By keeping trading partners guessing, the president has sought to create leverage in trade negotiations, including in talks over the North American Free Trade Agreement with Mexico and Canada. But in the process, he has sowed an atmosphere of chaos among allies as well as manufacturers uncertain about the ultimate impact on their vast supply chains.
.. Prime Minister Justin Trudeau of Canada said it was “inconceivable” that Canada “could be considered a national security threat.”
.. “For the first time in generations, we’ve really thrown out the rule book with our best trading partners,” said Rufus Yerxa, the president of the National Foreign Trade Council, which represents some of the largest exporters in the United States. “We can’t expect them to continue business as usual with us if we are throwing out the rules. So that means everything from airplanes to agriculture is on the chopping block.”
.. But Vice President Mike Pence on Tuesday phoned to tell the Canadian prime minister that the precondition of a deal was a sunset clause, meaning the pact would automatically expire unless the three countries voted to continue it. The idea has drawn ire from both foreign leaders and business executives, who say it undercuts the surety that trade agreements are meant to create.“I had to highlight that there was no possibility of any Canadian prime minister signing a Nafta deal that included a five-year sunset clause,” said Mr. Trudeau, “and obviously the visit didn’t happen.”.. Germany, in particular, had pressed for a negotiated solution, but officials there grew wary after Mr. Trump announced that he would begin a separate trade investigation into automotive imports. If car tariffs go into effect, they would especially hurt Germany’s economy... The Trump administration has argued that imports have weakened the country’s industrial base, and, by extension, its ability to produce tanks, weapons and armored vehicles. “We take the view that without a strong economy, you can’t have strong national security,” the commerce secretary, Wilbur Ross, said Thursday... The European Union and Canada have objected strongly to the idea that they pose any kind of threat to national security, citing their close alliances and defense agreements with the United States... Canada announced corresponding tariffs on a broad list of American exports, including steel and aluminum, as well as dozens of basic consumer products like ketchup, insecticides and laundry machines. The Canadian tariffs, which go into effect July 1,.. The United Steelworkers union, which represents members in Canada as well as the United States, said the decision called “into serious question” the design and direction of the administration’s trade strategy... The Aluminum Association, the industry trade group, also said it was disappointed. Heidi Brock, the group’s president, said the tariffs would do little to address the larger issue of overcapacity in China “while potentially alienating allies and disrupting supply chains that more than 97 percent of U.S. aluminum industry jobs rely upon.”
.. “These tariffs are hitting the wrong target,” said Representative Kevin Brady, Republican of Texas. “When it comes to unfairly traded steel and aluminum, Mexico, Canada and Europe are not the problem — China is.”
.. In a more pointed statement, Senator Ben Sasse, Republican of Nebraska, called the tariffs “dumb.”
“Europe, Canada and Mexico are not China, and you don’t treat allies the same way you treat opponents,” he said.
Republicans, desperate for a win, already face setbacks as they prepare to unveil tax bill this week
The National Association of Home Builders, after learning that a “homeownership” tax credit it had wanted will not be in an initial version of the bill, is preparing a nationwide campaign against it. The development underscored just how difficult the prospect of a successful tax overhaul will be, given the complex and competing interests that President Trump and GOP lawmakers are trying to serve.
“We will do everything we can to defeat this thing,” said Jerry Howard, chief executive of the National Association of Home Builders.
.. Much of the pressure, and spotlight, will fall on Brady.
.. Ryan and Brady had been hoping to stave off corporate defections as long as possible, arguing that the plan’s benefits to the economy would outweigh the loss of any industry-specific tax break.
.. Home builders are considered among the most politically influential groups, as they play a large role in the local economy for virtually every congressional district — and contribute millions to political campaigns.
.. Howard and Brady’s aides spent weeks working together to add to the bill a “homeownership tax credit,” which essentially would have replaced the mortgage-interest and property-tax deductions, combining both benefits into a new tax credit.
.. he feared that other changes could tip the housing industry into a recession. He was particularly concerned about ideas to eliminate the federal deduction for state and local taxes and doubling the standard deduction, which could remove incentives for all but the “very wealthy” to deduct their mortgage interest — and have a chilling effect on homeownership.
.. federal government would gain revenue in the short term as a greater portion of initial savings is taxed — but lose revenue in the long term.
