President Donald Trump’s team played down talk of a trade war Wednesday as it fought to limit a financial market sell-off, promising a quick decision on contentious tariffs that prompted a popular economic advisor to the president to quit.
Administration big guns Commerce Secretary Wilbur Ross and Treasury Secretary Steve Mnuchin rushed to the cameras to calm market jitters over proposed steel and aluminum duties, which they indicated were still negotiable and would not hurt growth.
Trump is set to formalize the tariffs at a signing ceremony Thursday afternoon, and Canada and Mexico will be exempt initially, Peter Navarro, a top trade advisor, told Fox Business Network Wednesday night.
As markets fell on news that Wall Street favorite Gary Cohn, Trump’s top economic adviser, had resigned from the White House in protest at Trump’s trade decision and global partners vowed retaliation, Ross tried to calm fears of a trade war.
“We’re going to have sensible relations with our allies,” he told CNBC, claiming that Trump’s policy was well “thought through. We’re not looking for a trade war.”
Mnuchin joined the effort, claiming that the tariffs, which are not yet finalized, would not hurt the administration’s projections for three percent growth.
“We’re comfortable that we’re going to manage through this so that it is not detrimental to our growth projections,” he told Fox Business.
As stocks fell off on Wall Street, a fierce battle over Trump’s proposals raged behind the scenes in Washington.
Trump surprised and angered Republican lawmakers with his impromptu tariff announcement last week.
Congress is now starting to contemplate legislation that would block the measures from taking effect.
“We are still trying to work with POTUS to avoid that outcome,” a congressional source told AFP.
Even Trump’s most accommodating allies have begun to speak out against what amounts to a major break with Republican orthodoxy.
“There is a lot of concern among Republican senators that this could sort of metastasize into a larger trade war,” Senate majority leader Mitch McConnell told reporters.
“Many of our members are discussing with the administration just how broad, how sweeping this might be,” he added. “There’s a high level of concern about interfering with what appears to be an economy that’s taking off in every respect.”
White House press secretary Sarah Sanders also tried to soothe unease, projecting calm and saying a decision would come soon.
“We are still on pace for an announcement on that at the end of this week,” she said, adding that Trump would also quickly move to replace Cohn with a mainstream pick.
“The president’s got a number of people that could potentially fill that role,” she said.
“What I can assure you obviously is he’s going to make a good pick that can help him continue to further building a strong economy and continue creating jobs and continue focusing on long-term economic success.”
Despite Republican agitation, it is far from clear that Trump will back down.
Cohn’s departure has given the president’s “nationalist” advisors like arch China skeptic Peter Navarro and Commerce boss Ross the whip hand.
Cohn, a 57-year-old former Goldman Sachs executive, had lobbied passionately against the tariffs before losing out.
Ross offered an olive branch, claiming, contrary to the statements of his White House colleagues earlier in the week, that Trump could agree to tariff carve outs for Canada, Mexico and perhaps others.
Data released Wednesday showed the US foreign trade deficit widened in January to its highest level in nine years, heaping pressure on Trump, who had campaigned on a promise to reverse that trend.
Trump took to Twitter to blame the deficit on “bad policies & leadership” from his White House predecessors.
He also took aim at perennial trade bogeyman, Beijing.
“China has been asked to develop a plan for the year of a One Billion Dollar reduction in their massive Trade Deficit with the United States,” he tweeted.
“Our relationship with China has been a very good one, and we look forward to seeing what ideas they come back with. We must act soon!”
China warned Thursday it was ready to respond to US tariffs if they materialise.
“Choosing a trade war is surely the wrong prescription, in the end you will only hurt others and yourself,” Foreign Minister Wang Yi said, adding that “China will certainly make an appropriate and necessary response.”