Advertisement

SKIP ADVERTISEMENT

Trump Reaffirms Commitment to Tariffs but Opens Door to Compromise

President Trump is eager to impose tariffs, and was reassured his decision was right by Monday’s stock market rebound, a person close to the White House said.Credit...Al Drago for The New York Times

(Update, March 6: Gary D. Cohn, President Trump’s top economic adviser and a key pro-trade voice in the White House, said Tuesday that he would resign. Read more »)

WASHINGTON — President Trump, facing an angry chorus of protests from leaders of his own party, including the House speaker, Paul D. Ryan, insisted on Monday that he would not back down from his plan to impose across-the-board tariffs on steel and aluminum imports. But the White House was devising ways to potentially soften the impact of the measures on major trading partners.

The intense maneuvering, which began before Mr. Trump’s unexpected announcement of the tariffs last Thursday, is likely to delay any formal rollout of the measures until next week, according to several officials who have been briefed on the deliberations.

On Monday, Mr. Ryan, the most powerful Republican in the House, broke with the president, declaring through a spokeswoman, “We are extremely worried about the consequences of a trade war and are urging the White House to not advance with this plan.” The tariffs, Mr. Ryan’s spokeswoman said, would “jeopardize” the economic gains from the recent Republican tax cuts.

Mr. Trump appeared little moved by the pushback. One of his all-important barometers — the stock market — rebounded on Monday after falling sharply immediately after the announcement of the tariffs last week as the Republican dissent fueled optimism that Mr. Trump would ultimately reverse course. Opponents of tariffs, including many economists, warn they could damage economic growth by igniting a ruinous trade war, a prospect that Mr. Trump has alternately welcomed or dismissed as unlikely.

But a person close to the White House said that the president was itching to impose tariffs, and that Monday’s stock market rebound had reassured Mr. Trump that he was in the right.

“We’re not backing down,” the president said at the White House on Monday, as he reeled off a familiar litany about trade deals that he said had driven out factories and deprived American workers of jobs.

But Mr. Trump did open the door to a compromise, at least with Canada and Mexico, which are in negotiations with the United States to revise the North American Free Trade Agreement. If the two countries agree to a “new & fair” Nafta, they could be exempt from the tariffs, Mr. Trump said in a tweet on Monday morning.

The debate over tariffs has become a litmus test for Mr. Trump, putting his longstanding suspicion of free trade up against the equally fervent support for it among Republicans and members of his own administration.

Video
bars
0:00/1:40
-0:00

transcript

Defending President Trump’s Tariffs (With a Can of Coke)

Here’s how President Trump and his administration are selling the decision to impose tariffs on steel and aluminum despite strong Republican pushback.

“This trade policy will be disastrous.” “It’s only going to hurt American consumers and our allies. Please reconsider your solution.” “There will be retaliation. There will be a response. And I think it’s extremely unfortunate.” President Trump’s announcement to impose tariffs on steel and aluminum is sparking criticism from members of his own party. “We are extremely worried about the consequences of a trade war and are urging the White House to not advance with this plan.” Gary Cohn, the chief economic adviser, has even threatened to resign if the president goes forward with his plan. Here’s how Trump and his administration are selling their decision despite strong Republican pushback. “This is a can of Campbell’s soup.” That’s Wilbur Ross, the secretary of commerce. “Here’s a can of Coca-Cola.” Ross is using these steel and aluminum items to show that an increase in price would be minuscule. “Coca-Cola has 3 cents’ worth of aluminum in it. So if that goes up 10 percent, that’s three-tenths of a cent.” Peter Navarro, a trade policy adviser, used a similar argument. “A six-pack of beer with a 10 percent aluminum tariff only goes up by a cent and a half.” But a higher price for metal isn’t the main concern for some critics. Many economists fear a bigger consequence would be a trade war. That hasn’t swayed the president, who appears to see that as an advantage. “When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win.” Navarro agrees. “I don’t believe any country in the world is going to retaliate for the simple reason that we are the most lucrative and biggest market in the world.”

Video player loading
Here’s how President Trump and his administration are selling the decision to impose tariffs on steel and aluminum despite strong Republican pushback.CreditCredit...Tom Brenner/The New York Times

Inside the White House, the debate has pitted hard-liners like Peter Navarro, the president’s trade adviser, and Commerce Secretary Wilbur Ross against more pro-trade voices, like Mr. Trump’s chief economic adviser, Gary D. Cohn, who argue that the measure could disrupt international alliances and global supply chains.

Republican lawmakers have criticized tariffs as undercutting the $1.5 trillion tax cut that they worked in lock step to pass last year, saying tariffs are essentially a tax increase that would slow economic growth. On Monday, they floated the idea of congressional action to try to block tariffs, should the president impose them.

Representative Kevin Brady, Republican of Texas and chairman of the House Ways and Means Committee, circulated a letter Monday expressing concern over the tariffs. Senator Dan Sullivan, Republican of Alaska, said he spent the weekend speaking with members of Congress and “senior administration officials” about his opposition to the president’s plan.

“As you know the administration is split itself,” Mr. Sullivan said from the annual CERAWeek energy conference in Houston, noting that details of the tariffs remain sparse.

