GOP scrambles to ease blow from Trump's trade war

May 16, 2019

             

Vice President Mike Pence, left, talks with Sen. Todd Young, R-Ind., as they enter a Senate Republican policy luncheon at the Capitol in Washington, Tuesday, May 14, 2019.

WASHINGTON  President Donald Trump's allies on Capitol Hill are scrambling to soften the blow from his trade war with China amid mounting anxiety from farm-state lawmakers that the protracted battle and escalating tariffs could irreparably damage their local economies.

Vice President Mike Pence met privately Tuesday with Senate Republicans for a second week in a row and urged them to stick with the White House. Senators were working with the administration to craft a relief package for farmers and ranchers, some $15 billion that Trump announced this week would be coming soon. Details of the package remained in flux.

"One thing I think we all agree on is that nobody wins a trade war," Senate Majority Leader Mitch McConnell said after the private lunch meeting.

McConnell said there was hope that the tough negotiating tactics being used by the administration "get us into a better position, vis--vis China, which has been our worst and most unfair trading relationship for a very long time."

Pence heard an earful from senators last week as uncertainty mounted.

The administration on Friday launched a fresh round of tariffs on some $250 billion of Chinese goods; China retaliated this week with tariffs on $60 billion on American goods on top of those already hurting U.S. markets.

The tariffs risk spiking prices for U.S. consumers while leaving growers with commodities they cannot sell to the Chinese markets. Already soybean and hog farmers are among those home-state interests senators say are struggling under Trump's trade policies. With China talks stalled, senators pushed the White House to wrap up the negotiations and resolve the standoff.

"There's a lot of concern," said Sen. John Cornyn, R-Texas, a member of GOP leadership.

"If this is what it takes to get a good deal, I think people will hang in there, but at some point we've got to get it resolved," Cornyn said. "If this goes on for a long time, everybody realizes it's playing with a live hand grenade."

On Tuesday, though, senators appeared more reserved, and largely held their fire as they tried not to undermine the president's negotiating hand and worked to shore up their home-state communities with a new round of federal aid.

Pence told them that talks on another trade front, a new U.S.-Mexico-Canada deal to replace the North American Free Trade Agreement, were progressing. Senators said they were hopeful those talks were at the finish line and would open new markets for commerce, but the deal would need approval from Congress, which remained uncertain.

Sen. John Hoeven, R-N.D., the chairman of the agriculture appropriations subcommittee, is working with the administration on the latest aid package. Last year, Congress gave the Agriculture Department some $30 billion annually that can be tapped to provide up to $15 billion Trump wants to offer as aid. Congress could advance some of the money by tucking it into a disaster aid package that's expected to be voted on next week.

The federal aid could go toward existing government programs, including those that provide market payments for certain agricultural producers or that fight hunger in poorer or war-torn countries abroad. Last year, the Trump administration made some $12 billion available to domestic producers of soy, corn, dairy, hogs and others hit hard by the retaliatory tariffs.

"We're stepping forward with more assistance," Hoeven said. "The goal is to get a trade agreement."

Senators said they were hopeful that talks would resume before the latest Chinese tariffs kick in on June 1. Trump is expected to meet Chinese President Xi Jinping in late June at the G-20 summit in Japan.

Trade is the rare issue in Congress that cuts across party lines. Several top Democrats, including Sen. Chuck Schumer of New York, the Democratic leader, want the president to stay tough on China.

Schumer said that while Trump's tariff fights with other countries "make no sense," he thinks the president should work with U.S. allies to confront China. "We have to have tough, strong policies on China," he said.

Other Democrats, though, doubt Trump's ability to negotiate a good deal for Americans. "The president is essentially betting the farm somebody else's farm," said Sen. Richard Blumenthal, D-Conn.

GOP Sen. Ron Johnson said agricultural and business interests back home in Wisconsin "really feel a lot of short-term pain." But he said they also "really want the president to succeed on this."


Trump issues order that appears to target China's Huawei

WASHINGTON  President Donald Trump issued an executive order Wednesday apparently aimed at banning equipment from Chinese telecommunications giant Huawei from U.S. networks.

It declares a national economic emergency that empowers the government to ban the technology and services of "foreign adversaries" deemed to pose unacceptable risks to national security including from cyberespionage and sabotage. While it doesn't name specific countries or companies, it follows months of U.S. pressure on Huawei. It gives the Department of Commerce 150 days to come up with regulations.
 

