The NPR Politics Podcast - President Trump Lashes Out Over Trade War With China, Dow Plunges

Episode Date: August 24, 2019

President Trump announced higher tariffs on goods from China, hours after Beijing said it will slap tariffs on $75 billion of auto and other U.S. goods. Earlier in the day, he "ordered" U.S. companies to stop doing business with China. Plus, exclusive reporting from Susan Davis on an implosion inside the Republican Party's centrist wing. This episode: political correspondent Scott Detrow, chief economics correspondent Scott Horsley, White House correspondent Tamara Keith, Congressional correspondent Susan Davis and political editor Domenico Montanaro. Email the show at [e-mail]. Find and support your local public radio station at npr.org/stations.Learn more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

Hi, this is Leanne calling from Loudoun County, Virginia, where we just completed our first day of the school year for 2019-2020. This podcast was recorded at 4 47 Eastern on Friday, August 23rd. Things may have changed by the time you hear this. Keep up with all the latest news by visiting npr.org, using the NPR One app, or listening to your local public radio station. Congratulations to my kindergartner, Max, and my fifth grader, Caroline. Have a great school year, everybody. Enjoy the show. Hey there, it's the NPR Politics Podcast. I'm Scott Detrow. I cover the campaign. I'm Scott Horslake, Chief Economics Correspondent.

And I'm Tamara Keith in the basement of the White House. Scott, you are back two days in a row. Woohoo! That means either good times or bad times. You are here once again because we have a lot of questions about the economy again today. Today, the Dow dropped 623 points following some angry tweets from the president. And, Tam, let's start with those tweets. What exactly did the president say? Earlier in the day, the president tweeted his

displeasure with Jay Powell, the Fed chairman. And he also tweeted his displeasure with China and China's President Xi Jinping. One tweet notably ended, quote, My only question, who is our bigger enemy, Jay Powell or Chairman Xi? And Scott, you talked about this earlier this week, actually, but I feel like we just need to take a moment and note how remarkable it is for the president to undermine, to go after the Fed chair in any way, but let alone in a way like this. That's right. And Jay Powell is kind of got his hands tied behind his back. He has tried very hard not to get into a slugfest with President Trump. The chairman of the Fed was out in Jackson Hole, Wyoming, speaking at a big conference about monetary policy. Everybody was sort of on pins and needles. Well, not everybody, but the Fed watchers were all on pins and needles. You were. It's fine. Waiting to see what's Jay Powell going to say. Apparently, Donald Trump was watching, too. Didn't much like what he heard. And so he goes on Twitter and likens him to the president of an adversarial country.

And Scott, what Jay Powell said in a very Fed chairman, gentle kind of way was essentially there's only so much the Fed can do when there's all this uncertainty related to trade policy. And that comes from the White House. And speaking of that uncertainty in trade policy, what else did the president put on his timeline today? It is a very long series of tweets. But in order to fully understand it, you need to know that China announced today that it plans to retaliate against the United States for tariffs that the president has imposed on Chinese imports. China is going to impose tariffs on $75 billion worth of U.S. products. So the president says, I will be responding to China's tariffs this afternoon. But here's what

the president said that arguably moved markets. He said, Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies home and making your products in the USA. And the reason we are taking the time to walk through all of these tweets in the way we are is that, Scott, after the president tweeted all of this, we saw a pretty almost instantaneous reaction from the markets. What happened and why were they reacting this way? That's right. The market dropped sharply in response to the president's tweet storm. And by day's end, the Dow was off more than 600 points, more than two and a third percent. The broader S&P 500 index was down more than two and a half

percent. And I don't think that's because market participants were actually thinking companies are going to have to pull their supply chains out of China. Some have already done so, but a lot of are staying behind in China. I don't think they're taking the president's threat or order at face value. I think what they're responding to is what seems to be a sort of increasingly erratic response from this White House to what is a slowdown in the global economy and signs of a slowdown in the U.S. economy. All this week, we've seen mixed messages about tax policy. We've seen inconsistent messages about the direction of the economy. There's a sense in the market that the White House team is not at the top of its game. And this extra-constitutional

