What to Know in Washington: Are Trump’s Tariffs a Goal or a Tool?

President Donald Trump has repeatedly portrayed the punitive tariffs he has imposed on China and other countries as tools to create leverage and draw them into new trade deals that benefit the U.S.

Increasingly, however, it is looking like Trump’s tariffs are here to stay and more tangible than any of the deals the president has promised. And that, economists agree, bodes badly for the U.S. and global economies.

With his move to raise tariffs on $200 billion in Chinese imports last week and to order up plans for tariffs on all further trade from China, Trump has deployed import taxes on a scale not seen in decades, with some economists reaching as far back as the 19th century for comparisons. He has also threatened more to come with a Saturday deadline looming for him to make a decision on whether to proceed with new tariffs on imported cars and parts.

In tweets and other public utterances in recent days Trump has repeatedly hailed his tariffs, claiming they have helped power U.S. economic growth and repeated over and over again that other countries such as China pay the bill, a view even his own economic advisers are uncomfortable defending.

Those tariffs have invited retaliation against U.S. agricultural exports such as corn and pork that are hurting U.S. farmers. They also have caused senior Republicans like Chuck Grassley (R-Iowa), the head of the Senate Finance Committee, to say they will block any vote for Trump’s re-branded NAFTA, the U.S.-Mexico-Canada Agreement.

But the administration has refused to bend and remove the tariffs unless Canada and Mexico agree to other trade restraints with new investment in domestic steel mills and aluminum smelters, one of the benefits of Trump’s trade wars the president is most eager to tout. Read more from Shawn Donnan.

Photographer: Chris Kleponis/Pool via Bloomberg
Trump at the White House on Monday.

Farmers Feeling Pain: American farmers, among Trump’s most loyal supporters, face mounting financial pain from the trade war and the growing risk that the damage will outlast the conflict. The standoff with China is compounding the strain of five years of falling commodity prices and losses from spring flooding. And as the dispute drags on, China is forging relationships with competing suppliers, and farmers in other countries are reorienting operations to cater to the Chinese markets.

Among the hardest hit and most vulnerable to continuing tensions are soybean growers across the U.S. grain belt. Soybean futures yesterday skidded to their lowest prices in more than a decade and are down more than 20% from a year ago. That is a direct blow to Trump country. Read more from Mike Dorning.

Trade Politics: Joe Biden has emerged as the Democratic front-runner thanks to a perception that his working-class roots and chummy relations with labor leaders make him the likeliest candidate to take back the Upper Midwest and beat Trump. But that scenario is complicated by the former vice president’s decades-long record of backing free-trade deals that have helped hollow out the manufacturing core in several important electoral states. Joshua Green has more.

Politics and Probes

Trump Record Disclosure Trial: A Washington judge plans to hold a trial today as planned to determine whether a congressional committee can obtain financial records from Trump’s longtime accountants. U.S. District Judge Amit Mehta said the hearing will go as scheduled despite objections from Trump’s lawyers, who said they didn’t have enough time to properly prepare.

Mehta said last week that he had enough information to skip a preliminary hearing and to decide the case. Trump’s attorneys asked the judge to reinstate today’s preliminary injunction hearing and set a longer-term schedule for a trial. The judge said in a brief order yesterday that he’ll consider Trump’s objections at the hearing. Read more form Andrew Harris.

New York Offers Trump’s Taxes: The State of New York is poised to enact a law that would allow Congress to obtain Trump’s state tax returns. But the House Democrat who could get them may not take New York up on its offer. The Democratic-controlled New York State Assembly could vote this week on a bill that would give House Ways and Means Committee Chairman Richard Neal (D-Mass.) the power to request the state returns of any New York taxpayer. The State Senate, which Democrats won control of in November, passed the bill last week and Governor Andrew Cuomo has said he will sign it if it passes both houses.
However, much to the dismay of some members of his party, Neal has indicated he won’t ask New York for the state returns because it could derail his attempts to get Treasury Secretary Steven Mnuchin to hand over six years of Trump’s personal and business federal returns. Read more from Laura Davison.

Rosenstein Attacks Comey, Defends Mueller Probe: Former Deputy Attorney General Rod Rosenstein launched a public attack on former FBI Director James Comey yesterday, even as he defended Special Counsel Robert Mueller’s probe in the face of Republican attacks on its legitimacy. Rosenstein’s speech marked the latest clash among those who held senior positions within the government over the investigation into Russian interference in the 2016 election. Rosenstein, who oversaw the inquiry and stepped down less than a week ago, said he had admired C omey but is now disappointed in him, according to the prepared text of his remarks in an address to the Greater Baltimore Committee. Read more from Billy House and Chris Strohm.

