- Jun 30
Trump overrules cabinet, plots global trade war
By Mike Allen and Jonathan Swan.
The big picture
Evan Vucci / AP
With the political world distracted by President Trump's media wars, one of the most consequential and contentious internal debates of his presidency unfolded during a tense meeting Monday in the Roosevelt Room of the White House, administration sources tell Axios.
- The outcome, with a potentially profound effect on U.S. economic and foreign policy, will be decided in coming days.
- With more than 20 top officials present, including Trump and Vice President Pence, the president and a small band of America First advisers made it clear they're hell-bent on imposing tariffs — potentially in the 20% range — on steel, and likely other imports.
- The penalties could eventually extend to other imports. Among those that may be considered: aluminum, semiconductors, paper, and appliances like washing machines.
Inside the room
One official estimated the sentiment in the room as 22 against and 3 in favor — but since one of the three is named Donald Trump, it was case closed.
- No decision has been made, but the President is leaning towards imposing tariffs, despite opposition from nearly all his Cabinet.
- In a plan pushed by Commerce Secretary Wilbur Ross, and backed by chief strategist Steve Bannon (not present at the meeting), trade policy director Peter Navarro and senior policy adviser Stephen Miller, the United States would impose tariffs on China and other big exporters of steel. Neither Mike Pence nor Jared Kushner weighed in either way.
- Everyone else in the room, more than 75% of those present, were adamantly opposed, arguing it was bad economics and bad global politics. At one point, Trump was told his almost entire cabinet thought this was a bad idea. But everyone left the room believing the country is headed toward a major trade confrontation.
The motivation and potential fallout
The reason, we're told: Trump's base — which drives more and more decisions, as his popularity sinks — likes the idea, and will love the fight.
The problem, according to top officials who argued strenuously that the move is ill-advised: The trade war wouldn't just affect China. The collateral damage would include a slew of allies, including Canada, Mexico, Japan, Germany and the United Kingdom.
Watch for: Trump was warned — and White House officials anticipate — that an affected industry like automakers is likely to seek a court injunction within hours of any tariffs on steel.
More Axios: 2/3 of new manufacturing jobs are thanks to foreigners
A significant majority of the 656,000 new manufacturing jobs created between 2010 and 2014 can be attributed to investment from countries like Japan, the U.K., and Germany, according to a Reuters analysis.
Why it matters: President Trump and some of his advisers are "hell-bent on imposing tariffs — potentially in the 20% range — on steel, and likely other imports," Axios reported Friday morning, though the majority of his cabinet opposes the plan. Trump's complaints about unfair trade practices are not unfounded, but there's a reason why trade arrangements are hard to reform: Attempts to gain advantage at the expense of trade partners risks upsetting cross-border supply chains that support millions of jobs. And it's states in Trump's southeast stronghold like South Carolina that have the most to lose from economically from disrupted global supply networks.