Trump’s Commerce Secretary pick Howard Lutnick, former head of Cantor Fitzgerald in Manhattan, faced off with the Senate Commerce Committee on Wednesday in hisnomination hearing. And while it seems certain he will be voted in by the Republican Senate majority, Democrats were the most suspicious of Trump’s tariffs. Republicans brought it up only once.
Some particular products might see prices go up, but that’s not inflationary. China and India have the largest tariffs in the world and no inflation. It’s nonsense that tariffs cause inflation.
Sen. Amy Klobuchar (D-MN) said she prefers targeted tariffs instead of Trump’s proposed universal tariff. That proposal is often referred to as a ‘revenue tariff’ and ranges from 10% to 20%. A revenue tariff would be used to offset Federal income tax revenue with the goals of lowering the roughly$2 trillion fiscal deficit, and extending the Tax Cuts and Jobs Act signed by President Trump in 2017.
Lutnick made clear that he favors universal tariffs, and demonstrated that he was in lockstep with Trump’s Trade and Tariff agenda.
“I prefer across the board tariffs,” Lutnick said. “If we pick just one product, the other country will pick another product to retaliate. So my way is country by country tariffs. We are treated horribly by the global trading environment. They all have higher tariffs and non-tariff barriers and we can use tariffs to create reciprocity, fairness and respect,” he said, a line repeated numerous times throughout the hearing.
Sen. Tammy Baldwin (D-WI) brought up agriculture and how they are usually on the receiving end of incoming fire from countries facing new tariff regimes. Agriculture has been consistently used by the Senate to advocate for free trade deals, and opt-on on tariffs, a topic that was basically non-existent on Capitol Hill until Trump first came to town in 2017.
“The experience of the first Trump administration has made them really nervous this time around,” Baldwin said. Trumpwon four out of five of Wisconsin’s Central Sands region counties, its farming hub.
“A generous share of our milk production ends up in dairy products that get exported. If the U.S. imposed tariffs on Mexico and Canada, it will reduce dairy exports to a degree that will harm milk prices significantly. What would you say to these farmers and manufacturers worried about retaliatory tariffs?”
Lutnick stuck to his theme of reciprocity here. “Canada treats your dairy farmers horribly,” he said. “If Canada is going to rely on us for economic growth, how about helping our producers? Dairy is just one example.”
TheCanada U.S. goods trade deficit has gone from $16.2 billion in 2017 to $64.2 billion in 2023. The deficit in 2024 will probably come in at around $60 billion.
Sen. Gary Peters (D-MI), who has watched his state’s auto industry shrink in size since the implementation of NAFTA, said he worried about North American tariffs. “This will hurt our manufacturers who do a considerable amount of trade back and forth. Michigan auto is a highly integrated industry and our industry is very concerned about what those tariffs would mean for vehicles. If tariffs are put in place with Mexico and Canada in the short run that will make cars less affordable and harm workers,” Peters said.
Lutnick should have said that it was the absence of tariffs that led to insecurity in the automotive labor market in his state. But instead, he focused on the current Trump tariff threat of 25% if Mexico and Canada do not seal their border and fight fentanyl traffickers. He said fentanyl mostly comes from Mexico but it also comes from Mexican drug cartels who have set up shop in Canada.
“This tariff is to get them to shut the border and end the fentanyl trade,” Lutnick said. “This is a separate kind of tariff. It is designed to create action from Mexico and Canada and if they execute, there will be no tariff. But ordinary tariffs will be studied and that will begin in April.”
Peters said he was worried about those studies, requested by Trump in his America First trade policy agenda last week.
Lutnick only promised that they will look into the ramifications of universal tariffs, but said the government’s top priority was “to grow domestic manufacturing. Michigan is where we build things. Car manufacturing is going to Canada and moving to Mexico. A thoughtful tariff policy that drives manufacturing back to America is very important to American workers, especially workers in Michigan.”
Michigan has experienced a significant decline in automotive employment over the past few decades. Since 1990, jobs in the state’s auto plants, parts factories, and corporate officeshave decreased by approximately 35% thanks in large part to the free trade deal with Mexico.
