The China trade war is about helping American businesses.
Congressional Republicans have swallowed endless rounds of President Trump’s antics and misconduct, from low-grade corruption, obstruction of an FBI inquiry, and the ripping of immigrant children from their mothers’ arms to a continual stream of lies from the White House.
But a proposed 5 percent tax on imports from Mexico, scheduled to take effect early next week, is a bridge too far for much of the party.
According to Burgess Everett and James Arkin of Politico, at a closed-door lunch with Senate Republicans earlier this week, “White House deputy counsel Pat Philbin and Assistant Attorney General Steve Engel faced brutal push-back from the GOP, according to multiple senators, with some threatening that Trump could actually face a veto-proof majority to overturn the tariffs.”
The sheer ferocity of opposition to the tariff gambit puzzles many people because congressional Republicans have traditionally been reluctant to challenge Trump, but also because they didn’t object when Trump has reached for tariffs in the past.
Trump imposed tariffs on imported washing machines and imported steel and aluminum in order to help a couple of particular corporate sectors in the United States. And he’s launched an extended “trade war” with China in order to secure trade policy concessions that the American business community wants.
Neither of those moves was uncontroversial, but neither of them challenged the basic logic of the GOP governing coalition. The Mexico clash is different. It not only abrogates abstract free trade principles but also it imposes economic costs on American business as part of a plan to achieve immigration policy goals they don’t really care about. That’s roused unusually strong interest group hostility, and that hostility is reflected in an unusually restive congressional caucus.
Trump’s China trade war is (mostly) pro-business
The China trade debate today is different from the one of 10 or 20 years ago, when labor unions were asking for protection against competition with low-wage Chinese labor. The point of getting tough on China, in those days, was to save American jobs from outsourcing by applying tariffs that would raise the cost of Chinese-made goods and thus discourage American companies from relying on Chinese factories for production.
Over the past five years, however, the China argument has shifted subtly.
Today, under Trump, the United States is primarily asking the Chinese government to enact policy changes that will make it easier for American companies to outsource jobs to China. That includes cracking down on Chinese theft of American intellectual property, paring back regulations that force Americans to form joint ventures with Chinese companies in order to do business there, and ending “forced technology transfer” policies that make American companies hand over valuable knowhow in order to gain access to the Chinese market.
It’s true that the tool Trump is using to try to get these concessions — tariffs — is the same as what labor was asking for in the mid-aughts. But the Trump administration’s policy goal isn’t to keep these tariffs in place to protect American jobs. It’s to remove the tariffs in exchange for the Chinese agreeing to make China a friendlier place for American companies to do business.
This agenda has sparked some backlash from the business community — especially from the farm lobby — because it’s bad for Americans who are heavily involved in exporting to China. But big business writ large is comfortable with this form of confronting China because it mostly serves to advance their interests. The fact that this trade war is easily confused for the kind of old-style populist protectionism that they oppose is, to big business, a feature rather than a bug. Trump is mobilizing anti-trade sentiments that corporate America worries about on behalf of an agenda that corporate America mostly supports.
The Mexico thing, however, is different.
Trump’s Mexico trade war is about immigration
Trump is also using tariffs as a bargaining chip with Mexico, though the dispute is not about trade. As acting White House Chief of Staff Mick Mulvaney said on last week’s conference call announcing the tariffs, “These are not tariffs as part of a trade dispute; these are tariffs as part of an immigration matter.”
On the same call, acting Secretary of Homeland Security Kevin McAleenan described three main things he’d like to see Mexico do:
- He wants more vigorous Mexican efforts to secure the border between Guatemala and the Mexican state of Chiapas. “They need to step up their efforts on the border,” he said, alluding to the fact that this is a much shorter border than the US-Mexico one and that he believes Mexican authorities should have the ability to stop people from crossing in the first place.
- Second, he called for a massive crackdown on the organizations that help migrants travel through Mexico to the United States. He characterized these groups as “transnational criminal organizations” and said “we need Mexico to crack down on these operations,” many of which he says are operating fairly openly, with some involving commercial bus lines.
- Last and potentially most significantly, he says “we want to align with Mexico on asylum” and “we need to be able to protect people in the first safe area they arrive at.” This appears to signal a desire to move beyond the current “remain In Mexico” policy initiative and get Mexico to sign what’s known as a “safe third country” agreement. Such an agreement would stipulate that Mexico is a safe place for people fleeing Central America, and thus Central Americans arriving at the US-Mexico border are not entitled to asylum hearings.
Mexico has sporadically done the first and second of these things but has always been deeply reluctant to do the third. Mexico is, among other things, not necessarily a very safe place for Central American asylum seekers to be.
Under questioning, however, Mulvaney would not lay out specific success criteria that he wants to see Mexico meet. Instead, he said simply that “we’re going to handle this on an ad hoc basis.”
The key thing here is that even if this strategy works, it doesn’t accomplish anything corporate America wants or cares about. It’s a trade-off across two distinct issue areas, with Trump asking Americans to pay higher taxes and asking American companies to risk loss of sales to Mexican markets, all for the sake of doing something immigration hawks want.
The broader logic of the conservative coalition is at stake
What makes this standoff interesting is that Trump is asking, in a small way, for a sacrifice the business wing of the GOP is never asked to make.
Like any other political party, the modern-day Republican Party is a coalition and the interest groups behind it have different and at times clashing priorities. But Republicans typically manage to avoid outright conflicts between their major constituency groups, and even though cultural and identity concerns dominate Republican electioneering, when it comes to policy priorities, the business community always gets its way.
This has even mostly carried through on immigration policy in the Trump era, with the president publicly voicing skepticism of the E-Verify program that would make it harder for employers to hire unauthorized workers even while universally supporting harsh measures against immigrants themselves.
The way the deal is supposed to work is that cultural conservatives provide the votes, and they get their way on issues the business community doesn’t care about (until cultural conservatives’ views become an unpopular embarrassment the way opposition to same-sex marriages and military service is), but business isn’t supposed to actually sacrifice its interests for the sake of cultural conservative causes. With the tariff gambit on Mexico, Trump is overturning that logic in a way that his other trade shenanigans haven’t. And that’s why congressional Republicans are resisting in an unusual way.