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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 EPA Finalizes Rollback of Key Obama Climate Rule that Targeted Coal Plants

The new Affordable Clean Energy (ACE) rule gives America's 50 states three years to develop their own emissions reduction plans

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Trump, Obama, Climate
EPA administrator Andrew Wheeler speaks with the media at the Environmental Protection Agency, June 19, 2019, in Washington. VOA

The Trump administration is rolling back rules to curb greenhouse gas emissions in the United States as scientists continue to warn countries to rapidly cut emissions to prevent the most drastic effects of climate change.

The Environmental Protection Agency (EPA) announced Wednesday it had finalized rules to replace the Clean Power Plan, former President Barack Obama’s initiative to cut global warming emissions from coal plants.

The new Affordable Clean Energy (ACE) rule gives America’s 50 states three years to develop their own emissions reduction plans by encouraging coal plants to improve their efficiency.

By contrast, the Clean Power Plan was designed to slash power plant carbon emissions by more than one-third from 2005 levels by 2030 by pushing utilities to replace coal with cleaner fuels like natural gas, solar and wind.

Trump, Obama, Climate
The Trump administration is rolling back rules to curb greenhouse gas emissions in the United States. VOA

The Obama-era plan was never enacted, however, because of lawsuits filed by Republican states and hundreds of companies. The Supreme Court halted its enactment in February 2016.

“States will be given the flexibility to design a plan that best suits their citizens environmental and energy needs, according to a summary of the new rules,” according to a summary of the ruling.

EPA Administrator Andrew Wheeler said at a Washington news conference, “Our ACE rule will incentivize new technology which will ensure coal plants will be part of a cleaner future.”

But environmentalists, many Democratic lawmakers and some state attorneys general have labeled the new rules the “Dirty Power Plan,” maintaining they will lead to increases in carbon emissions and other pollutants over the next few decades.

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“At a time when Americans are urging us to take meaningful climate action and reduce our carbon footprint, today’s Dirty Power Plan is a failure of vision and leadership,” said Joe Goffman, executive director of Harvard University’s Environmental & Energy Law Program.

Even the EPA’s own regulatory analysis last year estimated Trump’s ACE rule would kill an additional 300 to 1,500 people each year by 2030 because of more air pollution from the U.S. power grid.

Trump has, nevertheless, dismissed scientific warnings on climate change, including a report this year from scientists at more than a dozen federal agencies noting that global warming from fossil fuels “presents growing challenges to human health and quality of life.”

Trump promised early in his presidency to kill the Clean Power Plan as part of an effort to revive the ailing coal industry, contending it exceeded the federal government’s authority.

Trump, Obama, Climate
The Environmental Protection Agency (EPA) announced Wednesday it had finalized rules to replace the Clean Power Plan. Pixabay

Wednesday’s announcement to overturn Obama-era climate rules is part of a broader Trump administration effort to roll back “a multitude of health, safety environmental and consumer protections at the behest of corporate interests,” the non-profit consumer rights advocacy group Public Citizen concluded in a report released in May.

The report said shortly after Trump took office in early 2017, the National Association of Manufacturers (NAM) sent the Trump administration a list of 132 regulations that “concerned” members and detailed their “preferred course of action to address its concerns on each of the regulations.”

The report concluded that “Regulatory agencies have granted or are working on granting 85 percent of the wishes related to rulemakings on a list of deregulatory demands submitted” by NAM.

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The new rule is expected to take effect within 30 days. (VOA)