.. On Saturday, Brady gave ground on the planned elimination of the federal income tax deduction for state and local taxes — a provision that had put Republican House members from New York, New Jersey, California and other high-tax states on edge — agreeing to maintain a deduction for property taxes but not for income or sales taxes.
.. He has been a relentless advocate for “pro-growth” measures — which largely refer to business provisions meant to goose investment.
..
The idea seemed “brilliant,” in Schweikert’s recollection. But then Brady started asking questions. And not long afterward, Schweikert withdrew his idea and the debate quickly moved along. Thanks to Brady’s soft touch, he said, he understood the decision.
“I don’t know of many members here who could handle the ideological or even the temperamental range that’s in the room,” Schweikert said. “Instead of saying, ‘That’s a dumb idea,’ or, ‘No, I’ve got to get you back over here,’ it’s, ‘Let’s walk through that. How would that work? How would you enforce that?’ ”
Trump Faces Deal-Making Challenges as Congress Returns
“Legislatively, September may be the longest month of the year, with several must pass items that face an uphill climb,” said Doug Heye, a longtime Republican strategist. The president’s decision to push the immigrant program to Congress “only makes that harder, on an issue that for years Republicans have struggled to make any headway on. The question is whether this was a strategic decision by the White House.”
His self-proclaimed deal-making skills could also be put to the test in foreign policy as he decides how to respond to North Korea’s nuclear saber-rattling while separately seeking to renegotiate the North American Free Trade Agreement with Mexico and Canada and broker peace between Israelis and Palestinians. And he may alienate America’s traditional European allies if he tries to scuttle Mr. Obama’s nuclear agreement with Iran by declaring Tehran out of compliance over their objections.
.. As he pressures North Korea to curb its nuclear program, he has belittled South Korea for “appeasement” and threatened to tear up its trade deal with the United States. As he lobbies lawmakers to back his legislative priorities, he has castigated Senator Mitch McConnell, the majority leader, and other Republicans crucial to passage.
.. Mr. Trump’s allies argue that he had a better summer than the Washington conventional wisdom would suggest and that he has a path forward. They contend that after the fights of early August, the president took on the mantle of a national leader with a vigorous and visible response to Hurricane Harvey, and that cleaning up the devastation may prove both a rallying point and a strategic leverage.
.. “It may sound counterintuitive, but the president heads into September with a bit of wind at his back,” said Michael Dubke, who served as his White House communications director. “Harvey was handled well, tax reform is back on track, the debt ceiling showdown will be pushed to a later date and while there are no good choices in North Korea, the president’s national security team is second to none.”
.. It’s not a mistake to disagree when you disagree; it is a mistake to suggest that somehow this president, who was elected just as the Constitution prescribed, and has the responsibility to lead the country, that somehow we need to not work with this president.”
.. On Tuesday afternoon, Mr. Trump will host a group that has been dubbed the Big Six to discuss his tax overhaul —
- Mr. McConnell;
- House Speaker Paul D. Ryan;
- Treasury Secretary Steven Mnuchin;
- Gary D. Cohn, the president’s national economics adviser;and
- Senator Orrin G. Hatch of Utah and
- Representative Kevin Brady of Texas, the Republican chairmen of the tax-writing committees.
.. Allies said Mr. Trump’s approach to negotiations, however, is to hold out for the best deal possible until the last moment, so it is too soon to judge.
.. “My style of deal-making is quite simple and straightforward,” he once wrote. “I aim very high, and then I just keep pushing and pushing and pushing to get what I’m after. Sometimes I settle for less than I sought, but in most cases I still end up with what I want.”
.. But those who have studied his career in real estate and business said that it has been marked by as many failed deals as successful ones.
- He bought an airline that failed.
- He bought a football team in a league that collapsed.
- He filed for bankruptcy protection multiple times.
“If you look at his record, there are a lot of deals that didn’t work out,” said Michael D’Antonio, a Trump biographer. “So if you think about the true record of performance, he is very good at promotion and creating the idea that he is a deal maker, but not very good at making actual successful deals.”
.. some Democrats argue that Mr. Trump’s very weakness may yet prove to be a boon. Since legislating entirely with fellow Republicans has yet to yield the results Mr. Trump had hoped, he may have more incentive to work with Democrats on areas where they could find agreement, particularly
- infrastructure and the
- tax code.
Democrats would also like to work on legislation stabilizing the Obama health care markets.