Economy

Grassley to Trump: Drop Tariffs or the Trade Deal Gets It

The senator is largely right on the merits, but the president is invested in his strategy.

Nate Jackson · Apr. 30, 2019

Iowa Republican Sen. Chuck Grassley has a way with ultimatums. In the last two years, Mr. King Corn himself has threatened any and all of President Donald Trump’s nominees if action is taken to do anything but increase the ethanol mandate. As chairman of the Senate Judiciary Committee at the time, Grassley could have made good on that threat. Thus, Americans will, for the foreseeable future, be forced to continue pumping corrosive corn into our gas tanks solely to placate the corn lobby.

Now, as chairman of the Senate Finance Committee, Grassley has a new target: Tariffs. His rationale is largely still saving Iowa corn (and hog) farmers, though, unlike with ethanol, he’s actually onto something about tariffs. In a Wall Street Journal op-ed titled “Trump’s Tariffs End or His Trade Deal Dies,” Grassley vigorously argues that Trump must rescind his tariffs or risk the future of the U.S.-Mexico-Canada Agreement (USMCA) to replace NAFTA:

I’ve met with congressional colleagues, as well as U.S., Canadian and Mexican trade officials, to discuss how our nations will secure legislative approval of USMCA. A significant roadblock is the administration’s tariffs on steel and aluminum and retaliatory Canadian and Mexican tariffs on U.S. products. These levies are a tax on Americans, and they jeopardize USMCA’s prospects of passage in the Mexican Congress, Canadian Parliament and U.S. Congress. Canadian and Mexican trade officials may be more delicate in their language, but they’re diplomats. I’m not. If these tariffs aren’t lifted, USMCA is dead. There is no appetite in Congress to debate USMCA with these tariffs in place.

Grassley is exactly right that tariffs are “a tax on Americans.” In fact, Trump’s 20% tariff on imported washing machines ended up adding roughly $90 to each appliance consumers buy. As NBC News reported just yesterday, “Collectively, Americans are paying more than $1.5 billion extra every year from this tariff alone.” But the overall toll is far higher: “Another recent study by a trio of economists from Princeton and Columbia universities and the New York Fed found that the combined impact of all the Trump administration’s trade sanctions costs Americans $1.4 billion each month.”

Now, as we’ve written numerous times, Trump has a strategy with tariffs, and that involves absorbing some pain for longterm gain. But, arguably, when it comes to Canada and Mexico, it’s time for relief as the three nations work toward a deal. Trump’s more justifiable beef is with China. So we’ll see what comes of Grassley’s threat. Trump didn’t even put up a fight over ethanol, but he was never interested in really cutting that mandate. Trade has been one of his biggest issues, and Grassley is challenging him head on.

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