Our allies have also taken advantage of us, like Korea with domestic goods and Japan with steel. It is important for us to make this stuff at home and they have to understand that.
And speaking of cars, this exchange between new Sen. Bernie Moreno (R-OH) and Lutnick was interesting.
“Imagine being an EU car maker. You ship your vehicle to America at low tariffs targeted at wealthy people, like a Rolls Royce Spectre, an EV. Would you imagine that the U.S. government subsidizes via tax credits of $7,500 if you lease it?”
Lutnick laughed. Then, “Are you joking?”
Moreno was talking about the $7,500 max tax credit known officially as the30D tax credit for people who lease EVs. This is a clause in the tax law set up in the Inflation Reduction Act. It effectively gives tax breaks to imported cars, calling into question whether the IRA was an industrial policy law to make new clean energy vehicles and power sources like solar here at home, or import it all and still get the tax breaks.
When hearing about the idea, Lutnick said he agreed it had to go. “We have to end that immediately.”
“So Europe sells as a luxury EV and qualifies for government tax incentives and we get a 10% tariff to sell a car into Europe,” Moreno said.
Lutnick called that “an example of failed American trade policy.”
‘Funding Freezes’ and Microchips
Democrats lambasted Lutnick for Trump’s funding freeze on numerous appropriations. Funding for CHIPS Act legislation was the main one because it related to manufacturing of a key, strategic good. Here, Lutnick did not really know how to respond because he likely did not know the reason for the freeze, and was being asked to go against the wishes of the White House.
Committee Chairman Ted Cruz (R-TX) and Cynthia Lummis (R-WY) said that the reasons for the freeze was because the money came with “extra-legal stipulations” such as hiring rules and environmental rules, along with preferences for who the companies receiving CHIPS Act funding could work with. It seems the Trump administration wants to examine those extra requirements, and see if there are extra costs associated with them before releasing the appropriated funds.
Lutnick said that the money will go to manufacturers to manufacture chips. That is the goal, and he supports that goal, he said numerous times throughout the day.
Taiwan Semiconductor, which is building a factory in Arizona because of the CHIPS Act,said it was facing regulatory hurdles and difficulties hiring due to these additional hiring measures tacked onto the CHIPS Act after it became law.
Republican Senators seemed most interested in expanding the broadband telecom spectrum for commercial purposes, and both sides wanted support for mining operations in the U.S. with one Senator asking, John Hickenlooper (D-CO) asking for tariffs against countries that overly pollute to dig up natural resources from the ground.
“What about tariffs to facilitate that process,” Hickenlooper said.
“Sounds smart,” Lutnick responded.
Agriculture came up throughout the day. Clearly this sector will be a “trade war” punching bag used by both sides to get Trump to moderate on tariffs.
Sen. Lisa Blunt Rochester (D-DE) said she wanted Commerce to focus on reshoring. On January 27, she, along with Ranking Member Maria Cantwell (D-WA) and Sen. Marsha Blackburn (R-TN), reintroduced the Promoting Resilient Supply Chains Act – a monitoring program that tasks Commerce to keep identify and track “critical supply chains.”
“You said there were too many exclusions in the Section 301 tariffs; are there exceptions you would make, like on drugs and drug components?” she asked him.
Lutnick had said prior that the tariff exclusions were too vast. He singled out exemptions given to steel and aluminum goods under the Section 232 tariffs. “The right answer on exemptions is that the president asked for substantial studies on tariffs. Let us let that play out first,” he told her.
Most of the heat came from Democrats on funding freezes of appropriated funds and attempts by one Senator to essentially get Lutnick to disavow himself of the man who picked him for the job. But barring those moments, which Cruz crushed in the final minutes of the hearing, the big takeaway is that Committee leadership is in favor of at least pushing for the reshoring of semiconductors.
“We are all in agreement,” said Cantwell. “America needs to bring chips manufacturing back to the United States.”