Mr. Trump has heard all sides’ arguments, but his view has remained steadfast, one White House official said.

Still, the official said, the president is mindful enough of the arguments against potentially tanking the stock market that he has been somewhat open to a move to narrow the scope and effects of the tariffs while avoiding the perception that he was relenting. That would echo the approach the administration took to winding down the president’s promises on the Deferred Action for Childhood Arrivals, or DACA, program, which has protected young immigrants brought illegally to the United States as children.

The unsettled nature of a final policy was magnified by a conversation on Sunday between Mr. Trump and Prime Minister Theresa May of Britain.

Ms. May, a person briefed on the call said, warned Mr. Trump how dangerous the tariffs would be. Mr. Trump disagreed, but concluded the conversation by telling Ms. May that he had not made a final decision on what to do.

The president originally announced that he wanted to put new tariffs into effect this week, but a legal review has not been concluded. On Sunday, Mr. Navarro said the tariff announcement could come this week or the following week at the latest. He also reaffirmed that companies might be able to seek exemptions for certain foreign products they need for their business, a process likely to lead to months of furious lobbying.

A coalition of 25 industry associations representing farmers and companies that use steel and aluminum has started lobbying the administration and lawmakers, arguing that the tariffs are far broader than necessary and would create higher prices on American companies that buy and use metals.

The president and his advisers have repeatedly maintained that any tariffs will be imposed on imports from all countries without exception. The Commerce Department has concluded that imports of steel and aluminum pose a threat to national security, a determination that gives the president broad authority under United States law to impose tariffs.

Image
Foreign Minister Chrystia Freeland of Canada, left, Economy Secretary Ildefonso Guajardo of Mexico, center, and Robert Lighthizer, the United States trade representative, in Mexico City on Monday. Neither Canada nor Mexico appeared mollified by the prospect of a tariff exemption in exchange for bending to United States demands on Nafta.Credit...Jorge Nunez/European Pressphoto Agency

But that legal standing will undoubtedly be challenged by other countries and companies, both in court and at the World Trade Organization, which requires that members treat all other members equally on trade. Creating exceptions for countries like Canada and Mexico for non-national security reasons like Nafta could invite challenges at the World Trade Organization, said Jennifer Hillman, a professor at Georgetown University Law Center.

“Unequivocally, I think there will be cases filed at the W.T.O., and there is plenty of ground to challenge this,” Ms. Hillman said.

On Monday, Robert Lighthizer, the United States trade representative, said Mr. Trump decided to link a tariff exemption to a revised Nafta deal “a couple of days ago” as Mr. Lighthizer prepared to travel to Mexico City to meet with his Mexican and Canadian counterparts.

“It makes sense, since this is a major irritant, to have it be considered,” Mr. Lighthizer said in Mexico City after meeting with Economy Minister Ildefonso Guajardo of Mexico and Foreign Minister Chrystia Freeland of Canada. He said the situation could be modified for Mexico and Canada given a successful Nafta renegotiation, as well as “perhaps other countries in other contexts where we have those kinds of problems.”

Even if Canada and Mexico were exempted from the tariffs of 25 percent on steel and 10 percent on aluminum, officials said the United States would impose a quota on those countries’ exports to prevent them from being used as a conduit for metals shipments from other nations.

Neither Canada nor Mexico appeared mollified by the prospect of a tariff exemption in exchange for bending to United States demands on Nafta. Ms. Freeland reiterated comments that any action that ensnared Canada would be “completely unacceptable.”

“México shouldn’t be included in steel & aluminum tariffs,” Mr. Guajardo said in a tweet. “It’s the wrong way to incentivize the creation of a new & modern #NAFTA.”

Michael Camuñez, a former Commerce Department official who advises international firms doing business in Mexico, called the proposed tariffs and the tweet a “terrible development” for the Nafta negotiations “because all parties have indicated that they will not negotiate with a gun against their head.”

The talks in Mexico City produced no meaningful progress, and ultimately would be decided by one man — Mr. Trump, Mr. Camuñez said. Negotiators have continued to clash over provisions in the pact, including rules for auto manufacturing, and the United States has continued to insist on changes that its trading partners say are nonstarters.

Mr. Camuñez said Mexico and Canada would retaliate “with good reason” if the steel and aluminum tariffs were imposed, an outcome that could lead to a breakdown in negotiations. “That would escalate tensions and that could lead the president to conclude that these negotiations aren’t going anywhere and blame the Mexicans and the Canadians,” Mr. Camuñez said.

Mr. Trump has threatened additional retaliation if other nations erect their own trade barriers, saying in a tweet over the weekend that the United States would make it harder for the European Union to sell cars in the country if it imposes tariffs on American imports.

Reporting was contributed by Ian Austen from Ottawa, Elisabeth Malkin from Mexico City, Lisa Friedman from Houston and Thomas Kaplan from Washington.

Get politics and Washington news updates via Facebook, Twitter and the Morning Briefing newsletter.

A version of this article appears in print on  , Section A, Page 1 of the New York edition with the headline: Trump Resolute As G.O.P. Leaders Criticize Tariffs. Order Reprints | Today’s Paper | Subscribe

Advertisement

SKIP ADVERTISEMENT