Retaliation on Trade

Republicans pressure Trump to drop tariffs after Trudeau retaliation, but it might not matter, say U.S. trade watchers

By PETER MAZEREEUW      
‘Whether or not you can pressure an administration that has no policy, no direction, and no philosophy, I don’t know,’ says ex-Democratic U.S. trade representative Mickey Kantor.
Prime Minister Justin Trudeau, along with Foreign Affairs Minister Chrystia Freeland, announced plans on May 31 to bring in retaliatory tariffs on certain U.S. exports to Canada, beginning July 1, if President Donald Trump’s administration did not reverse newly-imposed tariffs on Canadian steel and aluminum. The Hill Times photographs by Andrew Meade

Republican lawmakers are pushing back against U.S. President Donald Trump’s tariffs on Canada, Mexico, and the U.S., likely making the case that the move could pave the road to his impeachment, say a former trade adviser to U.S. politicians and a Canadian lobbyist tracking the trade battle.

“The only hope there is the Republican leadership gets inside the head of the administration to say, ‘Whatever you’re trying to achieve, you’re going to lose the House in November. And if you lose the House in November, we’re immediately into questions of impeachment,’” said Flavio Volpe, president of Canada’s Automotive Parts Manufacturers’ Association, a lobby group for an industry that relies on steel and aluminum crossing the Canada-U.S. border.

“That’s an argument they’ll certainly make,” said a former trade adviser to Republican and Democratic lawmakers, adding, “I don’t think that it will cause the president to withdraw the tariffs.”

Prime Minister Justin Trudeau (Papineau, Que.) could hardly have hoped for a better outcome after he responded to Mr. Trump’s tariffs on steel and aluminum from Canada, Mexico, and the EU by imposing retaliatory penalties—effective July 1—on U.S. steel and aluminum, and a variety of other goods produced in U.S. swing states or the electoral districts of influential Republican lawmakers. Numerous Republican politicians have openly spoken against Mr. Trump’s decision, U.S. industry groups have done the same, and even the powerful conservative advocacy groups backed by the billionaire Koch brothers, including Americans For Prosperity, are campaigning against Mr. Trump’s tariffs.

It’s not clear to what extent the Republican backlash is related to Canada’s counter-tariffs, however. Several lobbyists and analysts following U.S. trade issues closely said the penalties brought in by Canada’s government have created some pressure on Republicans and the White House, as intended, by hitting the pocketbooks of businesses that export to Canada and are represented by Republican lawmakers. But some of the politicians who have spoken out or taken action against the tariffs—including Republican House speaker Paul Ryan, who was targeted by Canada’s counter-tariffs, and the Republican Senate Foreign Relations Committee chair Bob Corker—have already said they won’t run for re-election, theoretically diminishing the threat unhappy constituents would pose to them.

“Clearly across the country, in many places, what they have done is going to adversely affect campaigns for Republicans in the House and Senate where the Democrats have a chance, certainly to win the House, if not the Senate,” said Mickey Kantor, who served as the U.S. trade representative, the highest-ranking trade official in the government, under former Democratic president Bill Clinton.

“And that’s exactly what puts the Republicans under pressure. Now, whether that can pressure this president, is quite another question,” he said.

“Whether or not you can pressure an administration that has no policy, no direction, and no philosophy, I don’t know,” he said.

Mr. Trump took aim squarely at Canada after the G7 meeting in Charlevoix, Quebec last weekend, and a closing press conference in which Mr. Trudeau said Canada wouldn’t be pushed around by the U.S. on trade. Mr. Trump fired off a series of tweets in which he called Mr. Trudeau “meek and mild” and “dishonest and weak.” He left the G7 summit early, refusing to sign onto declarations about reducing plastic waste and climate change.

Mr. Trump’s chief economic adviser, Larry Kudlow, appeared on CNN Sunday that Mr. Trudeau had “stabbed us in the back.” White House trade adviser Peter Navarro told Fox News “there’ a special place in hell for for any foreign leader that engages in bad faith diplomacy with President Donald J.  Trump,” referencing Mr. Trudeau.

‘Dicey’ for Republicans to take on Trump

The Democrats are thought to have a strong chance of taking back majority control of the House from the Republicans in November’s mid-term elections, needing to win 24 Republican seats while keeping their own, with the party polling well and more Republican-held seats appearing vulnerable than those held by Democrats, according to reporting from The Financial TimesThe New York Times, CNN, Fivethirtyeight.com, and others.

Special counsel Robert Mueller’s investigation into the Trump team’s possible collusion with Russia during the 2016 election campaign, once completed, could produce evidence that Democrats could use to begin impeachment proceedings. If a majority of House members vote to impeach, the U.S. Senate would ultimately decide whether to accept that decision. Two-thirds of Senators would have to vote in favour of impeachment, The New York Times reported. The Republicans have a majority in the Senate, however, and are thought to have a good chance at holding it after the midterms.

“I’m not sure that he is convinced” that impeachment is a realistic outcome, said the former trade adviser, speaking on a not-for-attribution basis. “And at the end of the day, he doesn’t care about anyone but himself.”

Republicans vying for re-election are under pressure to support Mr. Trump’s actions, as the president can undermine their bids to stay in office by backing their challengers for the Republican nomination, which is not automatically awarded to incumbents, said Maryscott Greenwood, the CEO of the Canadian American Business Council, a government relations consultant at Dentons’ in Washington, and a former U.S. diplomat to Canada.

“That’s why it’s dicey to take him on,” she said.

“What [Mr. Trump] is doing is politically popular in the Republican base among Trump voters,” she added.