 In this Thursday, March 7, 2019 file photo, the Texas state flag files outside the Huawei Technologies Ltd. business location in Plano, Texas.

The order addresses U.S. government concerns that equipment from Chinese suppliers could pose an espionage threat to U.S. internet and telecommunications infrastructure. Huawei, the world's biggest supplier of network gear, has been deemed a danger in U.S. national security circles for the better part of a decade. U.S. justice and intelligence officials say Chinese economic espionage and trade secret theft is rampant.

U.S. officials have presented no evidence, however, of any Huawei equipment in the U.S. or elsewhere being compromised by backdoors installed by the manufacturer to facilitate espionage by Beijing. Huawei vehemently denies involvement in Chinese spying.

A senior U.S. administration official, speaking on condition of anonymity, told reporters in a hastily arranged call that that the order was "company and country agnostic" and said it would not be retroactive. Officials said "interim regulations" were expected before final rules were set but were vague on what that meant.

Washington and Beijing are locked in a trade war that partly reflects a struggle for global economic and technological dominance.

In a statement, Federal Communications Commission Chairman Ajit Pai called the executive order "a significant step toward securing America's networks."

"It signals to U.S. friends and allies how far Washington is willing to go to block Huawei," said Adam Segal, cybersecurity director at the Council on Foreign Relations. Many in Europe have resisted a fierce U.S. diplomatic campaign to institute a wholesale ban on the Chinese company's equipment in their next-generation 5G wireless networks.

Sen. Mark Warner, vice chair of the Senate Intelligence Committee and a former telecoms executive, called the order "a needed step" in a statement endorsing the State Department's contention that Chinese law compels Huawei to act as an agent of the state. He cautioned, however, that its implementation not "harm or stifle" legitimate business.

The order's existence in draft form was first reported by The Washington Post last June. Segal said that with U.S.-China trade talks at a standstill, the White House "felt the time had finally come to pull the trigger."

It is a "low cost signal of resolve from the Trump administration," Segal said, noting that there is little at stake economically.

All major U.S. wireless carriers and internet providers had already sworn off Chinese-made equipment after a 2012 report by the House Intelligence Committee said Huawei and ZTE, China's No. 2 telecoms equipment company, should be excluded as enablers of Beijing-directed espionage. Last year, Trump signed a bill that barred the U.S. government and its contractors from using equipment from the Chinese suppliers.

The FCC also has a rule in the works that would cut off subsidies for companies that any equipment banned as posing a national security threat. Huawei's handsets are virtually non-existent in the U.S. and last week the FCC rejected a Chinese phone company's bid to provide domestic service .

Only about 2 percent of telecom equipment purchased by North American carriers was Huawei-made in 2017. The domestic economic impact will be restricted mostly to small rural carriers for whom Huawei equipment in particular has been attractive due to its lower costs. That could make it more difficult to expand access to speedy internet in rural areas.

Blair Levin, an adviser to research firm New Street Research and a former FCC official, said the order is likely to widen the digital divide.

Roger Entner, founder of telecom research firm Recon Analytics, tweeted: "Banning Huawei in the U.S. has the FCC in a conundrum: Low cost Huawei equipment helps to build out broadband in rural America faster." He wondered if the FCC would subsidize small rural carriers.

Requests for comment from Huawei and a group representing small carriers, the Competitive Carriers Association, were not immediately returned. Administration officials told reporters they will welcome comments from the telecommunications industry as regulations are set.

They did not say whether subsidies would be considered.

General counsel Carri Bennet of the Rural Wireless Association has said a ban would cost its 15 affected members at least $800 million to redo their networks to strip out Huawei and ZTE equipment. That doesn't include the extra cost of next-generation equipment and upgrades from more expensive Western suppliers.

The association has about 60 members, none with more than 100,000 customers, although many are crucial partners for the nation's four major operators, providing coverage in remote locations through roaming agreements.

Early this year, the Justice Department unsealed criminal charges against Huawei, a top company executive and several subsidiaries, alleging the company stole trade secrets, misled banks about its business and violated U.S. sanctions on Iran. The sweeping indictments accused the company of using extreme efforts to steal trade secrets from American businesses including trying to take a piece of a robot from a T-Mobile lab.

The executive charged is Huawei's chief financial officer, Meng Wanzhou, who is also the daughter of the company's founder. She was arrested in Canada last December. The U.S. is seeking to extradite her.

 

Associated Press

 

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