US Treasury chief moves to calm lawmakers’ trade jitters
AFP – US Treasury Secretary Steven Mnuchin on Thursday worked to ease lawmakers’ worries about President Donald Trump’s expanding trade offensive.
Mnuchin’s appearance before a key Congressional committee came a day after the US Senate overwhelmingly voted to adopt a symbolic rebuke of the White House, endorsing legal limits on the president’s trade powers.
The Senate vote was nonbinding, but underscored the daylight separating Trump and members of his own Republican party, who have so far shrunk from actively blocking his trade policies.
With scores of billions of dollars in US imports and exports now subject to punitive import duties, higher industrial and consumer prices are beginning to feed into inflation, alarming business leaders.
Economists have repeatedly warned that the growing trade war will depress investment and economic growth.
The International Monetary Fund has also warned against the rising tide of protectionism and the potential to damage the global recovery. The IMF is due to release updated global growth projections on Monday.
Meanwhile, in an interview with NPR Marketplace Thursday, Federal Reserve chief Jerome Powell said he was "hearing a rising level of concern about the effects of changes in trade policy."
"Since War II we’ve had this trading system develop, and consistently tariffs have come down and trade has grown. And I think that’s served the global economy, and particularly the United States economy, very well," he said.
"I think this process that is going on now is a new one. It’s very difficult to predict how it turns out and we’ll just have to see."
But Mnuchin defended Trump’s policies before the House Financial Services Committee, while lawmakers repeatedly pleaded for US products, workers and industries vulnerable to tariffs, including Georgia pecans, Kentucky bourbon, Michigan and South Carolina autos, Missouri soy growers and nail manufacturers.
The committee chairman, outgoing Texas Republican Jeb Hensarling, said the tariffs jeopardized US energy independence by raising prices for oilfield equipment. He denounced Trump’s threats to use national security as a justification for even more tariffs on the hundreds of billions of dollars in annual auto imports.
"The 11-year-old Honda Accord I drove to work today simply does not threaten national security, nor does any other imported vehicle," Hensarling said, urging the White House to focus on China rather than confronting traditional allies like Canada and Europe.
– Asking Harley to stay –
But Mnuchin said in annual testimony on the state of the international financial system that the president’s policies were likely to succeed for all concerned.
"I think that the end game is we’re focused on having free and fair trade for American companies," Mnuchin said. "I’m cautiously optimistic but I think we’re going to end up in a good place."
He also said he was paying close attention to vulnerable sectors such as soy beans.
"We have not yet seen any negative impact although… we are monitoring the impact on uncertainty in investment."
Mnuchin said Trump had urged famed Wisconsin motorcycle maker Harley Davidson not to offshore additional production in response to retaliatory European tariffs.
But he suggested the company had seized on Trump’s tariff policies last month to deflect negative scrutiny from its off-shoring plans.
The company announced last month plans to shift some production overseas due to the 31 percent European tariffs on motorcycles imposed in retaliation for Trump’s steep duties on aluminum and steel.
"My sense is that Harley Davidson had previously planned on moving some of this manufacturing," he said.
– Iranian oil –
Mnuchin also said Washington continued to urge US allies to cut oil imports from Iran.
Over the objections of allies, Trump in May pulled the United States from a joint deal on Iran’s nuclear program, reinstating US sanctions and effectively barring many multinational firms from doing business in that country.
New US sanctions on Iranian oil exports are set to take effect in November although US officials have floated the possibility of offering some waivers.
"I think we expect that the Iranian oil shipments will decrease significantly," he said.