President Donald Trump’s threatened trade war has opened a rift within the Republican Party that some lawmakers and strategists believe could undermine their effort to keep their majorities in Congress.
Republicans plan to brag about the economy in midterm campaigns in hopes of countering Trump’s unpopularity, touting a strong stock market, low unemployment rate and — most importantly — their increasingly popular tax legislation. But Trump’s suggestion Saturday that he might slap penalties on European cars, in addition to the tariffs on aluminum and steel he already promised, could upend that strategy completely, Republicans say.
“Should the administration opt to move forward with tariffs on steel and aluminum, American manufacturers, businesses and consumers would be forced to bear the brunt, paying more for steel and steel products,” said Senate Finance Chairman Orrin Hatch (R-Utah), one of the primary authors of the tax overhaul that’s central to the GOP’s re-election effort. “Such action could very well undercut the benefits of the pro-growth tax reform we fought to get on the books.”
“It’s a real simple frame for the [midterm] election: Republicans want to run on issues,” said Douglas Holtz-Eakin, the president of the American Action Forum and a former Congressional Budget Office director. “This threatens that because it … goes against our economic message.”
The clash suggests that what might be good politics for Trump personally might not work for the entire party. While narrow action directed at China alone might be well received, two top Republican congressional campaign sources said any broader trade actions — such as what Trump is floating now — could be devastating.
And it’s also allowing Democrats to hug Trump just when Republicans have been trying to position the opposing party as detrimental to Trump's economy. Vulnerable Democratic incumbents from the Rust Belt have rushed to praise Trump for taking action that could help industries in their states.
“I like where the president is going on this,” Sen. Joe Manchin (D-W.Va.), one of the most at-risk Democrats, said on CBS’ “Face the Nation.” “Free trade hasn't worked well for West Virginia.”
The back and forth comes just days after Trump said he would slap a 25 percent tariff on imported steel and 10 percent on imported aluminum as soon as this week. Trump tweeted Friday that “trade wars are good” and “easy to win.” And by Saturday, Trump doubled down by threatening to retaliate against countries seeking to punish the U.S. for its protectionism.
“If the E.U. wants to further increase their already massive tariffs and barriers on U.S. companies doing business there, we will simply apply a Tax on their Cars which freely pour into the U.S.,” Trump tweeted Saturday. “They make it impossible for our cars (and more) to sell there. Big trade imbalance!”
Trump’s allies argue that the GOP’s free-traders misunderstand the politics of what Trump is doing. They say he is fighting cheap imports of aluminum and steel to boost domestic industries in the Midwest.
On CNN’s “State of the Union” Sunday, Office of Trade and Manufacturing Policy director Peter Navarro noted that just about every single Republican presidential candidate rejected Trump’s trade agenda. "Guess what: he beat them,” Navarro boasted.
Republicans are “dead wrong on the economics," Navarro said. “There’s no down-stream effect here.”
Most of the party flat-out disagrees. Sen. Mike Lee (R-Utah) called Trump’s proposed tariffs a "huge job-killing tax hike.” Sen. Ben Sasse (R-Neb.) said it will “kill American jobs.” And even Trump allies Larry Kudlow, Arthur Laffer and Stephen Moore argued in a Saturday CNBC op-ed that “even if tariffs save every one of the 140,000 or so steel jobs in America, it puts at risk 5 million manufacturing and related jobs in industries that use steel.”
Republicans have seen “this movie before, and they know it ends poorly,” said Holtz-Eakin, who worked in the Bush administration. “I was at the White House for steel tariffs, and in the end, there was a lot of retaliation against the U.S.”
In a recent interview with POLITICO, National Republican Senate Committee Chairman Cory Gardner (R-Colo.) said that “a majority-plus believe that if Democrats get elected, the economy is going to get worse.” But a trade war, Republicans say, would complicate their central pitch to voters that the GOP is good for business and Democrats will tank the economy.
Already, the EU has suggested it could retaliate against orange growers in the swing state of Florida, motorcycle maker Harley-Davidson in Wisconsin and other industries that could hurt toss-up areas that Republicans need to win if they're going to keep the House and Senate.
“Just a terrible decision, advocated by Assistant to the President for Losing Elections Peter Navarro,” tweeted conservative commentator Hugh Hewitt.
Sen. Lindsey Graham (R-S.C.) on CBS’ “Face the Nation” listed several South Carolina industries that he said would suffer and directed his message to Trump personally: “You’re letting China off the hook and punishing the American consumer and our allies. You're making a huge mistake here.”
Many free-trade Republicans are praying Trump’s top economic adviser Gary Cohn — who fought the tariffs and has been rumored to be eyeing the exits — doesn’t leave and can quash the effort. Some are holding out hope that Trump will narrow his tariff push to China. Others think Trump could still change his mind — as he did last year, when he walked back a plan to pull out of NAFTA — and are trying to downplay it.
“I’ve stopped worrying and reacting to the day-to-day because you get all stressed out about something, then you realize tomorrow morning by lunch that it’s never going to happen,” said one top Republican helping protect the majority in the House.