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Photo: Alex Wong / Getty Images

Gary Cohn and Steven Mnuchin successfully kept President Trump from making any disruptive trade actions during the tax reform fight. Now that tax reform is done — and Trump remains hell-bent on tariffs — they're making new arguments to try to mellow his hardwired trade-warrior impulses.

Cohn and Mnuchin are now appealing to Trump's obsession with the record-breaking run of the stock market under his presidency, according to four sources with direct knowledge.

  • They're telling him the stock market is at an all-time high, and that new tariffs on whole industries like steel and aluminum would hurt it.
  • They're also telling him — and others are joining them in making this argument directly to the president — that he's just given the middle class a tax cut, and that any tariffs making consumer goods more expensive would undo the pay raise he just gave them.
  • Why this matters: Sources who've spoken with the president say he's often said he wants to slap massive tariffs against entire countries, industries and product categories. They worry that doing so would roil global markets, start a costly trade war, and harm America's relationships with allies.

Behind Trump's thinking: He and his hawkish trade advisers, Peter Navarro and Bob Lighthizer, are deeply skeptical of the World Trade Organization's ability to resolve complaints between nations. They want to resurrect arcane laws — sections 232 and 301 of Trade laws from the 1960s and 70s — to circumvent the WTO and unilaterally retaliate against exploitive trade practices, especially from the Chinese.

It's quite likely Trump will use 301 authority — in January, we're told — to put tariffs on Chinese consumer electronics as retaliation against the country's widespread theft of American companies' intellectual property. Though Cohn and Mnuchin don't like tariffs, they're comparatively comfortable with targeted actions against truly bad actors, as in this case.

What you need to know:

  • In January, Trump will need to decide whether or not to temporarily protect American manufacturers from competition with imported solar panels and washing machines.
  • In the near future, Trump will decide whether or not to announce that global production of aluminum and steel presents a national security threat to the U.S., and then slap massive tariffs on those two industries.
  • Wall Street and Congressional free traders are most concerned about potential steel and aluminum actions.
  • Trump has not made firm decisions on any of this.
  • In fact, he held a recent meeting with top officials in the Situation Room, and the debate was hot.
  • Staff Secretary Rob Porter has been convening a trade meeting every Tuesday in the Roosevelt Room, attended by Cohn, Mnuchin, National Security Adviser H.R. McMaster, Commerce Secretary Wilbur Ross, hardline trade adviser Peter Navarro and top trade negotiator Bob Lighthizer. I'm told that at last Tuesday's meeting, there was still a "robust discussion" with "sharply diverging points of view."
  • Porter — typically a neutral arbiter — has argued for targeted actions rather than broad, blunt tariffs. Defense Secretary Jim Mattis is also an important voice; the Pentagon doesn't agree with Trump that global excess steel capacity is a national security threat.
  • Secretary of State Rex Tillerson shares Mattis' view that broad tariffs that hit allies who haven't engaged in unfair practices is bad policy that would unnecessarily harm relationships.

Bottom line: As we've repeatedly written — but can't stress enough — Trump believes this stuff to his core. Perhaps the only policy position he has consistently held for more than 30 years is that foreign countries are taking advantage of America, and that America needs to fight back. At the start of his presidency, he told President Xi that he would be gentler on trade if Xi took a harder line on North Korea's nuclear program. But in the months since, Trump has concluded that China won't play its part. So he's ready to begin the second year of his presidency with a big trade bang.

Go deeper

Reports: CIA finds "Havana Syndrome" unlikely caused by foreign campaign

CIA Director William Burns testifies during a Senate hearing on Capitol Hill last April. Photo: Saul Loeb-Pool/Getty Images

A preliminary CIA report rules out a foreign global campaign as the cause of American and Canadian diplomats affected by a mysterious illness known as "Havana syndrome," per multiple reports.

Why it matters: Some lawmakers had suggested the sometimes debilitating illness was due to directed energy attacks. But CIA officials told the New York Times that most of the 1,000 cases reported to the government could be "explained by environmental causes, undiagnosed medical conditions or stress." This finding has angered some victims, per the NYT.

Jan. 6 panel subpoenas 2 far-right "America First" activists

The House panel investigating the Capitol riot, from left; Reps. Bennie Thompson, Liz Cheney, Adam Kinzinger and Jamie Raskin on Capitol Hill in December. Photo: Drew Angerer/Getty Images

The House select committee investigating the Capitol riot issued subpoenas Wednesday for far-right leaders Nick Fuentes and Patrick Casey, who allegedly encouraged followers to go to D.C. and challenge the 2020 election results.

Why it matters: The action underscores the panel's increasing focus on rallies held ahead of the Capitol attack and how extremists were drawn to former President Trump's baseless claims of widespread voter fraud, per the New York Times.

Democrats fail to change Senate rules to pass voting rights bill

Senate Majority Leader during a news conference in Washington, D.C., on Wednesday. Photo: Alex Wong/Getty Images

Democrats failed Wednesday night to change Senate filibuster rules to pass the voting rights bill, with Sens. Joe Manchin (D-W.Va.) and Kyrsten Sinema (D-Ariz.) voting with Republicans.

The big picture: The failed effort came after Senate Republicans blocked the voting rights measure from coming to a final vote earlier Wednesday.