order from the president is just another sign of that sort of erratic policymaking from the administration. I think the other part of that, Scott, also, though, is simply that the president was indicating that trade wars are not easy to win and that the trade war was going to escalate. And speaking of that, Tam, as we sit here in the studio, it seems like the president has tweeted again with some substantive news. And notably, they waited until after the market closed to make this additional tweet. And it is another very long

series of tweets, which I will not read all of. But in short, the president is just saying, we have to do something about China. I'm the one who has to do something about China. And then here's the news. In response to the retaliatory tariffs from China, President Trump is now amping up the tariffs that he had already imposed or are going to be taking effect soon. So basically, some tariffs that were going to be 25 percent are now going to be 30 percent and some tariffs that were going to be 25 percent are now going to be 30 percent. And some tariffs that were going to be 10 percent are now going to be 15 percent. And Scott, how quickly will consumers see this and how notable will it be? Well, some of these tariffs were set to take effect on September 1st. Some aren't taking effect until December. But we're already feeling the effects of these tariffs. There have been various estimates about the cost to consumers. And every time you ratchet up the tariff amount, that's basically just putting a larger tax on

American companies and American consumers. The interesting thing about this is every time the president orders tariffs on China or one of our other trading partners, he seems surprised when the trading partner retaliates. The tariffs that China ordered today on U.S. exports, including automobiles, were a retaliation for the tariffs that President Trump ordered on August 1st. And you might say an entirely predictable retaliation for the tariffs that the president ordered on August 1st. I mean, we've gone through several cycles of this now. We know how this game is played. And yet every time the administration seems surprised when the other party says, oh, yeah, you're putting tariffs on us. We're going to come back and put tariffs on you.

The president in his tweet this afternoon seems surprised and insulted that China would take this step. So he ratchets up. Well, we know how this game is going to play out. Well, I have two more questions, and one is political. And let's start there. And I am curious of both of your views, Scott, from your cushy new perch covering economics and not politics. And Tam, continuing to cover politics and covering President Trump's reelection.

And that is that a lot of this isn't new, right? Like he would tweet about all sorts of things. He clearly sets policies on a whim. Often it changes from morning to afternoon. And yet, up until relatively recently, the business community has been very happy to continue to see regulations cut and get tax cuts. And the markets have done pretty well. What has changed in that the markets are responding to this volatility in the way that they didn't really seem to before? This president inherited an economy that was in good shape and steadily improving. It was steadily improving in a way it had been doing for years. And this president and

this administration have not really been tested with any serious economic challenges during the two and a half years that Donald Trump's been in office. This is the first stress test for President Trump and his economic team. And so far, I don't think the financial markets are terribly impressed with the way the Trump administration has responded to this stress test. But, Tam, this is all happening as the president prepares, at least we think he's still going as of right now, to the G7 to talk trade. How does this position him for that? I mean, it's not like this G7 meeting was going to be all sunshine and roses and every other country saying, yes, President Trump, you have a great plan. We're going to follow you wherever you lead. But that, I think,

is what the president actually wants from this. So I can't imagine that this G7 is going to be any less awkward than some several other recent meetings between the president and the leading economies of the world. Coming up, we've got some exclusive reporting from Susan Davis. But before we take a break, we do have one other news update. And that's this. The Supreme Court made an announcement today about the health of Justice Ruth Bader Ginsburg. In a statement, they said she has just completed three weeks of radiation treatment in New York. That treatment was for a tumor discovered on her pancreas. Justice Ginsburg will continue to have periodic blood tests and scans. But the court says no further treatment is needed right now. And, of course, that reporting comes from our Nina Totenberg.

