New tariffs on China pose major risk for Trump

Punishing tariffs ordered by President Trump are set to go into place Friday on Chinese goods, escalating a high-stakes battle with major risks for the economy and his reelection.

GOP lawmakers have been pressuring Trump to get a deal with China that would lower tariffs hurting U.S. farmers and manufacturers, but their complaints have failed to move the president or yield progress in talks with Beijing.

After months of touting progress toward a final deal, Trump is set to take a different tack on Friday, when tariffs on $200 billion in Chinese imports will rise from 10 percent to 25 percent, a move Trump said is necessary to hold China to previous commitments.

{mosads}“We were getting very close to a deal, then they started to renegotiate the deal,” Trump told reporters Thursday. “We can’t have that.”

Republicans have been broadly in favor of Trump’s crackdown on China’s alleged theft of U.S. intellectual property, market manipulation and other trade barriers.

But some GOP lawmakers are growing impatient and frustrated by the steep toll of Trump’s trade war, more than a year after the president called such conflicts “good and easy to win.”

Those frustrations are most acute in farm states that have borne the brunt of China’s retaliatory tariffs on U.S. agricultural goods, and that poses a risk to Trump’s reelection strategy, particularly in Midwestern states.

“A lot of farmers have said to me, it’s hurting us temporarily. But the president’s doing the right thing because you can’t let the Chinese screw us on international trade,” said Sen. Chuck Grassley (R-Iowa) in a Tuesday interview with NPR after the forthcoming tariffs were announced.

{mossecondads}”So it’s time, I think, to strike a very strong, enforceable deal so that farmers, even nonfarmers, can get the certainty that they need,” Grassley added.

Several Republican senators warned Vice President Pence in a Tuesday lunch that Trump’s inability to close trade deals with China, along with Canada and Mexico, is hurting rural economies.

“We always take it first in agriculture,” said Sen. Pat Roberts (R-Kan.), chairman of the Senate Agriculture Committee. “There’s a lot of feeling in farm country that we’re being used as pawns in this whole business.”

Beijing has pledged to retaliate if Trump follows through with Friday’s tariff hike and could increase or expand import taxes on U.S. crops. American farmers have been hit with huge losses from previous tariffs in the trade war, and further import taxes on their China-bound goods could compound the harm of plunging commodity prices and falling foreign orders.

“The president’s got the right fight going on,” said Rep. Mike Conaway (R-Texas), ranking member on the House Agriculture Committee. “My only advice to the president and [U.S. Trade Representative Robert] Lighthizer and others is, get this done as quickly as you can because we’ve got real Americans suffering daily.”

Trump has downplayed the potential harm from Friday’s escalation.

“Whatever happens, don’t worry about it. It will all work out,” Trump said at Wednesday rally in Florida. “You know why? It always does.”

Trump’s power play on China comes as he enjoys the highest approval rating of his presidency and a booming economy, two factors that could give him leverage in the trade war.

Washington’s battle with Beijing is also more popular in industrial states like Ohio, Michigan, Pennsylvania and Wisconsin that swung the 2016 election to Trump. Those states are key to his reelection strategy.

While Democrats broadly agree with Trump’s critiques of China, he’s unlikely to receive support from the party amid the mounting costs of the trade war. Failed trade negotiations will give 2020 candidates an opening to tarnish the president’s economic record and deal-making ability.

Rep. Tim Ryan (D-Ohio), a 2020 presidential candidate, said he shares Trump’s concerns with Chinese trade policy, but criticized the president’s “dangerous” lack of strategy.

“It roils the markets, it doesn’t provide stability and he’s got no plan. So I’m not going to support this,” said Ryan, whose district includes the former General Motors plant in Lordstown.

“You’re with him one day, you think maybe he’s saying something that makes sense, and then a day later he changes his mind so he can break into the news cycle,” Ryan added.

Stephen Myrow, managing partner at Beacon Policy Advisors in Washington, said Thursday that Trump’s aggressive stance toward China reflects the split in Trump’s base between industrial states with Democratic roots and deep-red agricultural states.

“If you look at the states that he cares most about in the election, these are places where beating up on China plays well,” Myrow said.

“There’s a difference between the Farm Belt and the Rust Belt,” he said. “The Farm Belt ends up feeling the pain of the trade war the most because it’s easy for China to hit back against our commodities.”

Raising tariffs on China also threatens to slow economic growth through higher prices on thousands of consumer goods and manufacturing parts.

“That would no doubt trigger retaliation, which has already taken a toll on everything from farming to manufacturing,” wrote Diane Swonk, chief economist at Grant Thornton, in a Wednesday research note.

The trade conflict, she said, poses “mind boggling and growing” threats to the U.S. economy.