Trump Pushes Auto, Agriculture Tariff Pain Past Midterms

Federal aid to farmers and a tentative deal with the European Union that would delay tariffs on autos means some of the sting from Trump’s trade war could be delayed until after November.

President Trump speaks during a roundtable discussion on workforce development at Northeast Iowa Community College on Thursday in Peosta, Iowa.
AP Photo/Evan Vucci
July 26, 2018, 8 p.m.

As the multi-front trade war starts to take a bite out of farmers and manufacturers, the Trump administration is trying to delay some of the pain until after the November midterms.

President Trump and European Commission President Jean-Claude Juncker announced Wednesday that Europe would seek to increase energy and soybean imports from the U.S. and remove some tariffs on industrial goods. The U.S. would also delay implementing up to $200 billion in tariffs on foreign automobiles and auto parts as broader negotiations on a zero-tariff and zero-trade-barrier deal continue.

Many Republicans on Capitol Hill praised the deal, and some running in November are likely breathing a sigh of relief as well. That’s because part of the agreement would set trade officials to produce a joint report in the next 120 days laying out a plan for a permanent deal, likely putting off any decision—and perhaps a breakdown in talks—until after the midterms.

The deal, combined with the announcement earlier this week that the federal government would offer $12 billion in aid to farmers hit by retaliatory tariffs, takes pressure off of farm-state Republicans and members whose states are home to factories owned by foreign automakers. It could also provide respite for lawmakers having to choose between backing the president’s policies and the economic realities of their districts and states.

“I think there’s a lot of things that are in the trade world that are difficult for specific members,” Rep. Dave Reichert told National Journal when asked whether the auto tariffs would be a red line for Republicans. “It depends on the district you come from. The products that you grow or make there are affected in different ways than other products in other parts of the country, so everyone has different opinions on what effect the tariffs might have on their particular neck of the woods.”

Trump went on a multi-stop tour of the Midwest on Thursday to tout his agreement with the European Union and his broader trade policy, an effort to shore up support from farmers and manufacturers wary of the fallout from trade disputes.

“We just opened up Europe for you farmers,” Trump said in Iowa, a green “Make Our Farmers Great Again” hat beside him on a table. “You’re not going to be too angry with Trump, I can tell you.”

The administration’s farm bailout would tap a Depression-era Agriculture Department program to aid farmers hit by retaliatory tariffs from China, Canada, Mexico, and the EU. The federal government would offer direct payments to farmers and purchase excess farm output. Payments will begin to roll out in September, just before the early-November midterms.

Some Republican senators, such as Finance Committee Chairman Orrin Hatch, criticized the agriculture bailout earlier this week, but there has been little appetite for blocking the president legislatively.

A July study by the Peterson Institute for International Economics found that a 25 percent tariff on automobiles and auto parts would raise the price of a sport-utility vehicle by more than $2,000 and reduce auto-sector employment by 5 percent.

In addition to fully built cars, the proposed auto tariffs would also hit car parts, and would raise costs for some of the foreign-owned auto plants located in the U.S., many in red states.

There’s a Volkswagen plant in Tennessee where Rep. Marsha Blackburn—a fervent Trump supporter—is running to replace retiring Sen. Bob Corker. Blackburn has criticized the administration’s tariffs, but declined to support legislation from Corker that would limit Trump’s tariff authority.

Blackburn is the likely Republican candidate, and would be in a toss-up race with her likely Democratic opponent, former Gov. Phil Bredesen, according to RealClearPolitics.

BMW has a major plant in South Carolina’s 4th District, where Democrat Brandon Brown and Republican William Timmons are running to replace Rep. Trey Gowdy, who is retiring. That district leans heavily Republican, however.

In the farm state of Missouri, the progressive group American Bridge has launched a campaign against Republican Senate candidate Josh Hawley, who is seeking to unseat Democratic Sen. Claire McCaskill, targeting his support of the president’s trade-policy goals. McCaskill leads only slightly in most polls.

Trump has faced criticism on Capitol Hill from Republicans on the proposed auto tariffs, and some lawmakers have proposed legislation rolling back the president’s authority to implement the national security provision that Trump would utilize. The president has already used the Section 232 provision to roll out tariffs on steel and aluminum, which will remain in place as the U.S. and EU try to negotiate a deal.

Commerce Secretary Wilbur Ross told Fox Business on Wednesday that the administration wouldn’t impose any auto tariffs “as long as the negotiations are progressing properly” with the EU.

Trump delivered another speech Thursday at Granite City Works, a steel factory in Granite City, Illinois, where he promoted steel and aluminium protectionism and said the EU’s agreement to buy more U.S. soybeans was critical, as retaliatory tariffs from China have reduced demand from U.S. farmers.

EU Trade Commissioner Cecilia Malmström and other trade officials went to Capitol Hill on Tuesday in search of allies to pressure the Trump administration to abandon the auto tariff proposal and reach a trade deal with Europe.

One of those members was Reichert, chairman of the House Ways and Means Committee’s subcommittee on trade. Reichert—who was also part of a delegation that met with the president following the EU announcement—told reporters Thursday that after frustration over the lack of communication between the White House and GOP lawmakers over tariffs, members left the meeting with a clearer sense of the White House’s trade strategy.

“I think some of us walked away from the events of yesterday with a more clear understanding of the direction, and feeling a little bit more optimistic about where we might be headed with this,” Reichert said.

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