And if you are looking for some classic conversation between Ruth Bader Ginsburg and our own Nina Totenberg, you can find an interview that Nina did in your podcast feed back from July 24th. All right, Scott, Tam, thank you very much. You're welcome. You're welcome. You're welcome. I feel like we'll have this combination of people talking about the economy again pretty soon. We're saying goodbye to you. When we come back, we're going to talk about

this investigation that Susan Davis just wrapped up. While you were sleeping, a whole bunch of news was happening around the world. And Up First is the NPR news podcast that gets you caught up on the big news in a small amount of time. Spend about 10 minutes with Up First is the NPR News podcast that gets you caught up on the big news in a small amount of time. Spend about 10 minutes with Up First. Weekday mornings from NPR News.

We are back with two new guests, Susan Davis and Domenico Montanaro. Hey, guys. Hey, Scott. Hey. So, Sue, we are here because you broke a pretty big political story today. You know, I am working too hard for August recess. I will tell you that much. Normally, August, you like to keep it quiet, slow, go to lunches. I have been working for weeks on this story.

And I am excited about this podcast because I saw you making dozens and dozens and dozens of calls for weeks. And I was like, what is going on over there? Well, now you know. All right. So let's talk about it. We have talked a lot in this podcast about the endangered species that is the moderate Republican in Congress in recent years. So this is a story about the complete implosion of the relationship between those remaining moderates and one of the key groups that tries to help them win. Yes. So there's two main players in this story. The first is a group of Republicans who are in a group called the Republican Main Street Caucus. That's on Capitol Hill. It was at the time about 60 to 70 lawmakers and their relationship with an outside group called the Republican Main Street Partnership. This is a group that's existed since the late 1990s and has existed to essentially

raise money and support moderate Republicans, people who are fiscal conservatives and social moderates. So, Domenico, spoiler alert, Democrats won back control of the House of Representatives in 2018. How key were these suburban districts represented by moderate Republicans to that flip? Well, they were huge. I mean, the fact of the matter is when you think about what Democrats were able to do in moderate districts, in suburban districts, places where you have lots of suburban women and all that, Democrats were able to win them by huge margins, big flips from 2016 and prior midterms in particular. And we've been talking so much about how Democrats are running their 2020 presidential

elections and how that's veered off from some of the strategy in 2018 of trying to appeal to these moderates. So the election comes and goes. There is a big meeting between this group and a lot of these lawmakers. What happened? Yeah. So the election comes and they get their butts kicked. So in these meetings after the election, emotions are pretty raw.

Members are angry. I think in some cases they were looking for someone to blame. And I think there was a lot of frustration at this group, the Republican Main Street Partnership, that it could have done more or it hadn't been doing enough. And there had been questions about how it was being run. But obviously, taking those hits in the election just accelerated a lot of that frustration. One of the things that came up after the election in these private meetings that I reported on was they were still sitting on more than $700,000 in campaign money, which in politics is kind of like malpractice. Why do you still have

money after election day that should have gone out the door to help some vulnerable Republicans? That type of money can air a lot of ads in some of these key districts, for example. And a lot of people pointed to races like David Valadao in California. He lost by like 700 votes. If you could have strategically spent money, could you have saved some? That's a little bit of Monday morning quarterbacking, but it speaks to the frustration that members had. They also just wanted to know sort of how she was running this organization, what kind of decisions she was making. And so as a group, they voted in a meeting in December on a unanimous resolution that said, we're going to suspend political activity with the partnership until they give us a full audit of their activities.

Now, how rare is a move like that? I've never heard of anything like it. Generally speaking, when lawmakers have these outside organizations that they're affiliated with, they're allies. They work together. They are partners in trying to build up their candidates or their philosophies. So to take on a group that is essentially using its relationship with you was so unusual. So to take on a group that is essentially using its relationship with you was so unusual. So they vote on this resolution and then it gets worse. They send it to the partnership. They tell them they've had this vote. About a month later, the partnership sends up a member of the board, a guy named Doug Osi. He's a former Republican lawmaker himself.

