robert Lighthizer outside the Office of the United States Trade Representative in Washington on Friday Associated Press/Photo by Andrew Harnik

2020 forecast

The list of contenders for the Democratic Party’s presidential nomination in 2020 swelled to 24, as two more candidates jumped into the race this week.

Montana Gov. Steve Bullock announced his bid on Tuesday in a video emphasizing bipartisanship. “As a Democratic governor from a state Trump won by 20 points, I don’t have the luxury of just talking to the people who agree with me.” His campaign announced he raised around $1 million in the first 24 hours after the announcement.

New York Mayor Bill de Blasio announced his presidential bid Thursday. In his video, de Blasio outlined a progressive platform and highlighted his differences with President Donald Trump on immigration and climate change, saying, “There’s plenty of money in this country; it’s just in the wrong hands.”

Meanwhile, Sen. Elizabeth Warren, D-Mass., on Tuesday broke with other 2020 candidates by turning down an offer to participate in a Fox News town hall. She accused the cable news channel of being a “hate-for-profit racket” but claimed that she is still “running a campaign to reach all Americans.”

Meanwhile, the Center for Responsive Politics reported that so far, the 2020 candidates—including Trump—have raised a combined $219.8 million. —H.P.

Treasury Secretary Steve Mnuchin (left) and U.S. Trade Representative Robert Lighthizer outside the Office of the United States Trade Representative in Washington on Friday Associated Press/Photo by Andrew Harnik

Courtroom volleys

A federal judge heard oral arguments Tuesday on Congress’ efforts to obtain financial records from Mazars USA, President Donald Trump’s longtime accounting firm. After the House Oversight and Reform Committee issued a subpoena for Trump’s records, the president countersued the firm to stop it from releasing the information. It was the first time a judge has heard oral arguments in one of several suits Trump has filed against subpoenas of his financial information.

Trump lawyer William Consovoy argued that the Democrats’ subpoena fell outside of Congress’ proper function: “They have made clear that this is not about legislation. They want to know if there has been any wrongdoing.”

U.S. District Judge Amit Mehta in Washington, D.C., said Congress could investigate whether Trump’s businesses are improperly financially entangled with foreign governments in violation of the U.S. Constitution’s Emoluments Clause. He said he would issue the ruling at a later date, but “on a timeline that reflects the gravity of the issues presented.” —H.P.

Treasury Secretary Steve Mnuchin (left) and U.S. Trade Representative Robert Lighthizer outside the Office of the United States Trade Representative in Washington on Friday Associated Press/Photo by Andrew Harnik

On the ballot

North Carolina state Sen. Dan Bishop toppled Republican primary challengers Tuesday in a do-over of the election for the state’s 9th Congressional District. State officials threw out the 2018 election results three months ago due to fraud allegations against the winner, Republican Mark Harris. An investigation found that a political operative on Harris’ campaign illegally collected and tampered with absentee ballots. Harris, a former pastor, opted not to run again, citing health issues. Bishop will run in the Sept. 10 general election against Democrat Dan McCready, a Marine Corps veteran who trailed Harris by a mere 905 votes in November.

Bishop was one of the authors of the state’s controversial 2016 “bathroom bill” that required people to use the public restrooms or locker rooms that corresponded with their biological sex. North Carolina repealed the law in 2017 under newly elected Democratic Gov. Roy Cooper, who defeated incumbent Republican Gov. Pat McCrory in the 2016 election. —H.P.

Treasury Secretary Steve Mnuchin (left) and U.S. Trade Representative Robert Lighthizer outside the Office of the United States Trade Representative in Washington on Friday Associated Press/Photo by Andrew Harnik

Full disclosure

Florida Gov. Ron DeSantis revealed at a news conference on Tuesday that during the 2016 election, Russian hackers infiltrated the election databases of two Florida counties. FBI officials told DeSantis and state election officials last week about the breach, discovered by special counsel Robert Mueller’s investigation into Russian interference in the 2016 U.S. presidential election. DeSantis said the data that was hacked was “public anyways,” adding that no votes were manipulated or results altered.

DeSantis said he could not reveal which counties were infiltrated due to a nondisclosure form he signed with the FBI. The governor also warned that the threat had not passed: “I think that threats evolve, and so I don’t want to say, ‘Hey, there’s no more threats.’ It’s just something that you’ve always got to be vigilant about.” —H.P.