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Trump’s Deep Misunderstanding of Trade Policy is Threatening the American Economy

President Donald Trump's aggressive and unpredictable use of tariffs is spooking American business groups

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Trump, Trade, Policy
FILE - Steel rods produced at the Gerdau Ameristeel mill in St. Paul, Minn., await shipment, May 9, 2019. The recent flareup with the U.S. over Mexico tariffs may prove to be a pivotal juncture. VOA

President Donald Trump’s aggressive and unpredictable use of tariffs is spooking American business groups, which have long formed a potent force in his Republican Party. Trade

Corporate America was blindsided last week when Trump threatened to impose crippling taxes on Mexican imports in a push to stop the flow of Central American migrants into the United States.

The two sides reached a truce Friday after Mexico agreed to do more to stop the migrants. But by Monday, Trump was again threatening the tariffs if Mexico didn’t abide by an unspecified commitment, to “be revealed in the not too distant future.”

Such whipsawing is now a hallmark of Trump’s trade policy. The president repeatedly threatens tariffs, sometimes imposes them, sometimes suspends them, sometimes threatens them again. Or drops them.

Trump, Trade, Policy
FILE – Traffic moves on the old Gerald Desmond Bridge next to its replacement bridge under construction in Long Beach, Calif., July 2, 2018. President Donald Trump’s tariffs provoke retaliatory tariffs on U.S. exports. VOA

Business groups, already uncomfortable with Trump’s attempts to stem immigration, are struggling to figure out where to stand in the fast-shifting political climate. They have happily supported Trump’s corporate tax cuts and moves to loosen environmental and other regulations. But the capriciousness of Trump’s use of tariffs has proved alarming.

“Business is losing,” said Rick Tyler, a Republican strategist and frequent Trump critic. “He calls himself ‘Mr. Tariff man.’ He’s proud of it. … It’s bad news for the party. It’s bad news for the free market.”

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“It was a good wakeup call for business,” James Jones, chairman of Monarch Global Strategies and a former U.S. ambassador to Mexico, said of Trump’s abrupt move to threaten to tax Mexican goods.

Creating distance from Trump

Just last week, the sprawling network led by the billionaire industrialist Charles Koch announced the creation of several political action committees focused on policy — including one devoted to free trade — to back Republicans or Democrats who break with Trump’s trade policies. A powerful force in Republican politics, the network is already a year into a “multi-year multi-million dollar” campaign to promote the dangers of tariff and protectionist trade policies.

The Chamber of Commerce, too, is in the early phases of disentangling itself from the Republican Party after decades of loyalty. The Chamber, which spent at least $29 million largely to help Republicans in the 2016 election, announced earlier this year that it would devote more time and attention to Democrats on Capitol Hill while raising the possibility of supporting Democrats in 2020.

Trump, Trade, Policy
FILE – A field of soybeans is seen in front of a barn carrying a large Trump sign in rural Ashland, Neb., July 24, 2018. President Donald Trump’s enthusiasm for tariffs has upended decades of Republican trade policy that favored free trade. VOA

Few expect the Chamber or business-backed groups like the Koch network to suddenly embrace Democrats in a significant way. But even a subtle shift to withhold support from vulnerable Republican candidates could make a difference in 2020.

Trump’s boundless enthusiasm for tariffs has upended decades of Republican trade policy that favored free trade. It has left the party’s traditional allies in the business world struggling to maintain political relevance in the Trump era.

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Uncertainty for businesses

Trump’s tariffs are taxes paid by American importers and are typically passed along to their customers. They can provoke retaliatory tariffs on U.S. exports. And they can paralyze businesses, uncertain about where they should buy supplies or situate factories.

“Knowing the rules helps us plan for the future,” said Jeff Schwager, president of Sartori, a cheese company that has had to contend with retaliatory tariffs in Mexico in an earlier dispute.

Trump seems unfazed.

Trump, Trade, Policy
FILE – Sen. Chuck Grassley, R-Iowa speaks at a town hall meeting in Greenfield, Iowa, June 2, 2017. VOA

Myron Brilliant, head of international affairs at the U.S. Chamber of Commerce, went on CNBC on Monday to decry “the weaponization of tariffs” as a threat to the U.S. economy and to relations with trading partners.

Trump responded by phoning in to the network to declare “I guess he’s not so brilliant” and defend his trade policies.

“Tariffs,” he said, “are a beautiful thing.”

Trump can afford to be confident about his grip over the party: Roughly nine in 10 rank-and-file Republicans support his performance as president, according to the latest Gallup polling. So Republicans in Congress have been reluctant to tangle with him.

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But last week’s flareup over the Mexico tariffs may prove to be a pivotal juncture. The spat was especially alarming to businesses because it came seemingly out of nowhere. Less than two weeks earlier, Trump had lifted tariffs on Mexican and Canadian steel and aluminum — action that seemed to signal warmer commercial ties between the United States and its neighbors.

“This really came out of left field,” said Daniel Ujczo, a trade lawyer at Dickinson Wright. “It was something we thought we had settled, and we hadn’t.”