And in another private meeting, essentially tells them, you can't have it. We're a private organization and you have no right to this information. So they're not getting an audit. I mean, how close to the legal line? It seems like OC in your story was saying that he was trying to kind of protect these lawmakers. And then yet there's someone else in your story who's a kind of campaign watchdog who's saying, you know, that's actually not the case, that they could share the information. So what is the legal line on this? OC has a point. It's a kind of campaign watchdog, was saying, you know, that's actually not the case, that they could share the information. So what is the legal line on this? OC has a point. It's a private organization. Members of Congress have no legal right to say, show us your books. We want a governance audit before we'll continue to work with you.

At the same time, there's nothing legally that says they can't do that. And if anything, if the members that you're supposed to be seen as supporting and organizing around are unhappy, you know, politically, you'd think that you would want to make those lawmakers happy and comply with the audit. So the group of lawmakers that this organization is like solely devoted to trying to help is mad at them. They want the audit. They're not getting the audit. And have suspended all political activity with them. So like all good investigative stories, you got your hands on a pretty interesting memo. Where did the memo come from? What did it say? So after they voted to suspend political activity,

there was a memo dated in December that I obtained from an anonymous source. It was sent to me over email. I then later verified the email with a source to make sure that it was accurate. And who was that source again? And so the memo lays out just a number of concerns about the partnership and mainly about Chamberlain. Sarah Chamberlain is the president and CEO of the Republican Main Street Partnership. But she also has her hand in any number of subentities, things like the Super PAC, another PAC, an advocacy arm. She's kind of in charge of all of it. She's also the treasurer, right? Yes. So in some ways, she was the boss and writing her own checks. I mean, there was just a lot of behavior that, if it didn't raise at least legal questions, would raise ethical questions. And again, the most important thing is these

members are just mad about it. They want to know answers. So the memo alleges things like she engaged in behavior that would violate campaign finance laws if it was true. I would say that they've denied the allegations in the memo. But saying things like she would approach lawmakers and say, I have a super PAC, you should call me. That's illegal. You know, you can't coordinate with candidates and campaigns using super PAC money. It also raised a lot of questions about what she was doing with an organization called Women to Women. So but they raise a lot of questions, but they obviously don't have any ability to connect the dots without actually an independent audit, at least is the way they see it, right?

Sure. They had questions and they wanted answers. So Women to Women, what was that group and what was its role in all of this? A couple of years, they started an effort that began as the Women to Women initiative that was intended to prop up Republican women in Congress. And it was allowed to feature them and promote them around the country. Chamberlain has transformed it into a different thing. It is now being transformed into a 501C3. A 501C3 is a tax term for a nonprofit.

Nonprofits can't engage in politics. So members had a question just from like the political standpoint is like, what's the point of this if it's not for politics, right? Like we exist to do politics. What are you doing here? And also a question of was she using the 501c3 to maybe engage in some political activity? And one of the things I know, because I went to a briefing with her in which she said this, is that they were using information that they gathered at these women to women events that essentially focus on suburban women, another core election demographic, and taking those insights and bringing them back just to Republican members to try and help them win back suburban women. Now, does that in itself break the law or is it ambiguous? If they are a 501c3,

that pretty clearly breaks the law. It would not be illegal if you took this information and put out a report and said, we advocate for suburban women and we're telling Congress what they think. One of those things where you kind of open source it with the hopes that the person you wanted to help picks it up and reads it. But it's public information. It's a public report.

