Republicans worry Trump’s trade war will blot out tax cut message

- April 07, 2018

Republicans want President Donald Trump to stick to a simple message ahead of the 2018 midterm elections: cutting taxes and slashing regulations.

But the president, who regards himself as a master communicator, seems to have a different plan. After repeatedly deriding the marketing of the landmark tax reform passed in December — which he wanted to call the “Cut Cut Cut Act” — Trump has shifted gears, instead launching into a tit-for-tat war on trade with China.

Trump announced plans Thursday for $100 billion in tariffs on Chinese imports, on top of $50 billion outlined last month, after the Chinese proposed their own $50 billion countermeasures.

The back and forth threats, none of which have been implemented, have nevertheless triggered dramatic fluctuations in the stock market and produced anxiety for American companies, consumers and farmers in red states, who are facing targeted duties on valuable soybean exports.

“If the tariffs raise prices on American consumers, then that will negate part of the positive impact of the tax cut. It’s the government giving the tax cut with the right hand and taking it away with the tariff with the left one,” said Stephen Moore, a distinguished visiting fellow at The Heritage Foundation and one of the architects of the Trump campaign’s tax plan.

Conservatives and business groups, which were central to the political push for tax reform bill, now worry that the potential tariffs and threats to pull out of trade agreements will overshadow their efforts to convince Americans of the benefits of the tax bill.


“The evidence of the tax cut working is getting yanked away. Conservatives and business groups aren’t sure what to do about it because no one wants to be the target of a Trump tweet,” said one conservative tax lobbyist.

Polling at the time the tax legislation passed in December 2017 showed that a majority of Americans did not believe the bill would help them personally. And in response, conservative groups launched multimillion-dollar ad campaigns to push that message to voters.

Capitol Hill lawmakers, business groups and lobbyists were startled on Thursday when the president deviated far from this planned message at an event in West Virginia that the White House had billed as a tax reform-focused event.

Minutes into it, Trump threw his prepared speech into the air, calling it “boring.” Instead he launched into a free-wheeling discussion about trade deficits, voter fraud and immigration.

“So we have to have strong borders. We’re going to have the wall. We’ve already started building it,” the president said.

It was the clearest signal yet that the president has little intention of following the advice of congressional leadership and Republican strategists of promoting a few key accomplishments, all centered around the idea of a strong economy and low unemployment rate.

“There is definitely a very real concern that the economic impacts on trade could overshadow the tremendous benefits of the Tax Cuts and Jobs Act,” said Michael Steel, who served as a top aide to former House Speaker John Boehner and an adviser to former Florida Gov. Jeb Bush’s 2016 presidential campaign.

Some Republican strategists argue it was too early to tell how any potential tariffs would affect Americans’ pocketbooks — and that will be the key metric heading into 2018.


“The only real political impact on the discussion is whether it has an economic impact on voters’ pocketbooks. All of that remains to be seen,” said Josh Holmes, the former chief of staff and campaign manager for Sen. Majority Leader Mitch McConnell.

The White House has nevertheless taken steps to mitigate the immediate response to Trump’s tariffs. Newly arrived economic adviser Larry Kudlow spent much of his first week on the job trying to soothe investors by insisting tariffs on Chinese goods were just proposals and did not amount of any kind of trade war.

“I like to think of this as a process,” Kudlow told reporters at the White House on Friday morning. “This process, it may include tariffs at the end of the day. It may also not. It may be solved by negotiation … The United States is simply putting these ideas out.”

Kudlow also emphasized that even if the administration does decide to advance the proposal, there would be a months-long public comment period during which White House negotiations with the Chinese would take place.

Later in the day, Kudlow told reporters the tax reform remains the administration’s biggest achievement.


“I would never let anything overshadow the tax cut,” Kudlow said. “The president’s success will rise and fall with the economy. The economy is doing rather well now. I expect it to do better.”

The White House and congressional leadership agreed during a January meeting at Camp David that the prevailing message from Republicans during this election year should center on jobs, the economy and tax legislation.

“That was the consensus, knowing that a legislative agenda in an election year is not top of mind,” said one Republican operative briefed on the meeting.

But Republicans backed off the tax-reform message in a special election last month in Pennsylvania, a sign that the approach wasn’t resonating. The Republican candidate, Rick Saccone, ultimately lost.

Former Trump campaign officials nevertheless argue that Trump’s decision to double down on trade is the right move—and part of the argument that landed him in the White House.

“The secret sauce that elected Trump wasn’t just turning out every possible conservative voter. It was turning out independent voters who previously ran away from the Republican Party after things like NAFTA and the Iraq War,” said one former Trump official. “Highlighting an issue like trade and being tough on China could help motivate these voters.”


 

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