Trump's Steel Tariff Threat Faces Resistance From Lawmakers

By William Mauldin Features Dow Jones Newswires

Senior lawmakers in both parties are resisting the Trump administration's moves toward imposing steel tariffs on national security grounds, worried that other countries could use the same argument to block exports from their states.

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The Commerce Department is expected to reveal the results of an investigation of steel imports in coming days, a step that could lead Mr. Trump to impose the most significant barriers to steel imports since at least the George W. Bush administration. Critics of the case -- known as a Section 232 investigation -- say broad tariffs would lead to higher domestic prices for steel, hurting auto makers and other consumers of the alloy, as well as generating retaliation from trade partners.

"It will encourage others to restrict our exports, even in unrelated sectors, which only hurts the growth of jobs and paychecks here at home, " said Rep. Kevin Brady, the Texas Republican who chairs the House committee that oversees trade policy. "Done hastily, we raise costs and prove to our partners that we aren't reliable."

The resistance in Congress is notable because lawmakers -- including many Democrats -- generally welcomed the Trump administration's overall goal of getting tough on trade partners by enforcing trade rules.

But some worry that the administration, by dusting off a rarely used provision of U.S. law aimed strictly at security threats, could open the door for other countries to bar a variety of U.S. exports over national-security concerns.

Congress doesn't get to vote on tariffs imposed at the executive level, but it could seek to repeal the law granting the president such powers.

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Rep. Lynn Jenkins, a Kansas Republican, asked U.S. Trade Representative Robert Lighthizer during a hearing on Thursday if steel tariffs based on national security could lead other countries to restrict wheat exports from Kansas for the same reason.

Mr. Lighthizer, the administration's newly confirmed point person on trade, defended the administration's view that the American steel industry is a vital part of national security, and that protecting it with tariffs may be worth the risk to steel-consuming industries and other sectors that could be hit by retaliation.

"Steel, aluminum -- these are national security issues," Mr. Lighthizer told the House hearing on Thursday, the second day of hearings on trade. "The president will look at this very, very hard."

So far, Mr. Lighthizer and Commerce Secretary Wilbur Ross -- who is leading the steel and aluminum investigations -- have given few signals about how the steel probe's findings or what Mr. Trump might ultimately decide to impose as a remedy. Officials say the steel probe should be finished by the end of the month, while a similar Section 232 case on aluminum could take longer.

People close to the trade case say different parts of the administration have strongly different views about what should be done, making the case another example that pits "economic nationalists" who want to defend suffering American industries against officials advocating freer trade that benefits companies more broadly.

"I know you get this: When we put tariffs or quotes on steel or aluminum there will be a sweeping effect on American manufacturing," Democratic Sen. Claire McCaskill told Mr. Lighthizer.

Her state of Missouri is home to transformer factories that probably can't be supplied by domestic sources alone, beer brewers that use aluminum for cans, and a machinery remanufacturing plant that doesn't want to pay higher prices for steel, aides said.

Sixteen Democratic lawmakers from the House and Senate on Tuesday sent a letter to Messrs. Ross and Lighthizer demanding a more thorough investigation of the steel issue, with more input from those affected. The lawmakers complained of canceled briefings with Congress and asked Trump administration officials to "immediately brief committee staff on these matters and respond to all member requests for individual briefings" before making a decision.

"We have no idea what they're doing," Ms. McCaskill said.

Not all lawmakers are worried about steel tariffs, and some believe a serious, carefully crafted move may be necessary as a first step to global efforts to get China to decrease its steel production, which U.S. producers blame for weighing on global prices.

"There very much needs to be a global addressing of the steel issue, and maybe Section 232 will bring this about," said Rep. Sander Levin (D., Mich.), who is often a critic of the Trump administration.

But some lawmakers say they want exclusions for the U.K., Canada or other countries who are military allies. Some people following the case expect Canada and Mexico could be granted exclusions as the Trump administration prepares for a renegotiation of the North American Trade Agreement, or Nafta.

Canadian Prime Minister Justin Trudeau told his country's lawmakers on Wednesday that he spoke with President Trump on why Canada should be exempted from any curbs on steel imports his administration may implement.

--Paul Vieira in Ottawa contributed to this article.

Write to William Mauldin at william.mauldin@wsj.com

(END) Dow Jones Newswires

June 23, 2017 05:44 ET (09:44 GMT)