King Urges GOP Not to Pull Plug on Russia Probe: Sen. Angus King (I-Maine), a senior member of the Intelligence Committee, urged Republicans yesterday to keep the panel’s long-running investigation of Russian meddling in the 2016 election going, despite declarations from many Republicans that the case should be closed. King said the committee’s subpoena of Donald Trump Jr. had been issued long before Majority Leader Mitch McConnell (R-Ky.) declared on the Senate floor last week that it was time to move on. Trump allies have sharply criticized the subpoena, but King said several episodes detailed in Mueller’s report must be thoroughly investigated before the panel’s work is done. Read more from Steven T. Dennis.

Meanwhile, Rick Gates, who worked on Trump’s presidential campaign and inauguration, is still cooperating with the government and shouldn’t be sentenced yet for his guilty plea to conspiracy, federal prosecutors said in a court filing. Read more from Joe Schneider.

Happening on the Hill

Congress Likely to Boost Pentagon F-35 Request: The Pentagon’s budget request for 78 advanced F-35 fighters is stirring concerns by some lawmakers who say the number needs to be higher. Analysts say they’ll almost certainly bankroll a higher number of the fighter jets: The bigger question is how many. Complicating those talks is the Pentagon’s proposed purchase of the older, less-advanced Boeing F-15X, which may take a bite out of an expected boost in F-35s, frustrating those who say the U.S. should fully commit to newer fighters.

The annual Lockheed Martin Corp. F-35 request has been on lawmakers’ radars as they begin drafting defense funding legislation this month. House appropriators are set to mark up spending plans this week, and the Senate Armed Services Committee will mark up its defense authorization bill next week. Read more from Travis J. Tritten.

Blue Water Veterans Bill Set for House Vote: House lawmakers are making another attempt to expand disability compensation for Vietnam-era veterans who say they suffer from illnesses linked to Agent Orange exposure after the effort stalled in the Senate last year.

The legislation (H.R. 299), set for a House floor vote today, would expand a presumption of benefits to approximately 90,000 former service members who served on deep water ships in southeast Asia. Veterans who had “boots on the ground” already receive these benefits but the Department of Veterans Affairs has opposed attempts to expand coverage to service members who served miles off the coast. Read more from Megan Howard.

Nord Stream 2 Pipeline: Sens. Ted Cruz (R-Texas) and Jeanne Shaheen (D-N.H.) plan to introduce a bill targeting the Nord Stream 2 pipeline that would take natural gas from Russia to Germany, according to two people familiar with the plans. The lawmakers, both members of the Senate Foreign Relations Committee, drafted the measure to increase pressure on Russia and one of its most important exports.

The gas pipeline has divided the European Union, with nations led by Poland concerned about Russia’s Gazprom PJSC tightening its grip on the region if the new pipeline comes online. Trump has also criticized the project, calling for the bloc to diversify its energy supply sources and buy liquefied natural gas from North America. Read more from Nick Wadhams and Daniel Flatley.

Movers & Shakeups

Anti-Abortion Judicial Pick Advances: The Senate advanced the nomination of a federal district court nominee who campaigned against abortion and for Trump. Lawmakers voted 49 to 43 last night to end debate on Michael Truncale’s nomination to the U.S. District Court for the Eastern District of Texas. He’s likely to be confirmed today. Truncale campaigned for conservative positions in his unsuccessful Republican primary bid for a Texas congressional seat, in 2011 and 2012. He also volunteered for the Trump campaign in 2016. Read more from Patrick L. Gregory.

Kraninger Names Deputy, Other Top Posts: Consumer Financial Protection Bureau Director Kathleen Kraninger boosted her executive team with the announcement of several new senior staff, including the bureau’s No. 2 position. Brian Johnson, a former top Republican aide at the House Financial Services Committee, will be the CFPB’s deputy director, a post he’s held on an acting basis since July. Johnson joined the CFPB in December 2017 shortly after former acting Director Mick Mulvaney was appointed by Trump. Read more from Evan Weinberger.

Elections and Politics

Sanders Aligns With Ocasio-Cortez on Climate: Democratic presidential candidate Sen. Bernie Sanders (I-Vt.) is highlighting his alliance with Rep. Alexandria Ocasio-Cortez (D-N.Y.) and her “Green New Deal” as he rallies progressive activists to try to blunt the momentum of Joe Biden in the nomination race. Sanders called for urgent action on climate change at an event yesterday in Washington organized by the Sunrise Movement, an activist group that aims to make the 2020 Democratic primary race a referendum on adoption of the far-reaching and costly climate-change proposal that’s been a signature issue for Ocasio-Cortez. Read more from Laura Litvan and Emma Kinery.

Biden Defends 1994 Crime Law: Biden defended his role in crafting the 1994 crime law yesterday in New Hampshire, countering criticism from progressives that it accelerated a trend toward mass incarceration and disproportionately harmed African Americans. “There’s a whole lot of talk about Biden and the crime bill,” he said at the Community Oven restaurant in Hampton, citing “three big things” in the legislation that he stands by. “One-third of the $10 billion was for prevention,” Biden said. “I got made fun of because it’s just Biden spending money not fighting crime, on prevention.” He said the measure was packaged with a ban on certain types of military-style assault rifles and also with the Violence Against Women Act, both of which remain popular with Democrats today. Read more from Sahil Kapur.