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
Howard Lutnick Goes Big on ‘Reciprocal’ Tariffs, Reshoring Supply Chains
Trump’s Commerce Secretary pick Howard Lutnick, former head of Cantor Fitzgerald in Manhattan, faced off with the Senate Commerce Committee on Wednesday in his nomination hearing. And while it seems certain he will be voted in by the Republican Senate majority, Democrats were the most suspicious of Trump’s tariffs. Republicans brought it up only once.
Sen. Amy Klobuchar (D-MN) said she prefers targeted tariffs instead of Trump’s proposed universal tariff. That proposal is often referred to as a ‘revenue tariff’ and ranges from 10% to 20%. A revenue tariff would be used to offset Federal income tax revenue with the goals of lowering the roughly $2 trillion fiscal deficit, and extending the Tax Cuts and Jobs Act signed by President Trump in 2017.
Lutnick made clear that he favors universal tariffs, and demonstrated that he was in lockstep with Trump’s Trade and Tariff agenda.
“I prefer across the board tariffs,” Lutnick said. “If we pick just one product, the other country will pick another product to retaliate. So my way is country by country tariffs. We are treated horribly by the global trading environment. They all have higher tariffs and non-tariff barriers and we can use tariffs to create reciprocity, fairness and respect,” he said, a line repeated numerous times throughout the hearing.
Sen. Tammy Baldwin (D-WI) brought up agriculture and how they are usually on the receiving end of incoming fire from countries facing new tariff regimes. Agriculture has been consistently used by the Senate to advocate for free trade deals, and opt-on on tariffs, a topic that was basically non-existent on Capitol Hill until Trump first came to town in 2017.
New CPA Economic Report Finds U.S. Faces Record Agricultural Imports, Worst Trade Deficit in History
Read More »“The experience of the first Trump administration has made them really nervous this time around,” Baldwin said. Trump won four out of five of Wisconsin’s Central Sands region counties, its farming hub.
“A generous share of our milk production ends up in dairy products that get exported. If the U.S. imposed tariffs on Mexico and Canada, it will reduce dairy exports to a degree that will harm milk prices significantly. What would you say to these farmers and manufacturers worried about retaliatory tariffs?”
Lutnick stuck to his theme of reciprocity here. “Canada treats your dairy farmers horribly,” he said. “If Canada is going to rely on us for economic growth, how about helping our producers? Dairy is just one example.”
The Canada U.S. goods trade deficit has gone from $16.2 billion in 2017 to $64.2 billion in 2023. The deficit in 2024 will probably come in at around $60 billion.
Sen. Gary Peters (D-MI), who has watched his state’s auto industry shrink in size since the implementation of NAFTA, said he worried about North American tariffs. “This will hurt our manufacturers who do a considerable amount of trade back and forth. Michigan auto is a highly integrated industry and our industry is very concerned about what those tariffs would mean for vehicles. If tariffs are put in place with Mexico and Canada in the short run that will make cars less affordable and harm workers,” Peters said.
Lutnick should have said that it was the absence of tariffs that led to insecurity in the automotive labor market in his state. But instead, he focused on the current Trump tariff threat of 25% if Mexico and Canada do not seal their border and fight fentanyl traffickers. He said fentanyl mostly comes from Mexico but it also comes from Mexican drug cartels who have set up shop in Canada.
“This tariff is to get them to shut the border and end the fentanyl trade,” Lutnick said. “This is a separate kind of tariff. It is designed to create action from Mexico and Canada and if they execute, there will be no tariff. But ordinary tariffs will be studied and that will begin in April.”
Peters said he was worried about those studies, requested by Trump in his America First trade policy agenda last week.
Trump’s America First Trade Policy: CPA Reviews New Trade Agenda
Read More »Lutnick only promised that they will look into the ramifications of universal tariffs, but said the government’s top priority was “to grow domestic manufacturing. Michigan is where we build things. Car manufacturing is going to Canada and moving to Mexico. A thoughtful tariff policy that drives manufacturing back to America is very important to American workers, especially workers in Michigan.”
