Hours before President Trump’s “reciprocal” tariffs on 180 countries were due to come into effect at a minute past midnight on Wednesday, his top trade official appeared before senators desperate for clarity on the policy’s goals.
The senators were united in one question for Jamieson Greer, the White House’s man in charge of negotiating deals as US trade representative: had there been given any thought to American families facing higher costs?
An early push came from Raphael Warnock, a Democratic senator from Georgia. He asked: if an American child is potassium deficient and the bananas they need become more expensive because of price rises from the tariffs, could the family claim a rebate from the government?
“There is not an exclusion process,” Greer replied, meaning that Trump was not minded to allow special exemptions for certain products.
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Warnock said the last time he checked, bananas were not grown in the United States, making them one of many items likely to cost Americans more.
So what does Trump want to achieve, and is it feasible? The answer came to a similar question about exemptions from James Lankford, a Republican senator from Oklahoma, who said garment manufacturers could not buy components they needed in the US.
“The president … does not intend to have exclusions and exemptions … in the near term,” Greer told senators. “If you have Swiss cheese in the action, it can undermine the overall point, which is to get rid of the deficit, achieve reciprocity.” This was bad news for the 70 or so countries, including Britain, already trying to negotiate away their tariffs.
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Pressed on why a friendly nation like Australia with a free trade agreement and a trade deficit with the US still had to pay the 10 per cent baseline tariff, Greer referred to Trump’s desire to “get rid” of the annual trade deficit, which he put at $1.2 trillion. Greer said: “We have a global tariff … we’re trying to address the $1.2 trillion deficit that Biden left us with.”
Ending this trade deficit in goods emerged as a key motivating force behind Trump’s attempts to re-order world trade.
Still, Republicans were not clear, especially as it would probably be impossible for countries like Bangladesh or Madagascar to buy enough US imports to offset their exports. Trump’s approach also completely ignores services, where the US has a big surplus with many countries thanks to its tech, finance and entertainment companies.
Chuck Grassley, a veteran Republican senator from Iowa, posed the fundamental question directly: “Is this administration for trade reciprocity or for Treasury replenishment?”
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Trump has talked of returning to a 19th-century ideal of funding the US Treasury more from tariffs and less from personal taxation. He has also talked of other goals, like using tariffs on Canada and Mexico to close the US border to migrants and drugs, and reshoring American manufacturing.
Greer argued for all of the above. “It’s important to understand a sense of the emergency that we’re facing and urgency with the need to reshore and do manufacturing here,” he began. America has lost five million manufacturing jobs and 90,000 factories in the era of globalisation since 1994, he said.
“[Trump] stated very clearly that he is happy to engage in negotiations immediately with countries that believe that they can help us reduce our deficit and get rid of the non-tariff barriers and the tariffs that affect that,” Greer said. “I think the answer, senator, is it’s going to be country by country. There are going to be some countries where they’re not able to address their non-tariff barriers or tariffs or the deficit fully.”
This implied that countries that could not “get rid” of trade surpluses or barriers would continue to face tariffs, which seems like an irrational punishment for producers of items that cannot be made in the US, like bananas.
Greer was keen to keep bringing back the conversation to American beef, a product that manifests Trump’s anger at the rest of the world almost as much as their refusal to buy US cars.
Just as American cars do not meet other nations’ technical and environmental standards, beef was kept out of Australia’s free trade agreement because of the use of hormones. Similar qualms have stood in the way of a US free trade deal with Britain.
“It’s always surprising because we have a free trade agreement with Australia and we would expect that we would have fair and reciprocal trade,” Greer said. “Last year, I think we imported about $3 billion worth of Australian beef and we exported $0 of American beef to Australia — and it’s not just beef.”
He gave the use of “licensing regimes or fake science” to “block our imports” as examples of the non-tariff barriers that Trump is determined to smash.
Another senior Trump trade official, Peter Navarro, made clear in an article how the beef argument had driven Trump to the dramatic unilateral tariff action after years of, as he sees it, pointless and unfair engagement with the formal trade structures.
Navarro wrote that the World Trade Organisation (WTO) ruled the EU ban on US hormone-treated beef illegal back in 1998 but Brussels had never allowed it in. “Trump’s reciprocal tariffs do exactly what the WTO has failed to do: hold foreign countries accountable,” Navarro wrote in the Financial Times. “The US will now match the substantially higher tariffs and crushing non-tariff barriers imposed on us by other nations. This is about fairness, and no one can argue with that.”
