by Saleha Mohsin, Jennifer Jacobs and Anna Edgerton 

Treasury Secretary Steven Mnuchin and Republican congressional leaders tried to tamp down fears of a global trade war as President Donald Trump came under pressure from his own party to stop or at least curtail steep tariffs on steel and aluminum announced last week.

“We are not looking to get into trade wars,” Mnuchin said Tuesday during a congressional committee hearing when asked about the tariffs, adding that he is “supportive” of imposing the broad duties Trump announced.

But Republican lawmakers are pressuring Trump to at least limit the reach of the tariffs. One of Trump’s closest Senate allies, David Perdue, suggested on Tuesday that the president may be open to changes on how the levies might be applied, sending U.S. stocks rising with the S&P 500 Index up 0.2 percent at 3:14 p.m in New York.

“There is a lot of concern among Republican senators that this could metastasize into a broader trade war,” Senate Majority Leader Mitch McConnell, a Kentucky Republican, told reporters. Asked if White House is listening, he replied, “I think they are.” 

The president also is facing push-back within his administration. White House economic adviser Gary Cohn is summoning executives from U.S. companies that depend on the metals to meet this week with Trump to make the case that the tariffs will cost more jobs than they save and damage the U.S. economy, according to two people familiar with the plan. Trump has told advisers he believes the former Goldman Sachs Group Inc. executive will leave the administration if he imposes the tariffs, said people familiar with the matter.

Republicans in Congress are undertaking an unusual public campaign to thwart broad tariffs of 25 percent on imported steel and 10 percent on aluminum. House Speaker Paul Ryan on Tuesday urged the president to “be more surgical” in penalizing trade abuses to prevent “any kind of unintended consequences or collateral damage.”

Senator Orrin Hatch, the Utah Republican who is chairman of the Finance Committee, released a letter he was sending to Trump expressing his “deep concerns” and warning that the tariffs would undermine the economic benefits of the tax cuts the president signed into law in December. 

The threat of retaliation and escalating  tit-for-tat penalties damaging growth around the world is already rising. The European Union warned it would respond with its own 25 percent tariff to hit $3.5 billion of U.S. goods. The EU is targeting iconic U.S. brands produced in key Republican states on a range of consumer, agricultural and steel products that will be levied if Trump goes through on his tariff threat, according to a list drawn up by the European Commission. 

Trump vowed on Monday to stand fast, telling reporters, “We’re not backing down.” After announcing the steel and aluminum tariffs, the president tweeted on Friday,“trade wars are good, and easy to win.” 

The split in the Republican ranks on trade is coming to a head as the party struggles to hold a previously safe House seat in a special election in steel country. Trump plans to visit the area on Saturday, a few days before the vote in southwestern Pennsylvania, where a recent poll shows a Democrat slightly ahead in a district Trump carried by 20 percentage points in 2016. 

Tariff supporters are pressing Trump to announce the measures during his visit to mobilize GOP voters, but Cohn is pushing back with the meeting of executives to make the case that trade sanctions will damage the economy and hurt the president’s own re-election campaign in 2020. The White House session with Trump later this week will include representatives of breweries, beverage-can manufacturers and automakers, along with the oil industry, said the people, who spoke on condition of anonymity to discuss a policy disagreement.

Advisers ‘Come & Go’

It’s unclear whether Cohn’s campaign or the threat of losing his top economic adviser will be enough to change the president’s mind. Trump said in a tweet Tuesday there may be more staff turnover, even as he denied his administration is chaotic.

"People will always come & go, and I want strong dialogue before making a final decision,” Trump said in a Twitter posting. “I still have some people that I want to change (always seeking perfection). There is no Chaos, only great Energy!"

The tariffs could reduce U.S. growth by as much as 0.2 percentage point this year, and further risk lies in how trading partners respond, Barclays Plc economists said. While a tight job market and tax cuts are likely to keep America’s expansion humming along, the trade tensions could weigh on growth and boost inflation more than desired by Fed policy makers.

Mnuchin told a House Appropriations subcommittee that Canada, the U.S.’s biggest supplier of steel, could gain relief from the tariffs along with Mexico if they can reach an agreement with Trump on renegotiating NAFTA. The tariffs won’t apply to the U.S. neighbors if a new trade deal is concluded, he said. 

He added that the NAFTA renegotiation is an administration “priority,” along with shifting trade with China to a “fair and balanced” relationship.

Congressional Response

Senate Democratic leader Chuck Schumer said the White House needs to adjust any tariffs to address trade imbalances with China, rather than allies like Canada and the EU.

“I believe that the president’s instincts to go after China are the right thing to do,” Schumer said. But the initial announcement on tariffs was “not well targeted.”

Republican Senator Cory Gardner of Colorado said many Republican lawmakers oppose the tariffs and he has “no doubt Congress would be forced to act” to end them if Trump proceeds.

"There is a series of legislative actions that could be taken to reverse the decision, obviously with the president supporting them they would have to be done in a way that would overcome any action that he would take, but we still have time,” Gardner said. 

However Republican Senator Jeff Flake said he doesn’t think enough Republicans would cross the president by passing legislation to reverse the tariffs, even as he called the measure “completely, utterly irrational.” 

Ways and Means Committee Chairman Kevin Brady of Texas and other House Republicans are seeking to blunt the tariffs’ impact by adding an “exclusion process” allowing American companies to petition for duty-free access for imports that aren’t available from U.S. sources. 

The lawmakers want existing contracts for aluminum and steel to be exempted from tariffs. They also called for a review of the effects of tariffs on the economy “to determine if a different approach would better serve the interests of our American workers, job creators, and consumers.” 

“Done right the president could impact trade positively,” Brady told reporters Tuesday. “We want to help him tailor it.”

If Trump follows through with the tariffs he proposed, the Senate Finance Committee should consider holding hearings, said John Cornyn of Texas, the No. 2 Republican in the chamber.

“The part that concerns me the most is the potential for retaliatory tariffs and a so-called trade war and other areas that would affect some of the more vulnerable sectors of our economy, like agriculture,” Cornyn said.

--With assistance from Margaret Talev, Steven T. Dennis, Justin Sink, Sahil Kapur, Erik Wasson and Laura Litvan.

To contact the reporters on this story: Saleha Mohsin in Washington at [email protected]; Jennifer Jacobs in Washington at [email protected]; Anna Edgerton in Washington at [email protected]

To contact the editors responsible for this story: Alex Wayne at [email protected]

Mike Dorning, Joe Sobczyk

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