While President Trump points to a low unemployment rate as proof he’s delivering on a campaign promise to create jobs, members of the Senate Finance Committee slammed his Commerce Department chief on Wednesday for trade duties they say are doing just the opposite.
Tariffs on metals and imports and additional levies being considered on cars have drawn widespread criticism from business leaders, economists and lawmakers from the president’s own party. They worry that the duties, along with an escalating trade dispute with China, will lead to a broader trade war that undermines the economic benefits of a tax cut approved in late 2017. Already, China and some of the closest U.S. allies, including Europe and Canada, have begun retaliating.
“You are taxing American families, you are putting American jobs at risk, and you are destroying markets — both foreign and domestic — for American businesses of all types, sorts, and sizes,” Sen. Orrin Hatch, the Utah Republican who chairs the panel, told Ross at the start of the hearing. “I hope you consider that carefully as your department conducts its investigation into the national security threat from imported automobiles and auto parts.”
[Also read: Stock market wilts as Trump’s China tariffs escalate trade worries]
Hatch and several other senators began their questioning with anecdotes about businesses in their home states that have been harmed. Sen. Claire McCaskill, a Missouri Democrat, described a nail company that has been forced to cut 60 of its 500 employees and may dismiss an additional 200 as sales drop.
Ross, however, defended Trump’s moves, blaming China’s trade practices for tariffs the U.S. has imposed elsewhere. “This administration is standing up for American families, American businesses and American workers by taking action to reduce imports that threaten our national security,” Ross argued.
[Related: Trump defends tariffs on Canada, Mexico: US ‘can no longer be the stupid country’]
To make sure U.S. businesses are hurt as little as possible, a mechanism has been established for companies to request exemptions from tariffs for specific steel products that aren’t available from domestic producers, he said.
The company McCaskill mentioned, however, filed 24 separate exclusion requests last week and has yet to obtain approvals for any. Since the department didn’t determine what exclusions should be included in the tariffs when they were announced, McCaskill said, workers across the country might now lose their jobs.
Sen. Pat Roberts, a Kansas Republican, shared a similar story about an agricultural equipment supplier. The company relies on Canadian steel not available in the U.S., and its production costs have soared, Roberts said. Without an exemption, it will be forced to pass that expense onto its customers, who are primarily farmers and ranchers.
As with many regulatory expenses, small businesses may suffer more than large ones. They “do not have an army of lawyers that can help deal with exemption of products,” said Sen. Ben Cardin, a Maryland Democrat who suggested allowing tiny firms to submit requests through trade associations.
So far, the Commerce Department has received more than three times as many exclusion requests as the 6,000 it projected, Ross said. It has exempted 42 steel products and rejected 56 requests.
Many senators, including Hatch, also questioned the commerce secretary about the national security justification for imposing steel and aluminum tariffs on Canada — one of America’s largest trading partners and closest allies. Canada has dismissed the rationale, allowed by Section 232 of the Trade Expansion Act of 1962, as groundless.
Canada, Mexico and the European Union had to be included in the tariffs combat transshipping, or the delivery of Chinese steel to the U.S. through other countries, Ross said. Tariffs of 25 percent on $50 billion of Chinese imports — and possible duties of 10 percent on as much as $400 billion more — were allowed under a different law and overseen by the U.S. Trade Representative.
Ultimately, lawmakers said, it’s U.S. consumers who will be the losers from the administration’s actions. Hatch cited a report from the Tax Foundation, a think-tank focused on tax policy, that estimated auto tariffs may result in a $73 billion tax increase on American shoppers and businesses.
