Senators Jerry Moran (R-KS) and Jeanne Shaheen (D-NH) spoke about the new Section 232 investigations. Moran focused on jet engines, one of the only consistent surplus items in American trade.
“We expect to have more on the aerospace 232 by the end of June,” Lutnick told him. “That’s when we will make our analysis public and set the standard for aircraft parts. But the key is to protect that industry,” he said, sticking with this theme for the rest of the day. “We will use these tariffs for the betterment of American industry.”
Sen. Shaheen continued in the same vein as most Democrats. When it came to tariffs, they were moderately supportive, but also critical.
“I agree we should be protecting the aerospace industry; that is our biggest export in New Hampshire,” said Shaheen. She then added that a company in her state makes ball-bearings for the aerospace industry and because of steel tariffs, now has a two and a half year lead time to get what they need from domestic sources. She said they used to source from Asia, and often had to wait up to 20 weeks.
Surprisingly, Lutnick did not ask her if her constituent tried sourcing from the U.K., where the recent trade agreement with them means they are now subject to near-duty free tariffs for steel and aluminum under a quota system.
Curiously, if a two year wait time is too long, then they will have to pay the new 50% tariff from their Asian partners and either work something out with them, or be forced to raise prices to end users to help cover the costs. Lower cost export loans were often brought up as one possible solution.
Still, Lutnick stuck to his guns here. “We have to make more steel and aluminum in the United States,” he said. That is the ultimate purpose of tariffs.
Sen. Shaheen agreed about reshoring, but said, “I don’t like the way it’s being done.” Like most members of the Senate who are in opposition to tariffs, Shaheen offered up no recourse, or new ideas other than pausing tariffs, or doing more studies, the bureaucracy’s answer to all problems.
Sen. Lisa Murkowski (R-AK) wanted protection for the fishing industry. Lutnick did not say if they would open a Section 232 investigation and, oddly, Murkowski did not call for one. She only said fishing accounted for 70% of Alaskan GDP and that, “Alaskan fisheries are in peril.”
On April 17, President Trump issued a new executive order titled Executive Order 14276: Restoring American Seafood Competitiveness, but this only looks at regulations. The U.S. has a gaping deficit in seafood, thanks in part to regulatory restrictions, often designed to protect sea life, but also thanks to overfishing in Asia for things like shrimp and certain types of white fish.
Sen. Lyndsey Graham (R-SC) called for boycott-level sanctions of 500% tariffs on China if they buy Russian oil and gas; hinting of a bill of that nature to come from his office soon. But he also had some questions about reciprocal tariffs, which was the point at the end of the hearing where you could see Lutnick change his tune.
“President Trump decides that whatever you charge us in tariffs, we are going to charge you…is that right?,” Graham asked, getting at the heart of reciprocity.
“To a point,” Lutnick said. “It has to be logical reciprocity.”
“Pushing back against countries with higher tariffs makes sense and I’m glad you are using tariffs to change people’s behavior,” Graham said. “If you’re going to let your country sell us fentanyl, we should tariff their stuff. If you manipulate your currency, you’re going to get tariffed. If you close agriculture markets in France, you’re going to get tariffed. If you require a Chinese business partner to be with you in your sales to us, that is not acceptable. The tariffs are here to make us safer and stronger. I can tell you that the major car companies in Germany came here to talk to Trump recently and they make Mercedes in Alabama and they want to make more cars in America and even engines now,” Graham said. “So thank you. This works. Some of the tariffs I might have a problem with, but what you’re doing is good.”
Sen. Kennedy Just Gave Howard Lutnick Best Example Why Reciprocal Tariffs Don’t Work
Sen. John Kennedy (R-LA) might not have meant to lampoon the concept of reciprocal tariffs. In fact, he may even be in favor of them. But he proved on Wednesday in a Senate Appropriations Committee hearing with Commerce Secretary Howard Lutnick that reciprocal tariffs will never work. By the time the Committee hearing with Lutnick was over, it seemed pretty clear that the Trump administration has shifting ideas about reciprocity today, and are less sure about the nature of them than they were before “Liberation Day” on April 2.
Sen. Kennedy: I agree with some of the things the White House has done on tariffs and disagreed on others. It seems to me that the president listens to you on tariffs. So if Vietnam came to you tomorrow and said ‘okay, you win, we are going to remove all tariffs and all trade barriers, would the US please do the same?’ Would you accept that deal?
Lutnick: Absolutely not. That would be the silliest thing we can do. It’s just a pathway from China to us. It’s a terrible idea.
Sen. Kennedy: Then what’s the purpose of reciprocity if that is one of our goals? If you’re trying to get other countries to lower their trade barriers in turn of us lowering ours, that is called reciprocity. The ultimate reciprocity is zero for zero tariffs. What if Vietnam said they won’t buy from China? Now what?
