The sharp escalation in the tit-for-tat trade conflict between the U.S. and China is set to sweep over Capitol Hill this week as lawmakers return from recess.
The U.S. imposed 25 percent tariffs on $34 billion worth of auto parts, electronics, and other goods Friday morning, with China issuing an equivalent amount of tariffs on agricultural, airplane, and automotive products in retaliation.
China’s retaliatory tariffs are tailor-made to deliver pain to states and congressional districts key to the Republican base. Congress has the power to restrict the president’s ability to impose tariffs, but so far the GOP majority has been willing to allow President Trump time to craft a deal. Many GOP members are acknowledging that there will be an economic cost, but remain behind the president on targeting China.
Rep. Kevin Brady, chairman of the House Ways and Means Committee, which has jurisdiction over most trade issues, has in the past said Republicans are frustrated with the administration’s lack of communication on tariffs. But he told reporters before the Fourth of July recess he backs the overall effort to target China so long as the administration rolls out a robust process to exclude certain products from U.S. tariffs.
“He’s asked us to have patience and back him as he takes on this challenge, and I think Republicans clearly are. But without an exemption and exclusion process to take that burden off the U.S. manufacturers, each week gets tougher,” Brady said.
For industries exporting to China, U.S. tariff exclusions may be little comfort.
House Republican Deputy Whip Tom Cole told a local Oklahoma television station last Thursday that concern over a trade war is real. Like many red-state lawmakers, Cole worries that agriculture-dependent areas in his state could be affected by the retaliatory tariffs.
“For Oklahomans, I think there’s probably more downside than upside,” Cole said. “The kind of industries that are being protected do not have a big presence here.”
Indeed, Oklahoma is expected to lose more than $200 million from the administration’s various trade battles, according to a state-by-state study compiled by the U.S. Chamber of Commerce and released last week.
The U.S. exported $19.6 billion worth of agricultural goods to China in 2017, $14 billion of that being soybeans primarily used in animal feed, according to the Agriculture Department’s Foreign Agricultural Service.
More than 100 soybean farmers are set to trek to Capitol Hill this week to convey the impact of the new tariffs. Industry representatives already met with the administration in March, and first spoke to lawmakers about the issue in April.
“We’re really wanting the administration and Congress to continue the negotiations, and if we feel the full effect of these tariffs hopefully they’ll roll those back,” American Soybean Association vice president Davie Stephens said.
China’s retaliatory tariffs also include U.S. beef, which China only recently began importing after a 13-year ban following concerns over mad-cow disease. The June 2017 decision to allow imports of U.S. beef was an early and much-touted trade victory for the Trump administration and Agriculture Secretary Sonny Perdue.
Colin Woodall, senior vice president of government affairs at the National Cattlemen’s Beef Association, said that before the newest tariffs, China had a 12 percent tariff on beef. The latest move adds an additional 25 percent.
“For all intents and purposes, we expect that to stop the beef trade between our two countries,” Woodall said.
Still, Woodall said cattle ranchers haven’t yet pushed Congress to roll back the tariffs on their own, instead asking lawmakers to reiterate their talking points to the administration.
There are other nontariff trade barriers that Woodall said they would like China to lift, such as a ban on the use of certain artificial hormones, and ranchers are willing to support Trump’s policy with the expectation that the administration will quickly resolve the dispute.
“He’s talked about short-term pain for long-term gain, and if that’s truly where we are headed, then the beef industry is willing to do our part,” Woodall said.
Congress has already made inroads in one area to convince Trump to moderate his trade strategy. The administration originally planned to impose heavy restrictions on Chinese investment in U.S. technology companies, but has since backed off. Instead, Trump will back a House effort to strengthen the Committee on Foreign Investment in the United States, a Treasury-run, multiagency board that evaluates mergers and acquisitions involving foreign companies for national security concerns.
The House passed a bill strengthening CFIUS in late June, and the language could be included in a must-pass defense-spending bill as Congress resolves that measure in a conference committee soon.
The Trump administration has another $16 billion in tariffs against China that will soon be ready and has threatened as much as $400 billion more tariffs if the trade conflict drags on. The tariffs on Chinese goods compound trade battles with other regions, including steel and aluminum tariffs on Canada, Mexico, and the European Union imposed in May. The White House imposed tariffs on solar panels and washing machines in January.
But GOP leadership has so far shown little motivation to put legislative restrictions on the president’s trade powers. Lawmakers shot down a plan by Sen. Bob Corker last month to limit the president’s use of a national security provision to impose tariffs on steel and aluminum.
“I’m not a fan of tariffs,” Senate Majority Leader Mitch McConnell told the Louisville Courier-Journal Thursday. “We’ve been arguing aggressively that this is the wrong path for us. The president does have the right to do what he’s doing. He’s not violating current trade policy.”