Thu | Dec 7, 2023

Party conflict erupts over steel, aluminium tariff plan

Published:Tuesday | March 6, 2018 | 12:00 AM
US House Speaker Paul Ryan. (AP)
A worker loads steel products on to a vehicle at a steel market in Fuyang in central China’s Anhui province on Friday, March 2. China has expressed “grave concern” about a US trade policy report that pledges to pressure Beijing with tariffs.

Worried about economic ramifications, US House Speaker Paul Ryan called on President Donald Trump to back away from his plan for broad international tariffs, arguing Tuesday that a "more surgical approach" would help avert a potentially dangerous trade war.

"What we're encouraging the administration to do is to focus on what is clearly a legitimate problem and to be more surgical in its approach so we can go after the true abusers without creating any kind of unintended consequences or collateral damage," Ryan said at his weekly news conference.

The Republican speaker's request came after Trump said Monday his administration was "not backing down" on its plans to impose special tariffs on steel and aluminium imports, and reiterated that US neighbours Canada and Mexico would not be spared.

Trump, however, has held out the possibility of later exempting the long-standing neighbours of the United States if they agree to better terms in talks aimed at revising the North American Free Trade Agreement(NAFTA).

"We've had a very bad deal with Mexico. We've had a very bad deal with Canada. It's called NAFTA," he declared.

Ryan said Tuesday that Trump was correct to focus on the problem of the dumping of steel in the US at lower prices. But he said the administration's approach was "a little too broad and more prone to retaliation".

The speaker suggested the White House may reconsider blanket tariffs on steel and aluminium, saying "those talks are ongoing and I'm encouraged that hopefully we can get to a good place".

Republican leaders of the House Ways and Means Committee, meanwhile, have circulated a letter opposing Trump's plan, and GOP congressional leaders indicated they may attempt to prevent the tariffs if the president moves forward.


Unusual alliances


Trump's pledge to implement tariffs of 25 per cent on steel imports and 10 per cent on aluminium imports has roiled financial markets, angered foreign allies and created unusual alliances for a president who blasted unfavourable trade deals during his 2016 campaign. Union leaders and Democratic lawmakers from Rust Belt states have praised the planned tariffs, joining with advocates within the administration, including Commerce Secretary Wilbur Ross and White House trade adviser Peter Navarro.

But the president has been opposed internally by Defense Secretary James Mattis and White House economic adviser Gary Cohn, who warned against penalising US allies and undercutting the economic benefits of the president's sweeping tax overhaul.

Ryan said he's had "multiple conversations" with the president on the planned tariffs and "he knows our views". He added, "Every now and then, we're going to have a different approach on how we should tackle these problems."

Likewise, White House press secretary Sarah Huckabee Sanders said Monday, "Look, we have a great relationship with Speaker Ryan. We're going to continue to have one, but that doesn't mean we have to agree on everything."

Canada is the United States' No. 1 foreign supplier of both steel and aluminium. Mexico is the No. 4 supplier of steel and No. 7 for aluminium.

The White House said Tuesday that Trump and Canadian Prime Minister Justin Trudeau discussed trade and NAFTA during a telephone conversation on Monday. Trump emphasised his commitment to a NAFTA that is fair to all three countries, and said the current agreement leaves the US with a trade deficit.


Narrow scope


Congressional Republicans say any tariffs should be narrow in scope, and they privately warned that Trump's effort could hurt the party's hopes to preserve its majority in the fall elections.

As the president dug in on his position, any potential compro-mise with foreign trading partners and Republican lawmakers was expected to still include some form of tariffs.

"Trump is not someone who retreats," said Stephen Moore, an economist with the conservative Heritage Foundation and a former campaign adviser. "He's going to need to be able to declare some victory here."

The tariffs will be made official in the next two weeks, White House officials said.

"Twenty-five per cent on steel, and the 10 per cent on aluminium, no country exclusions firm line in the sand," said Navarro, speaking on 'Fox and Friends.'

Republican critics on Capitol Hill and within the administration argue that industries and their workers that rely on steel and aluminium for their products will suffer. The cost of new appliances, cars and buildings will rise for Americans if the president follows through, they warn, and other nations could retaliate.

Two dozen conservative groups, including the Club for Growth, FreedomWorks and the National Taxpayers Union, urged Trump to reconsider, writing in a letter that the tariffs would be "a tax on the middle class with everything from cars to baseball bats to even beer".

The Trade Partnership, a consulting firm, said the tariffs would increase US employment in the steel and aluminium sector by about 33,000 jobs but would cost 179,000 jobs in the rest of the economy.

The end result could erode the president's base of support with rural America and even the blue-collar workers the president says he's trying to help.

"These are people that voted for him and supported him in these auto-producing states," said Cody Lusk, president of the American International Automobile Dealers Association. Lusk noted that of the 16 states with auto plants, Trump won all but two.

The administration has argued the tariffs are necessary to preserve the American aluminium and steel industries and protect national security. But Trump has also suggested they could be used as leverage in the current talks to revise NAFTA. The latest round of a nearly year-long renegotiation effort is concluding this week in Mexico City.

Upbeat about progress until now, Dan Ujczo, a trade attorney with Dickinson Wright PLLC in Columbus, Ohio, said, "We were moving towards the finish line in NAFTA." But he added, "This has the potential to throw the NAFTA talks off track."

Separately, Mexican Economy Secretary Ildefonso Guajardo tweeted: "Mexico shouldn't be included in steel & aluminium tariffs. It's the wrong way to incentivise the creation of a new & modern #NAFTA."

Overseas, Jean-Claude Juncker, president of the European Commission, said the European Union could respond by taxing American goods, including bourbon, blue jeans and Harley Davidson motorcycles.

Trump threatened to tax European cars if the EU boosts tariffs on American products in response to his plan.

"If they want to do something, we'll just tax their cars that they send in here like water," Trump has said, lamenting European "trade barriers that are worse than tariffs".

For congressional leaders, those products hit close to home. The iconic motorcycles are produced in Ryan's home state of Wisconsin, and Kentucky, the home of Senate Majority Leader Mitch McConnell, is well known for its bourbon.

- AP