Mr. Trump’s White House team is digging into the “loyalty” of Republican members of Congress as it decides which races Mr. Trump should lend his support to, or not, CNN reported last week.  The White House is also considering doubling down, and imposing additional trade penalties on Canada in response to Mr. Trudeau’s retaliatory tariffs, The Washington Postreported last week.

Some Republicans may not feel pressured to react to Canada’s threat of counter-tariffs until it becomes a reality, and businesses in their district start to feel financial pain, said Ms. Greenwood.

Bill Huizenga, the Republican representative for Michigan’s second district, told The Hill Times that delay could be a reality for some lawmakers, but “for some of us it’s very ripe and we want to deal with it.”

“Some polling will say that people are in favour of this, and the population are in favour of this, but part of that might be they haven’t seen some of the ramifications of it. I’m not just talking with Canada and NAFTA. I’m talking larger scale,” he said.

“What I have expressed both publicly and privately is that I’m afraid that the actions from the [U.S.] administration, while they may be well meaning, are a misguided effort to recapture a world that really no longer exists that way that it once did.”

Republican Senator brings bill to rein in president

Sen. Corker made a splash last week by introducing a bill that would force the president to seek approval from Congress before introducing tariffs under national security provisions of the Trade Expansion Act of 1962, which Mr. Trump used to bring in the penalties against steel and aluminum from Canada and other countries.

That bill would apply to any decisions made in the past two years as well, essentially giving Congress a veto over Mr. Trump’s tariffs on Canada. Sen. Corker has support from nine other Senators in both parties, The Denver Post reported. The bill has a tough road ahead, however. Time to pass it before the midterms is running short, with a summer break looming. The former trade adviser said the bill was unlikely to attract enough support from Republicans—wary of a backlash from Mr. Trump—and Democrats, some of whom are protectionist, and favour U.S. trade restrictions.

Mr. Trump called Sen. Corker on the day he introduced the legislation, and the two had what the Senator described as a “lengthy” and “heartfelt” conversation, CNN reported. Mr. Trump would have the power to veto the legislation if it advanced through both chambers of Congress.

Mr. Trump’s treasury secretary, Steven Mnuchin, also urged the president to exempt Canada from the steel and aluminum tariffs, ABC News reported last week, after Finance Minister Bill Morneau (Toronto Centre, Ont.) and his counterparts in the G7 issued a statement urging him to do so.

Mr. Trump hasn’t shown signs of backing down yet, tweeting late last week that Mr. Trudeau was “being so indignant” and that Canada’s protected dairy sector was “killing our agriculture.”

“Trudeau has no option but to retaliate,” said Mr. Kantor. “Simply because, for domestic purposes, if not anything else, I would assume that the business community and regular folks in Canada are upset at what the U.S. has done and demand that Canada respond.”

Editor’s note: this story was updated online to include the outcome of the G7 summit that ended June 9.

peter@hilltimes.com

@PJMazereeuw

Who put Canada’s tariff list together, and how

Canada’s list of retaliatory tariffs includes 44 categories of steel and aluminum products—a tit-for-tat response to the U.S. tariffs on Canada—and 84 categories of other products, ranging from playing cards to yogurt.

Those other categories in particular were strategically selected by Canadian officials to put pressure on businesses in the electoral districts of influential U.S. Senators and representatives, particularly Republicans.

Public servants in Global Affairs Canada, including in the U.S. embassy and consulates, worked with peers in the Finance, Agriculture, and Innovation departments to assemble the list, according to Global Affairs spokesperson John Babcock. The offices of the ministers for those departments and the PMO and PCO were also involved, he said.

The government tried to ensure the products being considered for inclusion on the list were finished products, and therefore unlikely to be materials Canadian companies rely upon to make their own goods, and to ensure that non-U.S. alternatives were easily accessible for Canadian consumers, said an official from Global Affairs, speaking on background.

Staff in Global Affairs and the Canadian embassy and consulates would have brought in the knowledge of which states exported which products, said Peter Clark, a trade-focused consultant at Grey, Clark, Shih, and Associates and a former trade official for the Canadian government.

“The steel items are a no-brainer—they simply  copied the U.S. list and invited Canadians to comment to ensure they can avoid injury to Canada,” he said.

Canada has sharpened its approach to assembling these retaliatory tariff lists over the years, said Colin Robertson, a vice president of the Canadian Global Affairs Institute and former Canadian diplomat in the U.S.. Mr. Robertson said he was involved with similar efforts related to softwood lumber disputes in the 1990s and mid-2000s.

“We worked closely with Finance and Industry [Canada] and our own sector specialists. We did not reach out to consulates,” he said in an emailed statement. “We also have more data crunching capacity today to figure out where goods are produced and link it to congressional districts and states.”

Canada’s last government under prime minister Stephen Harper took a more thorough approach to assembling a list of retaliatory tariffs after the Obama administration supported Country of Origin Labelling requirements—commonly abbreviated to COOL—for Canadian meat.

Finance Canada is responsible for tariffs, and took the lead on assembling the COOL list, said Adam Taylor, a trade consultant for Export Action Global who was working as a senior staffer for then-trade minister, now Conservative MP Ed Fast (Abbotsford, B.C.).

“The bureaucracy are best equipped to know that stuff, because our embassy is supposed to track who’s influential with the administration,” and who you can “raise the ire of” if you need leverage, said Mr. Taylor.

The list of counter-tariffs included orange juice, targeting Florida, an important swing state where Republican Governor Rick Scott is challenging Democratic Senator Bill Nelson for his seat; whisky, targeting Kentucky, the home of Republican Senate majority leader Mitch McConnell; yogurt, targeting Republican House speaker Paul Ryan in Wisconsin, the second-largest exporter of the product to Canada among U.S. states, after New York; and more.



Both comments and pings are currently closed.