The NPR Politics Podcast - Trump Escalates Trade War With China; China Retaliates

Episode Date: September 18, 2018

Hours after President Trump announced tariffs on $200 billion in Chinese goods, China responded with its own levies on $60 billion worth of U.S. products. The tit for tat looms heavily over the midterm elections. This episode: White House correspondent Tamara Keith, White House correspondent Scott Horsley, and national political correspondent Mara Liasson. 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

Hey, this is Kavitha. I'm currently in Juneau, Alaska, where I just finished my first day as a general assignment news intern at KTOO Public Media. This podcast was recorded at 3.29 p.m. on Tuesday the 18th. Things may have changed by the time you hear it. Thanks. Enjoy the show. Yay! A junior sprout. Hey there, it's the NPR Politics Podcast. The Trump administration announced new tariffs on China yesterday afternoon, and China has already struck back. If there's a retaliation against our farmers and our industrial workers, our ranchers, if any of that goes on, we're going to kick in another $257 billion. I'm Tamara Keith. I cover the White House. I'm Scott Horsley. I also cover the White House.

I'm Mara Liason, national political correspondent. So this is just the latest round of tariffs in what seems to be a ping pong game. Well, it's a ping pong game where you keep hitting the ball harder and harder. It's an escalation in President Trump's trade war. He just late yesterday announced tariffs on another $200 billion worth of Chinese imports to the U.S. And while up until now they have sort of tried to avoid consumer products, now these are going to be things that consumers are going to see in the stores. And Donald Trump says that if China retaliates with tariffs of their own, which China has already done to the first round of this trade war, he'll put even

more tariffs on. We don't want to do, but we probably will have no choice. So eventually, tariffs have the kind of effect that every single economist will tell you, which is they will raise prices for consumers. And we're very much near that point now. We're near that point now. The big question is, is the U.S. economy big enough, as Trump cabinet officials will say, that it can absorb this? Even President Trump says there's going to be some short-term pain for farmers, for other people. But in the end, we're going to win. Yeah, well, so Wilbur Ross, the Commerce Secretary, was on TV this morning and said, you know, it'll be spread out. It'll be on so many different things people won't even really notice.

Wilbur Ross has been minimizing the effects of Trump tariffs from the beginning. You might remember his TV appearance with the Campbell soup can where he talked about the fractional cents it will put on the extra cost of a steel can. But if you're talking about $200 billion in Chinese goods and hitting them with a 10% tariff to start with, ratcheting up to a 25% tariff in the new year, you're talking about billions of dollars in additional costs. It is spread out. It is not a huge chunk of our overall economy, but these are going to start to show up. Absolutely.

And on top of the increased prices for U.S. consumers, you are also seeing the effects of the retaliatory tariffs that China and other countries have hit back with. Initially, you remember the Trump administration said, oh, we don't think China's going to hit back. Wham, they hit back immediately. Why wouldn't they? And surprise, surprise, they've already hit back again to this next round. Just this morning, China announced tariffs on another $60 billion in U.S. exports to China. So folks who are in the export business are already certainly feeling the effects, and that includes a lot of farmers. We are now in a trade war. This is what a trade war looks like. And this is what Donald Trump famously tweeted, trade wars are good and easy to win. We're now going to find out if he's right or

not. Okay, let's start from the beginning. What is President Trump trying to achieve with these sort of escalating trade fights? Well, that is an excellent question. You know, this can be confusing because what many economists think should be done about China is that China is a trade cheat. China steals intellectual property. China makes forced technology transfer. China doesn't play by the rules. Those are problems that there is a bipartisan consensus around that those problems need to be fixed. Donald Trump, on the other hand, seems fixated on the trade deficit number. He wants that number

to come down. He talks about when you take out $500 billion from us, as if you have a trade deficit with a country, they're stealing money from you. What Donald Trump seems to want is that we have a trade surplus with everyone. Okay, wait, this is maybe a dense question. What is a trade deficit? So the trade balance is how much you buy from me measured against how much I buy from you. The United States today buys a lot more goods from China than China buys from the U.S. Therefore, we have a trade deficit with China. But that doesn't mean China is stealing money from the United States. That means at the end of the year,

