Lighthizer and his allies lay groundwork for Trump’s massive new tariffs

 

Transition of Power

Lighthizer and his allies lay groundwork for Trump’s massive new tariffs

 

Preemptive efforts to counter expected criticism of tariffs signal an even greater shake-up on trade during Trump’s second term.

 

By Gavin Bade

https://www.politico.com/news/2024/11/12/lighthizer-trump-new-tariff-plan-00189114

11/12/2024 04:51 PM EST

 

President-elect Donald Trump’s former trade chief and those close to him are preparing to aggressively sell their plans for massive new tariffs on imports that will go far beyond anything seen in Trump’s first term.

 

Robert Lighthizer, a gruff, Ohio-born trade lawyer, and his allies have been circulating memos among themselves as they prepare to convince lawmakers and the public that their plans for dramatically higher tariffs will energize the economy instead of tanking it, according to a document viewed by POLITICO, provided by a person close to the policy planning.

 

 

Advisers close to Lighthizer and the Trump transition also have been talking to key lawmakers and congressional staff about how Congress might even take a role in imposing the incoming administration’s tariff plans through legislation — an action that would signify a break from mainstream economic policymaking embraced by both parties for decades, but would also prevent the tariffs from being unilaterally revoked by a future president.

 

The economic justification for the tariffs could be released by Trump allies in the coming weeks, said the person, and will show “the failures of economic models to accurately predict changes to the economy” as a result of tariffs. Trump’s proposals, which aim to promote domestic manufacturing and lessen reliance on foreign countries, include a “universal” tariff of up to 20 percent on all goods coming into the U.S. and at least a 60 percent tariff on all imports from China.

 

Traditional economic models “assume that tariffs can never stimulate domestic production,” the circulated document reads. However, it adds “[w]hen the U.S. [International Trade Commission] studied the Trump tariffs, they found that domestic production increased in every single industry — a result in the real economy that these models all assume could never happen.”

 

Those discussions and preemptive efforts to counter criticism signal an even greater shake-up on trade during Trump’s second term and show how Lighthizer’s ideologically driven mission to reorder the global trading system has gained a level of acceptance among Republicans not seen during the president-elect’s first term. Congress, which has constitutional jurisdiction over trade matters, has not imposed tariffs in nearly 100 years, instead granting the president the power to do so — under extraordinary circumstances —through decades-old laws.

 

Together, the developments underscore how Lighthizer — one of the few Trump 1.0 figures still in the good graces of the president-elect and congressional Democrats — is expected to play a central role on the economy in Trump’s second term. He did not respond to a request for comment.

 

Lighthizer speaks to Trump regularly on trade and has been working for months to hone not only his campaign rhetoric on tariffs, but policy planning behind the scenes. Despite reports that Trump had asked him to return for a second run at U.S. Trade Representative — which a person familiar called “complete bullshit” — Lighthizer is still in the running for other senior economic positions, including secretary of Commerce, Treasury, or a senior White House adviser role. Any of those would allow him extensive influence over the trade agenda, particularly if one of his deputies is named trade chief, as is expected by many close to the transition.

 

The names of several Cabinet positions, including Chief of Staff, Ambassador to the United Nations and Education Secretary, along with the headshots of people who have been appointed, nominated or confirmed to those positions in the second Trump administration.

 

For months, Lighthizer and his inner circle have been preparing trade and economic policy actions for the administration’s first 100 days. Part of that effort has included getting Congress on board to consider a legislative approach to tariffs, which could provide a revenue source to pay for a plethora of expected new tax cuts.

 

“I think that’s something that, between the White House and Congress, there will be discussions and ways to work together on these things,” said Rep. John Moolenaar, the Republican co-chair of the House Select Committee on the Chinese Communist Party, when asked about a universal tariff.

 

More buy-in from Congress could be key for Lighthizer to deliver on a more aggressive tariff strategy that Trump has touted on the campaign trail. Additional action could be taken against the European Union, which Trump has described as a “mini China” and Lighthizer has accused of enjoying an unfair trading advantage against the U.S.

 

Since the day after the election, “there have been a lot of meetings in West Palm Beach, and I think those are likely to continue,” said one person with knowledge of Trump’s transition planning. “Now that the campaign is over [the conversation] switched gears, so I think those conversations” over policy sequencing “are really just starting now.”

 

Lighthizer has also been hitting the road as an unofficial Trump surrogate — sometimes with chilling effects for wary U.S. allies. A few months ago, Lighthizer unexpectedly attended a meeting of the Bilderberg group — an annual meeting of the transatlantic political and financial elite — delivering comments that were “terrifying to everybody who was there,” according to an attendee.

 

A familiar cast of characters is likely to be implementing and defending that tariff agenda in Trump’s second term. Many of Lighthizer’s deputies from the first term are on the short list for USTR or other economic posts — like his former chief of staff Jamieson Greer, former deputy USTRs Jeffrey Gerrish and C.J. Mahoney, and former general counsel Stephen Vaughn. People close to the transition say that points to an even more protectionist economic agenda than Trump’s first term.

 

Though no final decisions have been made, Trump could start, as early as Day 1 of his term, to impose tariffs through executive action under the International Emergency Economic Powers Act, a law that gives the president broad authority to take trade actions. Other tariff actions Trump is expected to take are being explored under laws he used during his first term to impose duties on China and other countries. Those latter options would require months of investigation by federal agencies, people close to Lighthizer caution, and the exact sequencing of actions is still being discussed.

 

Trump team members close to Lighthizer are also having conversations with House Ways and Means Committee staff under Chair Jason Smith (R-Mo.) on whether House rules need to be changed to allow tariffs to be used to offset any lost revenue from a potential extension of Trump’s 2017 tax cut package, according to two people granted anonymity to describe internal discussions.

 

Trump repeatedly said on the campaign trail that he wants to use tariff revenue to pay for tax cuts, but current House rules are not explicit on whether tariffs can be used as an offset. Clarifying those rules would allow Congress to follow through on Trump’s campaign pledge, and Smith indicated to Trump’s team that he is supportive of using tariff revenue as an offset for tax cuts, said one person with knowledge of the conversation.

 

Smith’s office declined to comment on the conversation.

 

“We’re likely to see in a reconciliation bill … that’s raising revenue through tariffs on imports and taking that savings and using it to cut taxes and create incentives for domestic production,” said the person familiar with conversations between Trump’s team and Congress.

 

Jasper Goodman contributed to this report.