In news that should surprise no one, it was reported on Thursday that the Trump administration’s own economists have found that a decision to impose unilateral tariffs on imports to the US will be bad for the economy.
The findings are in line with the unanimous consensus among respected economists that such trade policy will have adverse effects on economic growth. And, as it happens, the economy is the issue on which US President Donald Trump maintains strongest support among voters.
The New York Times reported analysis Thursday, citing people familiar with the research, though the reporters were not privy to precise projections.
Several polls released in the last several days confirmed that the majority of Americans are not sold on the tariff policy, with most saying they were uncomfortable supporting a congressional candidate who was behind the tough trade action.
Campaigning is in full swing for midterm elections, which will decide whether Republicans maintain a majority in the House of Representatives. One telling projection from Friday found that if you were to forecast the midterm elections using Trump’s approval rating, his own Republican party would lose 68 seats in the House. But if you did so using voters’ view of the economy, the Republicans would gain 55 seats.
The president has expressed his concern about the prospect of the Democrats regaining control of the House of Representatives, suggesting publicly they may try to impeach him.
There were some conflicting signals from the surveys, with a Wall Street Journal/NBC poll released Thursday showing respondents opposed to tariffs but supportive of Trump’s party’s handling of trade . While voters by a wide margin said foreign trade represented an opportunity for growth, those polled said they trusted the Republicans on protecting America’s interests on trade issues by a margin of 8 points.
That view is further muddled by the fact that protectionist trade measures – which Trump is now transforming into a Republican policy position – were once associated with the Democrats. The White House’s unilateral tariff policy has faced bipartisan opposition from lawmakers.
The Trump administration last week imposed stiff tariffs on steel and aluminum imports from allies, including the European Union, Canada and Mexico, exacerbating a rift that is currently on display at the G7 summit. All three of those tariff target economies have imposed or announced retaliatory measures.
In a separate poll, released by Politico on Wednesday, 55% of respondents felt the tariffs on steel and aluminum would hurt the economy, versus only 35% who said it would help.
The White House said tariffs on US$50 billion in Chinese goods will also be imposed “shortly after” a June 15 deadline. China had previously said they would reciprocate with equal levies on US imports, and more recently said any promises to buy more energy and agricultural products from the US would be immediately dropped should the import tax go into effect.
Political analysts have had trouble deciphering mixed messages from the White House on its trade policy, with many previously coming to the conclusion that Trump was more bark than bite and would shy away from following through on tariff threats. Some have interpreted the decision to impose the duties on allies last week as a material shift in policy to one that leans on tariffs as a part of a long-term trade strategy.
Trump, himself, has long advocated enacting tariffs, which he says are a viable means to revive America’s manufacturing industry – a view shared by US Trade Representative Robert Lighthizer and White House trade advisor Peter Navarro. But top economic advisor Larry Kudlow and Treasury Secretary Steven Mnuchin have both, at various times, suggested the tariff threats were merely a negotiating tactic and that Trump was at heart a “free trader.”
China’s willingness to negotiate under the pressure of the protectionist threats creates a potential pathway to averting an all-out tariff battle, as was demonstrated by South Korea, Brazil and Australia. All three of those countries were granted permanent exemption from metals tariffs after agreeing to trade concessions.
The European Union, Canada and Mexico have, however, decided they will not capitulate to demands. That suggests the performance of the US economy under strain of protectionism – and voters’ reaction to it – may be the deciding factor in whether Trump can keep up his pressure on trade.