Bullock Running for President: Montana Gov. Steve Bullock said in a Twitter post today that he’s running for the Democratic nomination for president. “To give everyone a fair shot, we must do more than defeat Trump. We have to defeat the corrupt system that keeps people like him in power, and we need a fighter who’s done it before,” Bullock said. Read more from Emma Kinery.

Ukraine Prosecutor Said Biden Claim Faked: A Ukrainian lawmaker accused his country’s top prosecutor of manufacturing a “conspiracy” about Biden, adding to a political intrigue playing out from Kiev to Washington. The lawmaker, Serhiy Leshchenko, said he had been given parts of a letter written by the prosecutor with the intent of currying favor with the Trump administration. The prosecutor went through unofficial channels to send the letter to Trump’s attorney Rudy Giuliani, the lawmaker said yesterday. Read more from Daryna Krasnolutska and Stephanie Baker.

What Else to Know

Trump Tower’s Decline: Trump Tower, once the crown jewel in Trump’s property empire, now ranks as one of the least desirable luxury properties in Manhattan. While some corners of Trump’s business empire have thrived, such as his Washington D.C. hotel, others have suffered from his high unpopularity. Rounds of golf are down at his public course in New York, a clutch of once Trump-branded buildings have torn his name off their fronts, and an ambitious plan to launch a new mid-tier hotel chain across the country fizzled.

Trump is scheduled to provide an updated snapshot of his net worth this week, with his annual financial disclosures due tomorrow. The documents won’t go into detail about the Trump Organization’s revenues, but it’s clear that Trump Tower is suffering, based on securities filings, property records, real estate listings, and interviews with industry insiders. Read more from Shahien Nasiripour.

Trump Meets Lotte Group Chairman: Trump, on the eve of a trip to tout new economic projects in Louisiana, met at the White House yesterday with Shin Dong-bin, chairman of the South Korean conglomerate Lotte Group, which has built a chemical plant in the state. Lotte’s chemical manufacturing facility in Lake Charles, La., is expected to produce yearly 1 million tons of ethylene, used in the plastics industry. Construction and use of the plant, which was officially opened in a ceremony last week, is expected to result in the creation of 2,500 jobs in the state, according to Louisiana Economic Development. Read more from Justin Sink.

White House Memo May Threaten Climate Finding: A recent update from the White House budget office is breathing new life into outside challenges to the EPA’s pivotal climate science finding. This isn’t the first time the Competitive Enterprise Institute, a free-market group that has long been critical of climate regulation, has asked the EPA to take another look at its 2009 greenhouse gas endangerment finding — the agency’s conclusion that greenhouse gas emissions endanger the public health and welfare, serving as the legal underpinning for regulations designed to combat climate change. But the group’s petition yesterday comes on the heels of updated guidance from the Office of Management and Budget that outlines a new process for outside groups to request corrections of information that the EPA and other federal agencies produce. Read more from Abby Smith.

T-Mobile, Sprint Said to Mull Concessions: T-Mobile and Sprint, fighting to win regulatory clearance for their $26.5 billion merger, are considering possible concessions to salvage the deal, according to people familiar with the situation. Among the top options being discussed is the separation and potential sale of their so-called prepaid businesses, said the people, who asked not to be identified because the deliberations are private. Other options — such as selling airwave licenses or setting up a new fourth carrier through a network -leasing arrangement — are far less attractive, they said. The two carriers face concerns that the deal will hurt U.S. wireless competition. Read more from Scott Moritz.

Turkey Weighs Missile Plans: Turkey is considering a U.S. request to delay the purchase of a Russian missile-defense system into 2020, a move that could ease tensions between the NATO allies, according to two people familiar with the proposal. The Trump administration last week asked Ankara to postpone receiving the S-400 batteries which was set for July, according to the people, who asked not to be identified discussing sensitive negotiations. A delay would buy Turkey and the U.S. — which have the two largest militaries in the NATO alliance — more time to resolve an impasse that has strained relations and threatened to result in more sanctions on Turkey’s battered economy. Read more from Selcan Hacaoglu, Nick Wadhams and Firat Kozok.

Abe on North Korea: Japanese Prime Minister Shinzo Abe said North Korea violated U.N. resolutions with its missile launches this month, putting pressure on the U.S. to raise the issue with the Security Council. Abe, who has long favored a harder line against Kim Jong Un’s weapon program, told a meeting of ruling coalition lawmakers today in Tokyo that United Nations resolutions must be better enforced. That contrasted with Trump, who said “nobody’s happy about” the missile launches, but stopped short of declaring them a violation. Read more from Isabel Reynolds and Emi Nobuhiro.

To contact the reporters on this story: Zachary Sherwood in Washington at zsherwood@bgov.com; Brandon Lee in Washington at blee@bgov.com

To contact the editors responsible for this story: Giuseppe Macri at gmacri@bgov.com; Loren Duggan at lduggan@bgov.com