Date
23 July 2018
Top White House economic adviser Gary Cohn, who opposes the proposed tariffs on steel and aluminum imports, said he is resigning. Photo:Reuters
Top White House economic adviser Gary Cohn, who opposes the proposed tariffs on steel and aluminum imports, said he is resigning. Photo:Reuters

Trump stands firm on tariffs as opposition gathers steam

Republican lawmakers stepped up calls for US President Donald Trump to pull back from proposed tariffs on steel and aluminum imports as a top White House economic adviser who opposes the tariffs said he is resigning, Reuters reports.

Critics worry that the measures risk igniting a trade war and damaging the US economy. But Trump showed no sign of backing down, reaffirming his belief the United States could win any trade war since it was running such a large trade deficit with so many countries.

“When we’re behind on every single country, trade wars aren’t so bad,” he told reporters at the White House at a news conference on Tuesday with the Swedish prime minister.

A prominent Republican critic of the proposal, House of Representatives Speaker Paul Ryan, returned to the attack on Tuesday, saying the proposed duties of 25 percent on steel and 10 percent on aluminum were too broad.

Although the measure is designed to hit China, its main impact will be on US allies like Canada, he said.

Ryan, whose home state of Wisconsin could be hit by proposed counter-tariffs from the European Union, has consistently opposed the tariffs and called for “more surgical and more targeted measures”.

The White House has said the measures will protect industries and jobs from unfair competition and that across-the-board tariffs are needed because countries like China use third countries for shipping steel to the US, disguising its origin.

Opponents charge that the tariffs could destroy more jobs than they create, risk alienating US allies and that American consumers will end up paying more for a range of products from cans of beer to cars.

“There is a lot of concern among Republican senators that this could sort of metastasize into sort of a larger trade war, and many of our members are discussing with the administration just how broad, how sweeping this might be,” Senate Majority leader Mitch McConnell said in his first comments on the issue.

Markets rally 

Financial markets have rallied off their lows on expectations the measures may be watered down in the face of an intense lobbying effort from leading Republicans.

On Tuesday, Representative Mark Meadows, the head of the Freedom Caucus, a staunchly conservative Republican grouping in Congress, raised concerns about the impact of the tariffs on US manufacturing and agriculture. Agriculture is a potential target for retaliatory tariffs from China if Trump pushes ahead.

Meadows, who spoke to reporters after a closed-door meeting with House Republicans, said: “Most of the conversation I heard was not in support of that particular decision.”

Trump was presented with three options by the Commerce Department. The broad tariffs that he announced last week were one. He also had the option of a much higher duty of 53 percent on steel imports on a narrower group of 12 countries that did not include Canada, Mexico and the European Union, although all countries would be subject to quotas.

For aluminum, China, Hong Kong, Russia, Venezuela and Vietnam would be subject to direct tariffs and others to quotas.

The final option called for quotas for both industries to limit imports.

Washington said on Monday that if Canada and Mexico agreed to its demands in the NAFTA talks, they could be exempted from the proposed steel and aluminum tariffs. Trump repeated the proposal on Tuesday after the trilateral talks ground to a close following six months of discussions that have achieved little progress.

Both Mexico and Canada have rejected the proposal.

Mexican Economy Minister Ildefonso Guajardo raised the prospect of reprisals if Washington pushed ahead with tariffs and insisted the North American Free Trade Agreement remain “a trilateral accord” in response to a US proposal to hold talks with Canada and Mexico separately.

“There’s a list [of US products] that we are analyzing internally, but we won’t make it public, we’re going to wait,” Guajardo told the Televisa network in an interview.

Canada has also said it would take counter-measures, as has the European Union.

Top economic adviser quits

Meanwhile, White House economic adviser Gary Cohn said he is resigning. 

“It has been an honor to serve my country and enact pro-growth economic policies to benefit the American people, in particular the passage of historic tax reform. I am grateful to the President for giving me this opportunity and wish him and the Administration great success in the future,” Cohn said in a statement issued by the White House.

His departure as director of the National Economic Council came after a little more than a year on the job.

Trump’s announcement last week of his plans to impose the tariffs sent US stock prices tumbling and came after an intense debate within the White House between Cohn and other advocates of free trade, on one side, and protectionist advisers such as Peter Navarro on the other, White House sources said.

Cohn, a former president and chief operating officer of investment bank Goldman Sachs, was seen as a bulwark within the White House against protectionist policies. Business lobbyists frequently cited Cohn as their strongest ally in the White House.

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