we have a lot of Chinese goods. They have fewer American goods, but they have more American dollars. I don't think there's any question that we have a lot of Chinese goods here in this country. Sometimes when an economy is very strong, one of the signs of that is the trade deficit goes up because American consumers have money and they want to buy a lot of stuff. Donald Trump was asked, hey, since you started talking about tariffs, the trade deficit has gone up. You know, he talks about we're being ripped off by China. We're being ripped off by the EU. He sees the trade deficit as some kind of a metric of an economy's success or failure. And so here, when you ask what is the president trying to achieve with these tariffs,

are these tariffs a means to an end? Is he trying to get China to change its behavior and stop stealing intellectual property and stop forcing American companies to transfer their technology to China? Or does he see these tariffs as an end in themselves that will discourage Americans from buying Chinese goods? And I think it's probably the latter, because he, according to Bob Woodward, scribbled in the margin of a speech, trade is bad. Donald Trump doesn't like trade with other countries. Somehow or other, he thinks if you buy a foreign product, that country has ripped you off. They've taken your money. But, you know, because he's the president of the United States, he gets to prosecute this. And what's so interesting is there is a bipartisan consensus that China is a trade cheat. But there is no bipartisan consensus

that tariffs are the way to correct that problem. And not only is there a bipartisan consensus within the United States, but there's an international consensus that China has been a bad actor on the trading scene. But instead of marshalling an international coalition to go after China and put pressure on China from all sides, President Trump and his trade policies

have managed to alienate lots of other countries who should be allied with the United States in pressing that case against China. So folks who might be working with us against China are instead mad at us because he's slapped tariffs on the EU or slapped tariffs on Canada. Once upon a time, there was an actual official coalition of countries who tried to do something about it. And it was called the TPP. And it was every country that had, you know, a border on the Pacific that was going to basically gang up against China. They were going to make a free trade pact. It was specifically excluding China. What did Donald Trump do? One of the very first things he did when he came into office was pull us out of that. OK, we are going to take a quick break. And when we get back, we're going

to look at how the trade war is affecting the midterm elections. Hi, I'm Daniel Alarcón, host of NPR's Spanish language podcast, Radio Ambulante. This week, a year after the earthquakes that devastated the country, Mexico is still dealing with the aftermath. Schools were especially damaged and the government promised to rebuild them fast. But two journalists discover that the truth about that reconstruction is much more complicated. And we're back. And President Trump in his campaign, one of his big items, something that he really talked up, especially in the upper Midwest, those states that he ended up winning like Michigan and Wisconsin. He said the Trans-Pacific Partnership is terrible and we're going to tear it up. And he said NAFTA is no good. And voters in the upper Midwest, those states that he won, Michigan and Wisconsin, voters responded to that. The question now is he's taking action. He is doing the things that he said he was going to

do in the campaign. Is he being rewarded for it or not? You mean politically? Yeah. Well, right now. I mean, we're headed into the midterms. Well, right now, you know, the question Donald Trump famously said, I could stand on Fifth Avenue and shoot someone and I wouldn't lose any voters. Now he's testing a corollary of that. Could I stand in a soybean field or on the floor of a small manufacturing company and shoot someone and not lose any voters. I think voters in the Midwest who like Donald Trump are willing to give him a lot of leeway, see if this tack works. But what we do see in polls is there's been a 13-point swing shift against Republicans in the generic ballot in the Midwest. When you ask voters all over the country, do you approve or disapprove of Trump's performance in trade negotiations? 39% approve, 61% disapprove. Trade itself is getting more and more popular,

tariffs getting less popular, polls show. So we have to assume that even Trump voters in the Midwest, which was his target audience, are concerned about the results of his trade war. But when you talk about the midterm elections, Tam, this is an interesting issue that doesn't break neatly along partisan lines. It's not as if a vote for a Democratic congressional candidate is necessarily a repudiation of Donald Trump's trade policy, or a vote for a Republican candidate is an enthusiastic thumbs up for Donald Trump's trade policy. Because when you look at the folks who are in Congress right now, some of the Democrats, like Ohio Senator Sherrod Brown, are more or less cheering the president on. They tend to support his trade policies. And some of the fiercest opponents

of the president's trade policies have been farm state Republicans whose constituents have been paying a price for the retaliatory tariffs that other countries have slapped on the U.S. And you talk about Ohio and Sherrod Brown. He is benefiting from all of the talk about trade and being able to connect himself to President Trump in a state that President Trump won by a significant margin in 2016. Then you go to North Dakota, where President Trump is also quite popular, won by a ton in 2016. And you have a Democratic senator there, Heidi Heitkamp, fighting for her life. And she has a new ad out where she is going after her Republican opponent on trade. China is canceling their contracts to buy soybeans. This is a farmer standing in a soybean field.

