Trump Rebuffs Demands to Lift Tariffs as Economy Falters

Trump Rebuffs Demands to Lift Tariffs as Economy Falters

WASHINGTON — President Trump continues to resist calls from hundreds of companies to drop tariffs he has placed on foreign goods, arguing that the levies do not impose costs on American companies, despite economic evidence to the contrary.

The Trump administration has been weighing an executive order that would defer tariff payments on some imports, though not cancel the levies outright. But Mr. Trump said Tuesday evening that he had yet to approve the measure, and it was not clear if the administration would ultimately proceed with it.

“That might be, but I’m going to have to approve the plan,” Mr. Trump said of lowering tariffs. He pushed back on news reports that he had made a decision, saying, “I approve everything and they haven’t presented it to me, so therefore it’s false reporting.”

People familiar with the deliberations say the administration has been weighing such a deferral, which would apply to the “most-favored nation” tariffs the United States has long imposed on goods from around the globe, rather than the levies Mr. Trump has imposed on Chinese products or foreign metals.

While the administration previously considered a 90-day deferral, recent discussions have included a 30-day deferral, and people with knowledge of the situation cautioned that the plans remain in flux.

Mr. Trump has been reluctant to reduce any tariffs because he does not believe they hurt American businesses and are instead being paid for by China and other countries — an idea he repeated Tuesday night.

“China’s paying us,” he said. “We made a deal with China. Under the deal, they’re paying us 25 percent on $250 billion and they pay it. And I spoke with President Xi the other day, and we didn’t mention that.”

American businesses and lawmakers have long pressed the administration to drop its tariffs. Those requests have only intensified in recent weeks, as the coronavirus causes steep economic pain for businesses and consumers.

Auto sales are plummeting and retailers have already furloughed hundreds of thousands of workers. On Wednesday, a gauge of manufacturing activity showed the factory sector had fallen back into recession. Specific forecasts have been difficult to make with events unfolding so quickly, but economists say this could be the deepest recession in a century.

As a result of the tariffs Mr. Trump imposed on global metals and Chinese products last year, many companies pay an additional 7.5 percent to 25 percent to import components and finished products from abroad. Economists have argued that these costs are largely borne by American businesses, rather than the Chinese companies that supply them.

Mark Zandi, the chief economist of Moody’s Analytics, said that the coronavirus would have flattened the economy regardless, but that Mr. Trump’s tariffs had further damaged U.S. and global growth.

“Tariffs and trade wars made no sense before the virus hit, but now they are beyond reason,” Mr. Zandi said.

In a letter to the White House on Tuesday, executives of more than 400 American companies, including some that have begun laying off workers, begged the president to delay the duties, arguing that such a move would give businesses more cash to help them survive the next few months.

“We are urgently asking you to delay the collection of duties, including those that many companies were required to pay this past Friday, for a period of 90 to 180 days,” read the letter, which was signed by the leaders of Levi Strauss & Company, L.L. Bean, Lowe’s, Walgreens Boots, Macy’s and other companies.

“In doing so, you would provide immediate relief to both large and small businesses, including manufacturers, retailers and other service providers, farmers and ranchers,” the letter said.

In a statement Wednesday, Myron Brilliant, the head of international affairs at the U.S. Chamber of Commerce, said tariff relief “would provide some welcome breathing room for American businesses and consumers.”

“Liquidity has emerged as one of the top challenges for businesses of all sizes, and tariff relief” would alleviate some of that strain, he said.

Glenn Hubbard, an economist at Columbia University, said removing the tariffs could be critical to helping the U.S. economy recover more quickly once the virus subsides, by giving business leaders confidence to ramp up investment.

“It would be good if the president stood down on the trade wars,” Mr. Hubbard said. “If I was sitting in a C.E.O.’s chair and Covid-19 was receding, if you wanted my confidence and investment back, I think you would want to convey business certainty.”

Some lawmakers have echoed the arguments. In a bipartisan letter on March 26, eight leading lawmakers urged Treasury Secretary Steven Mnuchin to defer all tariffs for at least 90 days to help ensure businesses have enough liquidity to weather the crisis.

But longstanding opposition to removing the tariffs has also grown. Groups that supported Mr. Trump’s levies from the beginning have insisted that any removal would be ruinous for industries like steel that depend on the protection.

“We appreciate President Trump’s statement yesterday that he is NOT planning on deferring the collection tariffs,” the Coalition for a Prosperous America, which has supported the tariffs, said in a statement Wednesday.

“This is not a recession caused by lack of cheap goods,” they said. “Incentivizing imports would kill many U.S. jobs that remain.”

In a letter last week to Customs and Border Protection, the American Iron and Steel Institute and other steel industry groups said that any efforts to delay or reduce the levies would “ultimately hurt U.S. workers and businesses during this unprecedented moment.”

The administration had already announced plans to review delaying tariffs on a case-by-case basis, before quickly reversing the decision.

In mid-March, Customs and Border Protection issued a notice saying it would consider delaying tariff payments for companies on an individual basis. Just one week later, however, it issued a bulletin saying it was no longer considering such requests.

On March 20, the United States Trade Representative announced that it would create a new process for companies to submit comments if they believed further modifications to the tariffs were necessary.


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