Trade war saps 'them, not us,' Trump asserts

Economic aide Cohn quits; retaliation to hurt, EU says

Posted: March 7, 2018 at 4:30 a.m.

White House economic adviser Gary Cohn, shown Sept. 27, had sought to hold talks between President Donald Trump and executives of companies that rely on metals in an attempt to head off tariffs but was rebuffed Tuesday before he resigned.

President Donald Trump reiterated his commitment to imposing tariffs on steel and aluminum, dismissing concerns about a global trade war and saying the United States has suffered from poor trading conditions with other nations, including those in the European Union.

Just hours later, White House economic adviser Gary Cohn, who has tried to head off the tariffs, announced his resignation. The president's fresh praise of the tariffs on Tuesday amounted to a public rebuff of Cohn, the director of the National Economic Council.

Cohn had been planning to bring executives from companies that depend on the metals together with Trump later this week to make the case that the tariffs would cost more jobs than they save and damage the U.S. economy, according to two people familiar with the plan.

"People will always come & go, and I want strong dialogue before making a final decision," Trump said in a Twitter posting. "I still have some people that I want to change (always seeking perfection). There is no Chaos, only great Energy!"

In a statement, Cohn said it was his honor to serve in the administration and "enact pro-growth economic policies to benefit the American people."

Trump praised Cohn despite the disagreement on trade, issuing a statement saying Cohn has "served his country with great distinction."

Cohn is a former Goldman Sachs executive who joined the White House after departing the Wall Street firm with a $285 million payout. He played a pivotal role in helping Trump enact a sweeping tax overhaul, coordinating with members of Congress.

"When we're behind every single country, trade wars aren't so bad," Trump said Tuesday in a news conference at the White House with Swedish Prime Minister Stefan Lofven. "The trade war hurts them, not us."

Trump's remarks came after his Treasury secretary, Steve Mnuchin, had sought to offer assurances during congressional testimony that the U.S. didn't want to start a trade war.

Republicans in Congress are undertaking an unusual public campaign to thwart broad tariffs of 25 percent on imported steel and 10 percent on aluminum. House Speaker Paul Ryan on Tuesday urged the president to "be more surgical" in penalizing trade abuses to prevent "any kind of unintended consequences or collateral damage."

Sen. Orrin Hatch, R.-Utah, chairman of the Finance Committee, released a letter he was sending to Trump expressing his "deep concerns" and warning that the tariffs would undermine the economic benefits of the tax cuts the president signed into law in December.

Republican lawmakers are pressuring the president to at least curtail the tariffs' reach to certain forms of the metals or by targeting a limited number of countries.

The threat of retaliation and escalating tit-for-tat penalties damaging growth around the world is already rising. The EU warned earlier Tuesday that it would respond with its own 25 percent tariff to hit $3.5 billion of American goods. The bloc is targeting iconic U.S. brands produced in key Republican states on a range of consumer, agricultural and steel products that will be levied if Trump goes through on his tariff threat, according to a list drawn up by the European Commission.

Trump said that the EU has been "particularly tough" on U.S. products, yet is able to sell its own goods -- like cars -- to Americans. Trump warned that he would impose a 25 percent penalty on European car imports if the bloc carried out its threat to retaliate.

"We have to straighten this out," Trump said. "We really have no choice."

Trump's threat that he could tax cars imported from Europe was premised on the idea that German automakers pour cars into the U.S. while making it "impossible" for American cars to sell there. The full picture is more complicated.

General Motors Co., America's largest carmaker, largely bailed from Europe last year for reasons that had less to do with protectionism than with billions of dollars in losses from decades of producing vehicles there that not enough Europeans wanted to buy.

[PRESIDENT TRUMP: Timeline, appointments, executive orders + guide to actions in first year]

And German automakers are already doing most of what Trump wants from them, building more vehicles for American consumers in the United States and even exporting from its shores. BMW AG and Daimler AG started erecting U.S. plants in the 1990s and have been increasing output to satisfy demand for luxury sport utility vehicles.

"German production has been moving here anyways," said Kevin Tynan, a Bloomberg Intelligence analyst.

As the rhetoric intensified, Mnuchin and Republican congressional leaders tried to tamp down fears of a global trade war.

"We are not looking to get into trade wars," Mnuchin said during a congressional committee hearing when asked about the tariffs, adding that he is "supportive" of imposing the broad duties Trump announced.

Mnuchin told a House Appropriations subcommittee that Canada, the U.S.' biggest supplier of steel, could gain relief from the tariffs along with Mexico if they can reach an agreement with Trump on renegotiating NAFTA. The tariffs won't apply to the U.S. neighbors if a new trade deal is concluded, he said.

He added that the NAFTA renegotiation is an administration "priority," along with shifting trade with China to a "fair and balanced" relationship.

Republican lawmakers are pressuring Trump to at least limit the reach of the tariffs. One of Trump's closest Senate allies, David Perdue, suggested on Tuesday that the president may be open to changes on how the levies might be applied.

"There is a lot of concern among Republican senators that this could metastasize into a broader trade war," Senate Majority Leader Mitch McConnell, a Kentucky Republican, told reporters. Asked if White House is listening, he replied, "I think they are."

DowDuPont Inc., the world's largest chemical company, is considering Canada or Argentina instead of the U.S. Gulf Coast for its next major investment as Trump's proposed steel tariffs make domestic construction pricier.

The tariffs would add hundreds of million of dollars in cost to DowDuPont's next wave of petrochemical expansion, said Jim Fitterling, chief operating officer of the Dow unit.

"You eventually get yourself to the point where you are saying, 'Should I really be building that here or somewhere else?'" Fitterling said Tuesday in Houston. "We've got opportunities in other places like Canada, like Argentina. All of them right now are on the radar screen."

The split in the Republican ranks on trade is coming to a head as the party struggles to hold a previously safe House seat in a special election in steel country. Trump plans to visit the area on Saturday, a few days before the vote in southwestern Pennsylvania, where a recent poll shows a Democrat slightly ahead in a district Trump carried by 20 percentage points in 2016.

Senate Democratic leader Chuck Schumer said the White House needs to adjust any tariffs to address trade imbalances with China, rather than allies like Canada and the EU.

"I believe that the president's instincts to go after China are the right thing to do," Schumer said. But the initial announcement on tariffs was "not well targeted."

Steel has long been a sore spot in trade between the United States and China. Washington has levied more tariffs and countermeasures against Chinese steel than it has against steel from any other place.

American steelmakers argue that Chinese steel hurts them anyway. Faced with American tariffs, the argument goes, Chinese steel mills simply send their products elsewhere. That drives down global prices and pushes other countries to export cheap steel to the United States.

Republican Sen. Cory Gardner of Colorado said many Republican lawmakers oppose the tariffs and he has "no doubt Congress would be forced to act" to end them if Trump proceeds.

"There is a series of legislative actions that could be taken to reverse the decision, obviously with the president supporting them they would have to be done in a way that would overcome any action that he would take, but we still have time," Gardner said.

Information for this article was contributed by Saleha Mohsin, Jennifer Jacobs, Anna Edgerton, Margaret Talev, Steven T. Dennis, Justin Sink, Sahil Kapur, Erik Wasson, Laura Litvan, Jack Kaskey and Toluse Olorunnipa of Bloomberg News; by Carlos Tejada and Karl Russel of The New York Times; and by Zeke Miller and Jonathan Lemire of The Associated Press.

A Section on 03/07/2018