Trump aides scramble to contain a trade war
While President Donald Trump dined with the British royal family, his team back in Washington was rushing to deal with the expanding trade war he left behind.
Administration officials started the week with a multi-front scramble as they sought to ease worries about another market-shaking tariff escalation, explain the president’s thinking to allies and salvage negotiations with lawmakers over his signature trade agreement with Mexico and Canada.
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Trump says he’ll hit Mexico with escalating tariffs starting next Monday unless the country does more to stem the flow of Central American migrants seeking asylum in the United States. The threat is already infuriating lawmakers, who warn that such a move could damage a strong U.S. economy and undermine efforts to win congressional approval of the USMCA, one of Trump’s top legislative priorities.
“I don’t even want to think about it,” said Sen. John Cornyn (R-Texas) of the potential economic fallout that could hit his state if Trump slaps tariffs on Mexico. He warned of dire consequences for Trump’s legislative agenda, too. “I think this calls into question our ability to pass the USMCA.”
Sen. Joni Ernst (R-Iowa), who spoke with Trump by phone on Friday, said she emphasized to the president that Republicans should focus on approving the new North American trade deal and then shift separately to the situation on the border. But Trump was undeterred, she said. “He’s a tariff guy.”
“I’m not pleased,” Ernst said, predicting the party would concentrate on trying to sway Trump in the coming week. “Hopefully he’ll be receptive. But right now he’s not that receptive.”
Few Republicans offered much support for the move on Monday evening, according to interviews with a half-dozen GOP senators.
“I’m concerned both with China and Mexico,” said Sen. Rand Paul (R-Ky.), a close Trump ally. “Worldwide tariffs are what led to the exacerbation of the Great Depression. … Tariffs are a bad idea. Interruption of trade is a bad idea.”
The White House plans to send an official to Senate Republicans’ policy lunch on Tuesday to answer questions about the pending Mexico tariffs. Trump’s aides, including members of the White House legislative affairs team, have sought to tamp down frustrations in Congress by separating the issues and encouraging lawmakers to not let their opposition to the tariffs stand in the way of approving the USMCA.
White House officials, who weren’t authorized to speak on the record, said lawmakers haven’t yet told them directly that they intend to hold up the USMCA as a result of the tariff threat, and they maintained outward confidence in the deal’s prospects. “If you put this on the floor, it will pass,” one White House official said.
Some White House aides also privately held out hope that Trump wouldn’t go forward with the tariffs, given the divide inside the administration over the move.
Senate Republicans were just coming off a high point after six of them trekked to the White House this spring and finally got Trump to back off the steel and aluminum tariffs on allies, raising hopes for passage of the new trade deal. A legislative effort to restrict Trump’s national security tariff authority had stalled, but the GOP found that diplomacy could move Trump — though it took them a year to do it.
This time around Trump is moving so quickly that Republicans’ tariff legislation wouldn’t even block the new tariffs on Mexico. Rather than saber rattle over another round of legislative battles with the president, most Republicans prefer to hash things out behind closed doors.
“Sometimes in his frustration [Trump] expresses the intent to do certain things, but after calm reflection and consultation with the members of the Congress has decided maybe to pursue a different course,” Cornyn said. “Legislation obviously requires a presidential signature. The better course is to have some discussions in private.”
The president’s relations Congress had already devolved into a worsening spectacle in recent weeks.
The White House is trying to ease tensions with House Speaker Nancy Pelosi, who railed against the administration’s decision last week to send a draft statement to Congress that paves the way for moving forward with a vote on the trade deal. Pelosi viewed the move, which the White House downplayed as a procedural step, as an effort to cut short lawmakers’ review of the trade deal and ratchet up pressure on Congress to quickly pass it.
Democrats so far have been dismissive of Trump’s latest tariff threat. Rep. Debbie Dingell (D-Mich.) raised her concerns about the tariffs during a closed-door leadership meeting on Monday night. In response, Pelosi suggested it was one of Trump’s diversions to distract from last week’s statement from Robert Mueller about the Russia investigation, according to two sources familiar with the exchange.
U.S. Trade Representative Robert Lighthizer spoke directly to Pelosi to explain that last week’s USMCA statement wasn’t intending to force lawmakers’ hands, according to a person familiar with the matter. White House staffers have also talked to Pelosi’s staff this week about both the possible tariffs and the speaker’s frustrations with the White House’s handling of the USMCA statement, the person said.
Trump administration officials are fanning out to address the tensions in coming days.
Lighthizer is scheduled to hold calls and meetings with five lawmakers this week as part of his ongoing push to sell the USMCA. Vice President Mike Pence plans to make another pitch for passage of the trade deal during a speech in Pennsylvania on Thursday, officials said.
Trump administration officials also must navigate a sharp backlash among investors and businesses, which see the tariffs as a major threat to the economy and stock market.
“We’re taking it seriously and we’re operating as if it is going to go into effect,” said Neil Bradley, chief policy officer at the U.S. Chamber of Commerce, which strongly opposes the tariffs. “This wasn’t an off-handed comment, responding to a question or a social media post. The White House released a detailed proposal.”
Business groups are warning that the tariffs would raise consumer prices on everything from automobiles to avocados. An analysis by the Chamber found that a 5 percent tariff would result in a potential tax increase on U.S. businesses and consumers of $17 billion. That would jump to $86 billion if the tariffs were to reach 25 percent, which Trump said would happen on Oct. 1 if no agreement has been reached.
Trump’s tariff threat is also forcing business groups to reroute advocacy efforts to get the USMCA passed by Congress. The Chamber, which has been working with the National Association of Manufacturers and more than 200 organizations to lobby for USMCA passage, is expected to focus its efforts on pushing for a reversal of the Mexico tariffs if they go into effect.
Foreign officials are joining the business groups in their opposition campaign. Canadian and Mexican officials, shocked by the latest tariff threat, publicly insisted that the USMCA trade deal is still on track. But in private, officials from both countries were scrambling to better understand the fallout from the announcement.
Mexico’s foreign minister said he’s planning to meet with Secretary of State Mike Pompeo on Wednesday. While the State Department declined to confirm the meeting, multiple administration officials confirmed it has been scheduled and other senior aides are expected to participate, including acting Homeland Security Secretary Kevin McAleenan.
The huddle is part of a full-court press by Mexican government officials, who have descended on Washington in recent days to convince the administration that Trump’s proposed new tariffs would be economically disastrous and foolhardy.
Some Mexicans were holding out hope that this was another empty scare, citing Trump’s history of making big threats and rolling them back at the last minute.
They pointed to earlier this year when Trump threatened to close the U.S.-Mexico border, prompting widespread criticism from business groups and lawmakers on both sides of the aisle.
Trump ultimately did not close the border and instead gave Mexico a “one-year warning” to crack down on illegal immigration and drug trafficking at the border.
“It remains to be seen if it translates to an actual public policy piece from the White House,” said Kenneth Smith Ramos, Mexico’s former chief NAFTA negotiator.
Heather Caygle, Adam Behsudi and Alex Panetta contributed to this report.