Weighing legislation

Congress was already showing signs of wariness, especially over Trump’s decision to dust off a little-used provision of trade law to slap tariffs on trading partners. Section 232 of the Trade Expansion of 1962 lets the president impose sanctions on imports that he deems a threat to national security.

Trump has deployed that provision to tax imported steel and aluminum. And he’s threatening to impose Section 232 tariffs on auto imports, a chilling threat to American allies Japan and the European Union.

Congress is considering bipartisan legislation to weaken the president’s authority to declare national-security tariffs. In doing so, lawmakers would be reasserting Congress’ authority over trade policy, established by the Constitution but ceded over the years to the White House.

The legislation has stalled in Congress this spring. But on Tuesday, Iowa Republican Chuck Grassley, chairman of the Senate Finance Committee, said the bill would be ready “pretty soon.” Given “how the president feels about tariffs,” Grassley said, “he may not look favorably on this. So I want a very strong vote in my committee and then, in turn, a very strong vote on the floor of the Senate.”

Congressional reluctance to challenge Trump could be tested in coming months. Lawmakers may balk if he proceeds with plans to tax $300 billion worth of Chinese goods that he hasn’t already targeted with tariffs — a move that would jack up what consumers pay for everything from bicycles to burglar.

Likewise, taxing auto imports — an idea that has virtually no support outside the White House — would likely meet furious resistance. So would any move to abandon a trade pact with Mexico and Canada. Trump has threatened to withdraw from the 25-year-old North American Free Trade Agreement if Congress won’t ratify a revamped version he negotiated last year.

For all their disenchantment with Trump, the Chamber of Commerce may yet find it hard to break its ties to the party. Though the chamber says it’s weighing a more bipartisan approach, it recently featured a sign on its front steps: It likened Trump to Republican icons Ronald Reagan and Dwight Eisenhower. (VOA)

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Trump to Pursue Higher Sales Age for Vaping Devices: ‘An Age Limit of 21 or So’

Trump told reporters his administration will release its final plans for restricting e-cigarettes next week but provided few other details

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Trump, Sales, Vaping
President Donald Trump speaks to reporters on the South Lawn of the White House in Washington, Nov. 8, 2019. VOA

President Donald Trump said Friday his administration will pursue raising the age to purchase electronic cigarettes from 18 to 21 in its upcoming plans to combat youth vaping.

Trump told reporters his administration will release its final plans for restricting e-cigarettes next week but provided few other details.

“We have to take care of our kids, most importantly, so we’re going to have an age limit of 21 or so,” said Trump, speaking outside the White House.

Currently the minimum age to purchase any tobacco or vaping product is 18, under federal law. But more than one-third of U.S. states have already raised their sales age to 21.

Trump, Sales, Vaping
FILE – A woman buys refills for her Juul at a smoke shop in New York, Dec. 20, 2018. VOA

A federal law raising the purchase age would require congressional action.

Administration officials were widely expected to release plans this week for removing virtually all flavored e-cigarettes from the market. Those products are blamed for soaring rates of underage use by U.S. teenagers.

However, no details have yet appeared, leading vaping critics to worry that the administration is backing away from its original plan.

Trump resisted any specifics on the scope of the restrictions.

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“We’re talking about the age, we’re talking about flavors, we’re also talking about keeping people working — there are some pretty good aspects,” Trump said.

Mint flavor

Underage vaping has reached what health officials call epidemic levels. In the latest government survey, 1 in 4 high school students reported using e-cigarettes in the previous month.

Fruit, candy, dessert and other sweet vaping flavors have been targeted because of their appeal to underage users.

Trump, Sales, Vaping
FILE – A man blows a puff of smoke as he vapes with an electronic cigarette, Oct. 18, 2019. VOA

On Thursday, Juul Labs, the nation’s largest e-cigarette maker, announced it would voluntarily pull its mint-flavored e-cigarettes from the market. That decision followed new research that Juul’s mint is the top choice for many high school students who vape.

With the removal of mint, Juul only sells two flavors: tobacco and menthol.

Vaping critics say menthol must be a part of the flavor ban to prevent teens who currently use mint from switching over.

‘Tobacco 21’ law

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Juul and other tobacco companies have lobbied in support of a federal “Tobacco 21” law to reverse teen use of both e-cigarettes and traditional tobacco products. The effort also has broad bipartisan support in Congress, including a bill introduced by Senate Majority Leader Mitch McConnell.

The logic for hiking the purchase age for cigarettes and other products is clear: Most underage teens who use e-cigarettes or tobacco get it from older friends. Raising the minimum age to 21 is expected to limit the supply of those products in U.S. schools.

Delaying access to cigarettes is also expected to produce major downstream health benefits, with one government-funded report estimating nearly 250,000 fewer deaths due to tobacco over several decades.

Still, anti-tobacco groups have insisted that any “Tobacco 21” law must be accompanied by a ban on flavors, which they say are the primary reason young people use e-cigarettes. (VOA)