Many congressional Republicans don’t like higher tariffs or far-reaching executive actions by the president.
That’s why reports that President-elect Trump was considering using executive action to impose a 5 percent tariff on imports raised eyebrows. Such a move would have risked his first real confrontation with Republicans on Capitol Hill.
Not so fast, said a Trump transition spokesman.
“I think the CNN story got a little bit too far out over its skis,” incoming White House communications director Jason Miller told reporters on a conference call Thursday, adding that it was too early “to go into specific speculation.”
Trump already reminded Washington that he dissents from recent Republican orthodoxy on trade when he unveiled a National Trade Council to be headed by Peter Navarro, a fervent critic of our trade policies with China who believes reducing the trade deficit could stimulate economic growth.
Wilbur Ross and Steven Munchin, Trump’s nominees for commerce secretary and treasury secretary, respectively, both favor a combination of carrots and sticks to keep jobs in the United States: lower taxes and less regulations for employers, but threats of tariffs and other repercussions for job exporters.
The 5 percent figure allegedly floated is a far cry from the 35 percent retaliatory tariffs Trump discussed during the campaign, but it is enough to raise hackles among the business community and Republican free traders. It also might be just high enough to have an impact on consumers but too low to influence many firms’ offshoring decisions.
Hill Republicans have waged war against President Obama’s executive actions on issues like immigration and Arctic drilling. Obama has urged Trump to be restrained in his use of executive orders, while Trump has pledged to reverse some of Obama’s most controversial orders.
An idea with more traction among congressional Republicans is border adjustability, which would tax American imports while exempting exports from taxation. House Ways and Means Chairman Kevin Brady, R-Texas, is a key booster.
Some conservatives worry that this will morph into a broader-based value-added tax, potentially increasing the country’s tax burden under future liberal governments.
The Trump administration could nevertheless embrace Brady’s plans and have little daylight between the White House and key Republicans in Congress. Budgets introduced by House Speaker Paul Ryan have proposed border-adjustable business consumption taxes.
It wouldn’t be the author of The Art of the Deal, however, if Trump didn’t make his own opening bid.
In the meantime, a GOP trade war has been averted.