Lutnick: We would consider it. But there are also certain products we want to reshore. We want to make pharmaceuticals here. We need to protect our market.
Lutnick did not mention the fact that the Vietnamese currency is significantly weaker than the Chinese yuan. Zero for zero is a dead giveaway for Vietnamese manufactured goods, with or without China. He should have stuck to the argument of protectionism, rather than try to get academic and explain that our bank is bigger than their bank or our taxes are higher than their taxes. That’s too complicated. If the Trump administration believes Vietnam, like all of Southeast Asia, is teeming with contract manufacturers for Chinese companies, then raise the 10% tariff to match the China 55% tariff, end of story.
Moreover, Chinese companies may be the least of Lutnick’s worries as U.S. businesses large and small will just contract out to Southeast Asia if tariffs there are much lower than China’s. If those countries offered U.S.-style Most Favored Nation tariff rates of 3.4%, which is what they all had two months ago, then American companies would quickly begin sourcing from four Southeast Asian nations instead of China. Instead of dealing with just mainland China, the U.S. producer will be dealing with four mini-China’s in Southeast Asia.
If Vietnam “promised” not to source from China to make solar and Vinfast automobiles, the U.S. should still not consider that as reciprocal. Reciprocal is a non-starter.
Lutnick was at his best when discussing Section 232 tariffs, and weakest when trying to defend reciprocity, something he gave up on by the end of the hearing.
Senators Jerry Moran (R-KS) and Jeanne Shaheen (D-NH) spoke about the new Section 232 investigations. Moran focused on jet engines, one of the only consistent surplus items in American trade.
“We expect to have more on the aerospace 232 by the end of June,” Lutnick told him. “That’s when we will make our analysis public and set the standard for aircraft parts. But the key is to protect that industry,” he said, sticking with this theme for the rest of the day. “We will use these tariffs for the betterment of American industry.”
Sen. Shaheen continued in the same vein as most Democrats. When it came to tariffs, they were moderately supportive, but also critical.
“I agree we should be protecting the aerospace industry; that is our biggest export in New Hampshire,” said Shaheen. She then added that a company in her state makes ball-bearings for the aerospace industry and because of steel tariffs, now has a two and a half year lead time to get what they need from domestic sources. She said they used to source from Asia, and often had to wait up to 20 weeks.
Surprisingly, Lutnick did not ask her if her constituent tried sourcing from the U.K., where the recent trade agreement with them means they are now subject to near-duty free tariffs for steel and aluminum under a quota system.
Curiously, if a two year wait time is too long, then they will have to pay the new 50% tariff from their Asian partners and either work something out with them, or be forced to raise prices to end users to help cover the costs. Lower cost export loans were often brought up as one possible solution.
Still, Lutnick stuck to his guns here. “We have to make more steel and aluminum in the United States,” he said. That is the ultimate purpose of tariffs.
Sen. Shaheen agreed about reshoring, but said, “I don’t like the way it’s being done.” Like most members of the Senate who are in opposition to tariffs, Shaheen offered up no recourse, or new ideas other than pausing tariffs, or doing more studies, the bureaucracy’s answer to all problems.
Sen. Lisa Murkowski (R-AK) wanted protection for the fishing industry. Lutnick did not say if they would open a Section 232 investigation and, oddly, Murkowski did not call for one. She only said fishing accounted for 70% of Alaskan GDP and that, “Alaskan fisheries are in peril.”
On April 17, President Trump issued a new executive order titled Executive Order 14276: Restoring American Seafood Competitiveness, but this only looks at regulations. The U.S. has a gaping deficit in seafood, thanks in part to regulatory restrictions, often designed to protect sea life, but also thanks to overfishing in Asia for things like shrimp and certain types of white fish.
Sen. Lyndsey Graham (R-SC) called for boycott-level sanctions of 500% tariffs on China if they buy Russian oil and gas; hinting of a bill of that nature to come from his office soon. But he also had some questions about reciprocal tariffs, which was the point at the end of the hearing where you could see Lutnick change his tune.
“President Trump decides that whatever you charge us in tariffs, we are going to charge you…is that right?,” Graham asked, getting at the heart of reciprocity.
“To a point,” Lutnick said. “It has to be logical reciprocity.”
“Pushing back against countries with higher tariffs makes sense and I’m glad you are using tariffs to change people’s behavior,” Graham said. “If you’re going to let your country sell us fentanyl, we should tariff their stuff. If you manipulate your currency, you’re going to get tariffed. If you close agriculture markets in France, you’re going to get tariffed. If you require a Chinese business partner to be with you in your sales to us, that is not acceptable. The tariffs are here to make us safer and stronger. I can tell you that the major car companies in Germany came here to talk to Trump recently and they make Mercedes in Alabama and they want to make more cars in America and even engines now,” Graham said. “So thank you. This works. Some of the tariffs I might have a problem with, but what you’re doing is good.”
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