Trump’s economic policies spur GOP angst

GOP nerves are on edge over the direction of President Trump’s economic policy, given the prospects for new tariffs and the resignation of Gary Cohn, whom they viewed as a voice of reason within the administration.

For a GOP used to dealing with pro-trade Republican presidents, the threat to impose a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports has been a thunderbolt.

It has left lawmakers worried about what could come next and whether Trump might follow through on threats to rip up the North American Free Trade Agreement (NAFTA) with Canada and Mexico or limit car imports from Europe.

{mosads}“It’s just not a good thing to be threatening trade wars,” said Sen. Ron Johnson (R-Wis.). “If this is a grand strategy in terms of a tough negotiating stance, I hope the negotiation succeeds. It’s just, from my standpoint, a pretty risky strategy if that’s what this is all about.”

Republicans won some good news on Wednesday when the White House signaled that Trump’s plan to impose tariffs on steel and aluminum imports could be modified to exclude U.S. allies.

“We expect that the president will sign something by the end of the week and there are potential carveouts for Mexico and Canada based on national security, and possibly other countries as well,” White House press secretary Sarah Huckabee Sanders told reporters.

Her comments suggested a GOP effort to sway the administration to soften Trump’s approach was succeeding.

On Wednesday afternoon, more than 100 House lawmakers led by Ways and Means Committee Chairman Kevin Brady (R-Texas) delivered a letter to Trump urging caution.

“Because tariffs are taxes that make U.S. businesses less competitive and U.S. consumers poorer, any tariffs that are imposed should be designed to address specific distortions caused by unfair trade practices in a targeted way while minimizing negative consequences on American businesses and consumers,” they wrote.

Senate Republicans have lobbied senior administration officials in recent days.

“I’ve talked to administration officials a lot in the last few weeks, including this morning and last night, trying to encourage them to, in my view, take a more targeted approach that would be better for the people they’re trying to protect,” said Sen. Rob Portman (R-Ohio), a leading trade expert in Congress who served as U.S. Trade Representative under George W. Bush.

Sen. John Hoeven (R-N.D.), like other senators from farm states, is worried that the tariffs could lead to retaliation against U.S. exports. He shared his misgivings with Agriculture Secretary Sonny Perdue.

“The concern is a lot of time that when it comes to retaliation they go after ag first,” said Hoeven. “The effort right now is to talk to the administration and find out what they’re going to do.”

But even if the steel and aluminum tariffs that Trump is expected to announce on Thursday are softened, it will not completely calm Republicans unnerved by signs that their president is leaning into his economic nationalist policies.

Cohn’s decision to resign, which was linked to the tariff announcement, was widely seen as a sign that forces moderating Trump’s populist instincts on trade were losing power.

Cohn is a former Goldman Sachs chief operating officer who was instrumental in the passage of Trump’s tax-reform package. He frequently battled with officials within the administration who disagreed with him on trade, climate change and other issues.

“I think he provided President Trump with a valuable source of advice on trade policy,” said Sen. Lamar Alexander (R-Tenn.), who noted that Cohn reminded Trump of the negative fallout from a decision by then-President Bush in 2002 to impose global steel tariffs.  

Just as worrisome for Republicans is that other voices within the administration could be further elevated with Cohn gone.

Sen. Lindsey Graham (R-S.C.) has publicly criticized White House policy adviser Stephen Miller, who is seen as having a significant influence on immigration, among other issues. Director of Trade Peter Navarro and Commerce Secretary Wilbur Ross are among the officials who pressed Trump for a protectionist approach on trade.

Senate Republican Whip John Cornyn (Texas) said he was worried about recent comments by Treasury Secretary Steven Mnuchin linking the tariff threat to NAFTA.

“I saw some comments from Mr. Mnuchin sort of tying the tariffs to NAFTA and saying, ‘Well, this may be an issue in the negotiation on NAFTA,’ ” he said.

“It seems to me he’s connected those two. I was already concerned about NAFTA and hope this doesn’t add to the complexity,” Cornyn said.

Cornyn expressed concern about the advice the president will receive from senior advisers on trade issues once Cohn is gone.

“I want to make sure the president is getting good advice because of the concerns raised by not only these tariffs but trade generally. I think Mr. Cohn was one of the best people giving him good advice,” he said.

Several GOP lawmakers are privately voicing pessimism over the likelihood of Trump finding a proponent of free trade with as much expertise and clout as Cohn to become the next director of the National Economic Council.

“Who from the A team with any gravitas is going to take that job?” remarked one Republican senator, pointing to the exodus of senior officials from the administration.

Senators at a lunch meeting on Wednesday discussed whether Trump’s actions could be blocked by a court ruling. Others are pushing a legislative response.

Sen. Mike Lee (R-Utah) has a bill that would narrow Trump’s ability to invoke national security as a justification for tariffs, but it is seen as a long shot.

Sen. Jeff Flake (R-Ariz.) noted that the bill would need to win Trump’s signature or muster the two-thirds votes in both chambers to override a veto.

“Sixty-seven votes would be tough to come by,” Flake said, citing the threshold in the Senate. “The best route right now is to try to talk the president out of it.”