While other Cabinet nominees took turns being grilled by Democratic senators, President-elect Trump’s commerce secretary-designate Wilbur Ross was getting skeptical questions from Republicans.
Sen. Todd Young, R-Ind., used Ross’s confirmation hearing to say he’s worried that the Trump trade policy Ross was being nominated to help implement would endanger his constituents who work for foreign companies.
“Subaru in Lafayette employs 5,000, Toyota in Princeton, 4,500 Hoosiers,” Young said. “These jobs provide a secure, middle-class income at a time when a lot of people are anxious about their ability to land those jobs and keep them. Can you reassure the tens of thousands of autoworkers and others whose jobs rely on free trade that their jobs will not be put at risk by restrictive tariffs?”
Democrats mostly praised the 79-year-old billionaire for divesting from a large majority of his holdings. “It tells me that you are committed to doing the job the right way by placing the public’s interest ahead of your own,” said Sen. Bill Nelson, D-Fla. Nelson’s colleague, Sen. Richard Blumenthal, D-Conn., asked why Trump couldn’t do the same thing.
Despite his vast wealth, Ross was not among the eight Trump Cabinet nominees Senate Minority Leader Chuck Schumer, D-N.Y., said Thursday the Democrats were going to prioritize stalling.
But GOP skittishness over Ross shows that he’s a proxy in a battle over trade policy. As a rule with some exceptions, the GOP has for 30 years been the party of free trade. Trump has argued that many of the major trade agreements the U.S. has pursued under recent presidents of both parties are bad for American workers. He has nominated Ross to help fix this.
“I am not anti-trade,” Ross told the Senate Commerce Committee. “I am pro-trade. But I am pro-sensible trade.” He pointed to his success in business and said he had learned the economic lessons of the Depression-era Smoot-Hawley tariffs.
But Ross made no bones that the administration wanted to re-open NAFTA, take a hard line against China and use at least the threat of tariffs where necessary to get a better deal. He agreed with Trump that bilateral trade pacts are better than multilateral ones.
“China is the most protectionist country of the very large countries,” he said during his confirmation hearings. “They talk more about free trade than they actually practice.”
“It’s a little weird that we have very low tariffs and China has very high tariffs,” Ross contended. “That seems to me as a bit of an imbalance.”
Trump has talked about imposing tariffs as high as 35 percent on companies that move jobs overseas. That seems to be a nonstarter with congressional Republicans, but there has been a push to taxing additional imports through corporate tax reform.
The concept is “border adjustment” of the corporate income tax. Products made on American soil but consumed elsewhere wouldn’t be taxed. Earnings on products consumed here would be taxed regardless of where there were made.
It has split conservatives who are normally allies, with House Speaker Paul Ryan, R-Wis., and House Ways and Means Chairman Kevin Brady, R-Texas, big supporters and House Financial Services Committee Chairman Jeb Hensarling, R-Texas, an opponent.
Trump himself isn’t a fan, He told the Wall Street Journal, “Any time I hear border adjustment, I don’t love it.” But his main complaint seems to be the complexity. “I just want it nice and simple,” he said.
Economists and interest groups have raised the specter of higher prices on consumer goods.
“Trump was elected by the very people who are going to see their gas prices go up by 46 cents a gallon, who are going to see their iPhones cost more, who are going to pay more for their shampoo,” said Brian Wise, president of the U.S. Consumer Coalition.
While the public has expressed support for Trump’s goal of stopping the offshoring of American jobs, a recent Morning Consult poll found that 45 percent said they wouldn’t be willing to pay more for consumer products as a result of tax policy changes. Only 17 percent would be willing to pay even 5 percent more, though it is worth noting the survey’s wording does not mention anything about trying to keep jobs in the country.
Trump won the presidency by holding traditionally Republican states and flipping the Rust Belt, so there will be pressure to deliver for hurting working-class voters. But he will be working with many congressional Republicans who won’t like anything that looks like a tax on businesses or consumers.
Trump will be sworn in at noon Friday.
