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Lighthizer and his allies set the stage for Trump’s massive new tariffs
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Lighthizer and his allies set the stage for Trump’s massive new tariffs

President-elect Donald Trump’s former trade chief and his inner circle 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. Trump.

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 would boost the economy at home. instead of sinking it, according to a document. accessed by POLITICO, provided by someone close to policy planning.

Advisors close to Lighthizer and the Trump transition also spoke with key lawmakers and congressional staff on how Congress could even play a role in imposing the new administration’s tariff plans through legislation – an action that would mean a break from the dominant economic policy adopted by both parties for decades, but which would prevent also that the tariffs be unilaterally revoked by a future president.

The economic rationale for the tariffs could be unveiled by Trump’s allies in the coming weeks, the person said, and will show “the failure of economic models to accurately predict changes in the economy” due to the tariffs. Trump’s proposals, which aim to promote domestic manufacturing and reduce dependence on foreign countries, include a “universal” tariff of up to 20% on all products entering the United States and a tariff of at least 60% on all imports from China.

Traditional economic models “assume that customs duties will never be able to stimulate national production”, we can read in the document released. However, he adds that “when the United States (the International Trade Commission) studied Trump’s tariffs, it found that domestic production increased in every sector – an outcome in the real economy that these models assume all of them could never happen. »

These discussions and preemptive efforts to counter criticism signal an even greater upheaval in trade during Trump’s second term and show how Lighthizer’s ideologically driven mission to revamp the global trading system has gained a level of acceptance among Republicans never seen during the president-elect’s first term. 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 – in extraordinary circumstances – through decades-old laws. decades.

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

Lighthizer speaks regularly with Trump on trade and has worked for months to refine not only his campaign rhetoric on tariffs but also behind-the-scenes policy planning. Despite reports that Trump asked him to return for a second term as U.S. Trade Representative — something a person familiar with described as “complete bullshit”Lighthizer is still in the running for other high-level economic positions, including Secretary of Commerce, Treasury, or a senior advisor role at the White House. Any of these would allow him to wield considerable influence over the trade agenda, particularly if one of his deputies is named trade chief, as many close to the transition expect.

For months, Lighthizer and his entourage have been preparing trade and economic policy actions for the first 100 days of the administration. Part of that effort has involved convincing Congress to consider a legislative approach to tariffs, which could provide a revenue source to finance a plethora of expected new tax cuts.

“I think this is something that between the White House and Congress there will be discussions and ways to work together on these things,” the representative said. John MoolenaarRepublican co-chair of the House of Representatives Select Committee on the Chinese Communist Party, asked about a universal tariff.

Greater buy-in from Congress could be key to allowing Lighthizer to implement a more aggressive tariff strategy that Trump touted on the campaign trail. Additional action could be taken against the European Union, which Trump has called a “mini China” and which Lighthizer has accused of enjoying an unfair trade advantage over the United States.

Since the day after the election, “there have been a lot of meetings in West Palm Beach, and I think that’s likely to continue,” said a person with knowledge of Trump’s transition plan. “Now that the campaign is over (the conversation) has shifted gears, so I think these conversations ‘about the political streak’ are really just starting now.”

Lighthizer has also hit 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 all present,” according to one attendee.

A group of familiar figures will likely implement and defend this tariff program during Trump’s second term. Many of Lighthizer’s first-term deputies are on the short list for USTR or other economic posts — such as his former chief of staff Jamieson Greer, former USTR deputies Jeffrey Gerrish and CJ Mahoney, and former attorney General Stephen Vaughn. People close to the transition say it portends an economic agenda even more protectionist than that of Trump’s first term.

Although no final decision has been made, Trump could begin, on his first day in office, to impose tariffs through executive action under the International Emergency Economic Powers Acta law that gives the president broad authority to take trade actions. Other tariff actions Trump is expected to take are being considered under laws he used during his first term to impose tariffs on China and other countries. The latter options would require months of investigation by federal agencies, with people close to Lighthizer being cautious, and the exact sequence of actions still under discussion.

Trump team members close to Lighthizer are also having conversations with staff on the House Ways and Means Committee, under the chairmanship. Jason Smith (R-Mo.) on the need to change House rules to allow tariffs to be used to offset any revenue losses from a possible extension of Trump’s tax cut program in 2017, according to two people who remained anonymous to describe internal discussions.

Trump has said repeatedly during his election campaign that he wants to use tariff revenue to fund tax cuts, but current House rules do not explicitly address whether tariffs can be used as compensation. Clarifying those rules would allow Congress to follow through on Trump’s campaign pledge, and Smith has indicated to Trump’s team that he supports using tariff revenue as compensation for tax cuts, he said. said a person familiar with the conversation.

Smith’s office declined to comment on the conversation.

“We will likely see in a reconciliation bill … an increase in revenue from tariffs on imports and a use of those savings to reduce taxes and create incentives for domestic production,” he said. a person familiar with conversations between Trump’s team and Congress.

Jasper Goodman contributed to this report.