The war of words over trade if not the trade war itself continues unabated this week with warnings from President Donald Trump’s Republican allies in Congress about the potential for adverse economic fallout from the sudden imposition of tariffs and taxes by the U.S.
House Speaker Paul Ryan (R-Wisconsin) told journalists he was “extremely worried” about sowing discord with Mexico and Canada and the consequences of a trade war.
Canadian Prime Minister Justin Trudeau wasted no times no time in attacking Trump’s tariff proposal and Mexican officials have abruptly given up on efforts to re-negotiate the North American Free Trade Agreement, which is critical to companies tied to the North American Auto Industry.
Meanwhile, Trump, in response to shouted questions from reporters at a White House event, said he “wasn’t backing down.”
(Trump threatens to tax Euro-made vehicles again. Click Here for the story.)
“We have a very bad deal with Mexico,” Trump said, adding he didn’t think the U.S. would wind up stumbling into a trade war, backing off a weekend tweet in which he suggested a trade war was easy to win.
Politico, a website dedicated to U.S. Politics, reported that Gary Cohn, the former Goldman Sachs executive who serves as Trump’s top economic adviser, said pro-free trade officials in the Trump administration are hoping parade of senior GOP lawmakers, donors, lobbyists and business groups will convince Trump that his proposed tariffs will damage the U.S. economy as Ryan said.
“West Wing aides led by Cohn, who directs the National Economic Council, are planning a White House meeting for Thursday with executives from industries likely to be hurt by big tariffs on imported steel and aluminum, two officials familiar with the matter said. The meeting is tentative and the participants have not yet been set in stone, but industries that could be hit hard by the tariffs include automakers and beverage companies,” Politico said.
(Click Here to see more about the halted NAFTA talks and Trump’s proposed tariffs on steel, aluminum.)
Politico reported that Republicans fear a trade war will increase the cost of goods for voters. Indeed, a new report released Monday by the Trade Partnership Worldwide, a private analytical firm, found that the tariffs would mean sacrificing 180,000 jobs in the broader U.S. economy. Other conservative economists have argued those numbers could reach the millions, it said.
Farmers, who were loosely aligned with Trump in 2016, also could be squeezed by a trade war. While only about 3% of Chinese-made steel is sold to American customers, Chinese customers are among the largest purchasers of soybeans grown by American farmers.
GOP election managers are counting on a strong economy with record employment, coupled with rising incomes and a strong market indexes, to help fight off losses to Democrats in the midterm elections this coming November. Historically, the party holding the White House – this year it’s the Republicans – loses seats in a midterm election and Democrats have been emboldened of late by polls that show Trump is unpopular with many parts of the American electorate.
(To see which Trump allies are ripping his tariff plan, Click Here.)
While consumer confidence is near record highs, which usually good for incumbents, sliding car sales and rising inflation and high prices generally are not.