Well, when you ask Kevin Cramer why he supports the trade war, he criticizes farmers. I hear all kinds of hysteria. There's potential short-term pain. We don't have a very high pain threshold in the United States of America. Mr. Cramer, that trade war is costing my family a lot of money, and you don't seem to care. That's a pretty powerful ad. One of the things, as Scott said, the trade war as a political issue is really complex, cuts across partisan lines. But one thing it clearly does is it is a wedge issue inside the Republican Party.

I mean, the vast majority of Republicans in Congress are against this trade war. It's one of the very few issues where Republicans are even willing to speak up against Trump. Not Kevin Cramer, but many others. And the president and his administration have tried to tamp down some of that opposition, especially in farm states, red states. That's why you saw the Agricultural Department take this multibillion-dollar rescue package for farmers, heavily weighted towards soybean and pork producers, because since those are a couple of commodities that have been hard hit by retaliatory tariffs. That cushions the blow, but you'll hear the farmers say, I don't want a government bailout.

I want the government opening up these markets. It's kind of humiliating for them. Why do they need welfare? I call it the strategic soybean reserve. Why do we have to do that? These farmers say, I can sell my product. I don't need a welfare check. And one reason farmers are being targeted is, A, farm states went for Donald Trump,

so the other countries figure this is a way to put some pressure on the White House. But also, American farmers are very productive. We have a trade surplus in agriculture. It's an area where the United States is extremely competitive. We produce commodities at a low cost, high quality. Other countries want to buy those products. And the trade war is definitely hurting agriculture. And so if you are dividing Republicans, if this is a wedge issue for Republicans, does that become a problem for Republicans running for office if there are some voters who are suddenly not that enthused? Well, sure. It also makes it harder for Republicans to sell the two great success

stories that they feel they've had, a good economy and tax cuts. And the trade war not only muddies the message, it also threatens to undermine the positive economic effects of what they think their reign has produced. The trade war can take some of the bloom off the rose of a great economy. And you can see concern about that in this latest round of tariffs directed at China. Again, these are going to hit some consumer products. When the White House initially talked about this, it was going to be a 25% tariff. As they've rolled it out, they've said, no, it's going to be 10% for the rest of this year, and then it'll go to 25 after the new year. So they want to get past the Christmas shopping season when there's going to be a lot of Chinese goods in the stores. And most importantly,

they want to get past that midterm election in November. And what you heard Kevin Cramer say in that Heidi Heitkamp ad is what Donald Trump says. There's going to be a little short-term pain. We just got to get through this. But the goal was to make a deal with China. The goal was to have the tariffs be a negotiating tool. But so far, we haven't had any results with talking to the Chinese at all. And it's not exactly clear that that was the president's goal. In a tweet that he sent out a couple of weeks ago, he said, and hey, we could get money from those tariffs.

Yes, as if tariffs were an end in and of themselves. He's also said we're making a lot of headway. It's kind of hard to see said we're making a lot of headway. It's kind of hard to see where they're making that headway in terms of actually bringing China to the table, changing China's behavior, striking new trade deals that the president's talking about. There haven't really been any new trade deals since he's taken this aggressive approach. So when voters go to the polls in states all over the country in November, will they be paying more for their iPhones? Or will they be seeing, or their tin cans, their Campbell's soup?

Will they see the effects of this fight? Will they be feeling the pain and the gain part hasn't happened yet? The gain part definitely hasn't happened yet. The pain is there. It may be a mild headache as opposed to a migraine. But for some folks in certain select industries that have been hardest hits, it's a migraine. You certainly know if you're in a small manufacturing plant and all of a sudden the cost of your steel and aluminum has gone through the roof, or you're the nail manufacturer

who had to lay off everyone and close, then you really know. If you're just a consumer, it's hard to tell. There's no sign on the grocery store shelf that says your Campbell's soup now costs five cents more because of Donald Trump's tariffs. You know, there's not information like that out there. OK, we are going to leave it here for today, but we will certainly be back in your feed soon, just as soon as there is news that forces us to run back into the studio. I'm Tamara Keith. I cover the White House for NPR. I'm Scott Horsley. I also cover the White House. I'm Mara Liason, national political correspondent. And thank you for listening to the NPR Politics Podcast.