Corporate America is effusive in its praise of a Republican senator’s measure curbing White House freedom to set national-security tariffs, a power with which President Trump has antagonized some of America’s oldest and closest allies.
The C-suite accolades, however, aren’t accompanied by any confidence that the proposal will become law.
Its political obstacles are significant in an election year: Passing the bill would require Republican lawmakers to face off against a president from their own party, one who maintains high support from the Republican base despite relatively low overall approval ratings.
It’s a dilemma evidentiated in the bill’s co-sponsors, most of whom are retiring from the Senate or not up for re-election this year, noted Chris Krueger, an analyst with Cowen Washington Research Group, which has tracked federal policy for more than 40 years.
The measure, he suggested, is one that is “not likely to pass in August, or really any time,” a reality highlighted when the Senate blocked Corker’s request for an up-or-down vote on adding it to a must-pass defense-spending bill.
Unless that environment changes, the odds that the White House’s tariffs and the fiery rhetoric that accompanies them lead to a trade war may keep climbing. Traditional U.S. allies from Europe to Canada and Mexico have already promised retaliation for the stiff metals duties that Trump imposed last month and his threat of 25 percent tariffs on automotive imports, also on national security grounds, only heightened concerns.
Such risks prompted the Conference Board, a global business research group, to cut its growth forecast for this year by 10 basis points to 3.2 percent.
While “a possible escalation in tit-for-tat tariffs and quotas is unlikely to push the global economy into reverse, in the near term,” they may make businesses wary of investment and hiring, thus increasing the risks of a recession, said Bart van Ark, the group’s chief economist.
Using national security concerns to impose tariffs, a power allocated to the White House under Section 232 of the Trade Expansion Act of 1962, frees Trump from any real requirement to justify his decisions and substantially increases the risk that countries affected by such tariffs will strike back, Corker said.
His remedy would require Congressional approval for any tariff set under national security grounds, allowing expedited consideration for two months to ensure the White House wasn’t hamstrung.
The Tennessee senator, who isn’t seeking re-election, said some members were worried that a vote on the bill would upset Trump, who asked Corker not to bring it up.
“‘Poke the bear’ is the language I’ve been hearing in the hallways,” he said. The Senate, he added, “is becoming a body where we’ll do what we can do, but my gosh, if the president gets upset with us, we might not be in the majority, so let’s don’t do anything that might upset the president.”
Corker’s office didn’t respond to inquiries about what steps he might pursue next to get a vote on the measure, which has more than a dozen co-sponsors.
“I haven’t heard a single senator on our side of the aisle who hasn’t expressed concern directly to the president about what’s happening with tariffs,” Corker said, referring to his Republican colleagues. “Our farm folks are worried about the North American Free Trade Agreement, our auto manufacturers are worried about Canada and Mexico and what’s happening with Europe, and our steel and aluminum folks are concerned.”
By failing to address those concerns, he said, Congress is abdicating its Constitutional responsibilities.
“All my amendment would do is say, ‘Look, Mr. President, you go negotiate, but when you finish, come back and, as senators and House members, let us vote up or down.”
Without Corker’s bill or some other requirement for Congressional oversight, Trump may not be inclined to back down from his confrontational stance with U.S. allies. His position was hardened by lieutenants who accused Canadian Prime Minister Justin Trudeau of stabbing the U.S. in the back in early June when he reiterated his country’s opposition to Trump’s trade maneuvers after a Group of 7 summit.
While the U.S. stock market has largely shrugged off the risks of a trade war so far —although levels remain below January highs — there are “risks to the view that ‘cooler heads will prevail,'” said Bank of America economist Aditya Bhave.
“Our concern is not so much irrational action, but that the U.S. and its trading partners could rationally engage in tit-for-tat protectionism, with growing economic costs, in order to test each other’s resolve,” he said. A dramatic market downturn or Republican loss of Congressional control might change the dynamic, however, emboldening free-trade advocates.
The White House has largely rejected much of the advice on the matter from the Business Roundtable, an organization representing the 200 largest U.S. companies, but the group plans to keep working, said Chief Executive Officer Joshua Bolten, who previously served as a chief of staff in former President George W. Bush’s White House. The association supported Corker’s proposal.
“Our members overwhelmingly have strongly objected to the imposition of national security tariffs on steel and aluminum imports, especially on some of our best trading partners and closest allies,” he said. “The threat of doing the same thing with automobiles is of deep concern to our members, and the threat of withdrawing from the North American Free Trade Agreement that has worked extremely well for the economy and American workers, is also of deep concern.”
Their worries were reflected in the Roundtable’s quarterly economic outlook, where an index of executives’ capital spending plans and revenue projections declined 7.5 points in the second quarter, the first drop in nearly two years.
“There’s still a lot of weighted risk with respect to this trade situation,” said Tony Roth, chief investment officer at Wilmington Trust, which manages $83.5 billion. If the U.S. were to be isolated from the Group of 7 major economies and its former allies band together to combat Trump’s tariffs, “it could really be quite deleterious for our economy,” he said.
“It’s probably pretty sound thinking that there should be some sort of Congressional oversight of executive action in the imposition of tariffs for reasons that are putatively for national security, outside of a war-time period,” Roth said.
Such legislation might pass Congress but probably wouldn’t be able to muster the two-thirds majority needed to override a presidential veto, he added. “That’s the problem.”
