Senators Decry Section 232 Tariffs as Anti-Tariffs Lobbying Trip Begins

Sen. Mark Warner, D-Va., said he's hearing from constituents big and small whose businesses are suffering either from higher costs of inputs or because of retaliatory tariffs. He said one midsize manufacturer is even considering leaving the country to avoid the higher metals costs. He said he understands very well the need to confront the threat of Chinese intellectual property theft, particularly in high-tech areas, but it needs to be coordinated with other countries facing the same problems. "But instead, what we've seen is this White House pick fights with folks like Harley Davidson and Justin Trudeau rather than where some of the real challenges lie in terms of Chinese technology policy." He said claiming that long-standing allies are a national security threat squandered good will that we needed to build that coalition. He said that not only was that not a smart way to confront China, he would also hope that when the administration sees something, such as with Chinese telecom equipment maker ZTE "where there's virtual unanimity from the intelligence community, they ought to stick to their guns rather than backing off" at the first pushback from China. He was referring to the president's decision to overrule an export ban for ZTE, which would have shut the company down, because it relies on American microchips (see 1807130057).

Sen. Pat Toomey, R-Pa., the author of a bill co-sponsored by Warner and others that would allow Congress to veto both the existing steel and aluminum tariffs and any future Section 232 cases, also dismissed the argument that President Donald Trump was using those tariffs to get better trade deals with Europe, Japan and Canada and Mexico. "The result was an agreement that diminishes trade opportunities between the three countries. The new NAFTA has impediments to trade relative to the old NAFTA." He said autos made in North America will be more expensive once it takes effect, and criticized the side letter that subjects Canadian and Mexican vehicles to quotas if a Section 232 tariff on imported autos comes into effect. Toomey said there was no national security justification for the tariffs, "and in my view, they should all be lifted yesterday."

Sen. Ron Johnson, R-Wis., who said Trump has been getting results by using Section 232 tariffs as a cudgel to get countries to the bargaining table, said that lobbying efforts like this one are important, because, he believes, the president does listen to companies that share specifics about how the tariffs are hurting them. He said that if the purpose is just to prop up the steel industry, there are less expensive ways of doing so than driving up cost for all steel buyers.

Johnson acknowledged that the bill he is co-sponsoring with Toomey and Warner will not get a veto-proof majority, and Trump is unlikely to agree to sign it. But he said it's not fair to call it a "messaging bill," because lobbying efforts like this one and having a debate on Toomey's bill do have a chance of changing minds within the administration.

While Senate Finance Committee Chairman Chuck Grassley, R-Iowa, does want to advance a bill that would take on the Section 232 tariffs, he criticized the Toomey bill during a phone call with reporters on Feb. 5. He has said he thinks the approach of Sen. Rob Portman, R-Ohio, is a good place to start: Portman reintroduced a bill on the Section 232 tariffs Feb. 6 (see 1902060051). Portman's bill would not address steel and aluminum tariffs but would allow Congress to overrule the president if more 232 cases are brought this year on uranium or autos. Grassley said of Toomey's bill: "It's too blunt of an instrument. We're going to have to see what kind of a compromise, hopefully bipartisan, that we can agree to. All aspects of either one of the bills aren't bad, but some aspects of the Toomey bill are too blunt."

One of the business people participating in the lobbying trip is from Bristol, Pennsylvania. Michael Rinzler, co-founder of Wicked Cool Toys, hasn't been touched by tariffs yet, as the toys he imports from China are not on any of the Section 301 lists. His company has 50 employees in the U.S. and 50 in Hong Kong, and imports toys worth $100 million retail, he said. Wicked Cool Toys owns one factory in China but contracts for 85 percent of its products. Because of the threat of tariffs, he and his partner have explored moving manufacturing to Vietnam or India, but he said it would be nearly impossible for a small company like his to ensure quality standards in those countries, which have less experience producing toys for export. "This has forced us to start to look elsewhere," he said. He's also having conversations with suppliers, license holders and retailers about who should take what portion of the tariff's cost, if it comes. In his experience, he said, not everyone "is willing to pony up."