Admitting that you take it just to Republicans and the intention is to help them win, that's electioneering, that's politics. And that raises a legal red flag. I will say that I have asked them about this. They claim they are not officially yet a 501c3, although there is documents in the story from the IRS saying that they have been determined to be a 501c3 as of June of this year. Now, just to have it all in one place here, what has Sarah Chamberlain said about your reporting? What has her response been? So I submitted a series of

questions to the organization, to both Sarah Chamberlain and Doug Osi. They did respond to them. Doug Osi responded on their behalf for both of them. They essentially denied all of the allegations in the memo. They say they comply with campaign finance laws. They say they do everything by the book. They kind of blamed, in Osi's words, a series of disgruntled individuals, saying that people were just mad after the election. They were looking for someone to blame. And this has all just been a distraction and that they're focused on the mission of electing more Republicans. The bigger point, though, is even if that is true, politically, it still matters that lawmakers on Capitol Hill don't believe them and they're not engaging with this organization. I should also

note that members in that caucus decided after all of this to dissolve it. It doesn't exist anymore. And it's no longer a part of this Congress. So after having lived with this for as long as you have, and watching the kind of moderate members that exist in the House kind of dwindle, you know, what do you find for yourself as a takeaway big picture on why people should care? The Republican Main Street Partnership bills itself as the, quote, governing wing of the Republican Party. And they have a point in that these are the lawmakers. These are the races that tend to decide where the majority is made. in either party, if Democrats, if this part of the Democratic Party was dissolving the Republican Party, the centrist, moderate coalitions that can beat in the suburbs, that compete in the swing races, if that's not strong, I think it speaks to the long odds that Republicans face of having a

chance at winning back the majority in 2020. My one caveat would be it's still early and things can change. Though, Domenico, a lot of the big picture trends that have led to all these gains in the suburbs, dissatisfaction with President Trump being chief among themomenico, a lot of the big picture trends that have led to all these gains in the suburbs, dissatisfaction with President Trump being chief among them. I think a lot of those trends have only continued since Democrats retook the House, right? Yeah. I mean, building up a structure, you know, now after the implosion of a group like this is made even more difficult by the fact that so many of them lost. And because that's not where the heartbeat of the party is right now. I mean, we've seen this become a Trump party is a Trump takeover that started with the rise of the Tea Party in 2010, when groups like this had a difficult time

forming in the first place and maintaining themselves and having power and being able to have the voice in the party that actually is pushing legislation. It's quite the opposite, especially when you're talking about trying to get a majority of your conference to get legislation to the floor. Last question, Sue. We have a lot of stuff that comes at us every single day that we can choose to cover or not cover. I'm curious, what initially got your attention here? What made you think this is worth spending a long time poking at? The funny thing is, it all happened kind of by accident, which is sometimes how the good stories get told. I went to a July 29th briefing with Sarah Chamberlain. It was on the record about

the Women to Women Initiative. I went very earnestly thinking I would try and write a story about what the Republican Party was doing to try to recruit more women. And when she was explaining what it was, it just was raising kind of these questions in my head of like, it's kind of weird that they're nonpartisan and why aren't they partisan and what's going on here. And so after the briefing, I just started to make a couple phone calls to follow up and see what was going on. And a very different picture started to emerge. I can say that, you know, I talked to 11 different sources for this story, almost to the one when I could finally track them down and get them on the phone, they would say to me, I can't believe it's taken this long for a reporter to call me about this.

I mean, this really was a drama that played out in the months after the election. One of the reasons why I think people weren't paying as close of attention is because of the Democratic takeover. The focus of Washington just shifted the other direction. And this was happening, and no one was covering it. So it was kind of fun to discover and just kind of methodically work through how I spent my August recess by Susan Davis. So the takeaway is if you invite Susan Davis to something, you might not get the story you thought you were going to get. This is a very well-reported story, but that also means it's a very complicated story, which means this conversation was actually just a sliver of

all the information in there. It's worth reading on NPR.org. That is a wrap for today. We will be back in your feed soon. All of our other coverage is, in addition to on the website, on your local public radio station, and on NPR One. I'm Scott Detrow. I cover the campaign. I'm Susan Davis. I cover Congress. And I'm Domenico Mazzanaro, political editor. Thank you for listening to the NPR Politics Podcast.