Political News

Trump’s Trade War Prompts Fight Among Top Economic Advisers

Posted November 13, 2018 3:48 p.m. EST

House Minority Leader Nancy Pelosi (D-Calif.) holds a news conference the day after the midterm elections, on Capitol Hill in Washington, Nov. 7, 2018. The president wanted speedy passage of a revised NAFTA trade deal, but Democrats want significant improvements to labor and other provisions. “Without enforcement you don’t have anything. Without it, you are, shall we say, just rebranding Nafta,” Pelosi said days before voters swept her Democratic Party back into power. (Erin Schaff/The New York Times)

WASHINGTON — President Donald Trump’s trade war is stoking an internal fight among his top economic advisers, with officials sparring both publicly and behind the scenes over the White House’s approach to dealing with China, the European Union and other trading partners.

The disagreements spilled into view Tuesday as Larry Kudlow, the director of the National Economic Council, accused Peter Navarro, a top trade adviser, of doing the president “a great disservice” by making hawkish comments about trade talks with China.

Kudlow said Navarro’s speech last week — which included a prediction that Trump would have the “courage” to reject a bad trade deal with China — was “not authorized” by the administration.

“I think Peter very badly misspoke,” Kudlow said on CNBC. “He was freelancing, and he’s not representing the president or the administration.”

He added, “I actually think he did the president a great disservice.”

The internal feuding comes at a pivotal moment, as Trump prepares to meet with President Xi Jinping of China at the Group of 20 summit in Argentina this month and as the White House economic team considers whether to impose tariffs on cars from Europe, Japan and other nations.

Europe’s top trade negotiator, Cecilia Malmstrom, is expected to meet with the U.S. trade representative, Robert Lighthizer, on Wednesday to discuss a framework for beginning formal trade talks.

Trump’s trade advisers are so far split over the president’s desire to impose tariffs on foreign cars and car parts, with Kudlow and Treasury Secretary Steven Mnuchin privately cautioning against such a move and Navarro pushing for tariffs as a way to gain greater concessions from Europe and Japan, according to people familiar with the discussions.

Kudlow, Mnuchin and others in the administration have also been encouraging Trump to make a trade deal with China and to forgo the additional tariffs he has threatened to impose on all Chinese imports. Navarro, in his speech last week, said China was not playing fair and was simply trying to get the United States to the table to improve its global image.

“They want to get us to the bargaining table, sound reasonable, talk their way and have their way with us,” Navarro said at the Center for Strategic and International Studies, a nonpartisan Washington think tank.

Navarro also lashed out at Wall Street executives with links to the administration who have been encouraging Trump to strike a quick deal.

“If there is a deal — if and when there is a deal — it will be on President Donald J. Trump’s terms. Not Wall Street terms,” Navarro said in his speech on Friday. “If Wall Street is involved and continues to insinuate itself into these negotiations, there will be a stench around any deal that’s consummated because it will have the imprimatur of Goldman Sachs and Wall Street.”

On Tuesday, Kudlow, an avid free trade proponent who generally opposes tariffs, said Navarro was “way off base.”

As the administration’s most vocal critic of China, Navarro has previously clashed with Trump’s more business-minded advisers, including Mnuchin and Gary Cohn, who resigned as head of the National Economic Council over concerns about Trump’s protectionist trade approach.

More recently, Navarro has increasingly been at odds with Clete Willems, a deputy director of the economic council who has been pushing back against auto tariffs, according to people familiar with the matter.

Navarro, who continues to have Trump’s ear, declined to comment.

The dissension comes as Trump’s economic team was scheduled to meet at the White House on Tuesday to discuss a Commerce Department investigation into whether auto imports pose a threat to national security. Such a determination could lay the foundation for the White House to impose tariffs on imported cars and car parts under Section 232 of the Trade Expansion Act.

The report, which must undergo an interagency review process, is expected to outline a range of actions Trump could take if he wants to limit imports — from doing nothing to placing tariffs or imposing quotas.

Trump could hold off on announcing the tariffs as talks proceed with Europe. However, he has been increasingly frustrated by the lack of progress in negotiations.

During an interview with The Wall Street Journal last month, Trump made clear that he planned to keep car tariffs as an option as discussions with Europe proceeded.

“If they don’t do the right thing, I’ll put tariffs on the cars,” Trump said. “And if they do, there won’t be any tariffs.”

Industry lobbyists and analysts have warned that imposing tariffs on cars would be tantamount to a disaster, with large swaths of the Midwest auto industry hurt by such a move. “We’ve made clear we think the imposition of tariffs under Section 232 for autos or parts would be harmful to the auto industry and harmful to the economy,” said Matt Blunt, the president of the American Automotive Policy Council. “We’re certainly hopeful that the report won’t recommend the imposition of new tariffs or quotas.”

Earlier this year, the United Automobile Workers union urged the Commerce Department to take a targeted approach to any protectionist measures.

“The automotive industry is a global industry with long, complicated supply chains,” the group said. “We caution that any rash actions could have unforeseen consequences, including mass layoffs for American workers.”

Kudlow did not comment on the prospect of auto tariffs but suggested that despite Navarro’s recent remarks, talks with China were moving on a constructive path. He said Mnuchin was having discussions with his Chinese counterpart and that there were communications happening at all levels of both governments.

“I think it’s better to talk than not talk, so that’s a plus,” Kudlow said.