Michigan has experienced a significant decline in automotive employment over the past few decades. Since 1990, jobs in the state’s auto plants, parts factories, and corporate offices have decreased by approximately 35% thanks in large part to the free trade deal with Mexico.
And speaking of cars, this exchange between new Sen. Bernie Moreno (R-OH) and Lutnick was interesting.
“Imagine being an EU car maker. You ship your vehicle to America at low tariffs targeted at wealthy people, like a Rolls Royce Spectre, an EV. Would you imagine that the U.S. government subsidizes via tax credits of $7,500 if you lease it?”
Lutnick laughed. Then, “Are you joking?”
Moreno was talking about the $7,500 max tax credit known officially as the 30D tax credit for people who lease EVs. This is a clause in the tax law set up in the Inflation Reduction Act. It effectively gives tax breaks to imported cars, calling into question whether the IRA was an industrial policy law to make new clean energy vehicles and power sources like solar here at home, or import it all and still get the tax breaks.
When hearing about the idea, Lutnick said he agreed it had to go. “We have to end that immediately.”
“So Europe sells as a luxury EV and qualifies for government tax incentives and we get a 10% tariff to sell a car into Europe,” Moreno said.
Lutnick called that “an example of failed American trade policy.”
‘Funding Freezes’ and Microchips
Democrats lambasted Lutnick for Trump’s funding freeze on numerous appropriations. Funding for CHIPS Act legislation was the main one because it related to manufacturing of a key, strategic good. Here, Lutnick did not really know how to respond because he likely did not know the reason for the freeze, and was being asked to go against the wishes of the White House.
Committee Chairman Ted Cruz (R-TX) and Cynthia Lummis (R-WY) said that the reasons for the freeze was because the money came with “extra-legal stipulations” such as hiring rules and environmental rules, along with preferences for who the companies receiving CHIPS Act funding could work with. It seems the Trump administration wants to examine those extra requirements, and see if there are extra costs associated with them before releasing the appropriated funds.
Lutnick said that the money will go to manufacturers to manufacture chips. That is the goal, and he supports that goal, he said numerous times throughout the day.
Taiwan Semiconductor, which is building a factory in Arizona because of the CHIPS Act, said it was facing regulatory hurdles and difficulties hiring due to these additional hiring measures tacked onto the CHIPS Act after it became law.
Republican Senators seemed most interested in expanding the broadband telecom spectrum for commercial purposes, and both sides wanted support for mining operations in the U.S. with one Senator asking, John Hickenlooper (D-CO) asking for tariffs against countries that overly pollute to dig up natural resources from the ground.
“What about tariffs to facilitate that process,” Hickenlooper said.
“Sounds smart,” Lutnick responded.
Agriculture came up throughout the day. Clearly this sector will be a “trade war” punching bag used by both sides to get Trump to moderate on tariffs.
Free Trade Agreements Have Damaged U.S. Agricultural Trade Performance
Read More »Sen. Lisa Blunt Rochester (D-DE) said she wanted Commerce to focus on reshoring. On January 27, she, along with Ranking Member Maria Cantwell (D-WA) and Sen. Marsha Blackburn (R-TN), reintroduced the Promoting Resilient Supply Chains Act – a monitoring program that tasks Commerce to keep identify and track “critical supply chains.”
“You said there were too many exclusions in the Section 301 tariffs; are there exceptions you would make, like on drugs and drug components?” she asked him.
Lutnick had said prior that the tariff exclusions were too vast. He singled out exemptions given to steel and aluminum goods under the Section 232 tariffs. “The right answer on exemptions is that the president asked for substantial studies on tariffs. Let us let that play out first,” he told her.
Most of the heat came from Democrats on funding freezes of appropriated funds and attempts by one Senator to essentially get Lutnick to disavow himself of the man who picked him for the job. But barring those moments, which Cruz crushed in the final minutes of the hearing, the big takeaway is that Committee leadership is in favor of at least pushing for the reshoring of semiconductors.
“We are all in agreement,” said Cantwell. “America needs to bring chips manufacturing back to the United States.”
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
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