Commerce Nominee Defends Need to Hike Tariffs on All Products From a Country

Sen. Tammy Duckworth, D-Ill., asked Lutnick if he agreed that joint ventures with allies, such as Japan or South Korea, support the economy and national security.

"Our great allies take advantage of our good nature, like steel in Japan and appliances [produced] in Korea. They've just taken advantage of us," he said, and the only partnership he's looking for is for foreign investment in factories in the U.S.

When Sen. Andy Kim, D-N.J., asked Lutnick if the administration would distinguish between allies and adversaries, arguing that burning allies would make it more difficult to coordinate actions on Chinese abuses. Lutnick said tariffs on Chinese goods should be the highest, but segued into an attack on the EU.

"But the fact that we Americans cannot sell an American car in Europe is just wrong, and it needs to be fixed. So while they're our ally, they are taking advantage of us," he said.

According to the European Automobile Manufactures' Association, in 2022, the EU exported 738,436 vehicles to the U.S. while the U.S. exported 271,476 vehicles to the EU; the group's 2023 report didn't indicate a number of units from the U.S., but said that the U.S. exported 7.8 billion euros' worth of vehicles, which ranked fifth, behind China, the U.K., Japan and South Korea. In 2023, the EU exported 800,821 cars to the U.S., worth more than 40 billion euros.

Lutnick also criticized the EU's non-tariff barriers in agriculture.

"Europe, for example, comes up with all sorts of policies so that our ranchers can't sell steak. If you saw a European steer and an American steer, it's laughable. The American steers are three times the size. The [American] steaks are so much more beautiful, but they make up this nonsensical set of rules so that our ranchers can't sell there. Our farmers can't sell there. It's nonsense. They don’t like our fertilizer, a little bit. We need to change those rules. We need to end the disrespect our farmers, ranchers and fishermen have to suffer with. We are the best, our farmers are the best, it is clear, and they need to be able to sell their wares around the world."

He brushed aside questions from farm-state senators from both parties, who expressed concern about lost market share when foreign countries impose tariffs on American products in response to American tariffs. Those senators asked him to think about retaliation before imposing tariffs.

"Tariffs are a way to create reciprocity, to be treated fairly, to be treated appropriately, and I think it will help our farmers, our ranchers and our fishermen to flourish," he said.

Sen. Tammy Baldwin, D-Wis., told Lutnick that milk processors in Wisconsin also own facilities in other countries that President Donald Trump has threatened to impose 25% tariffs on, and that a tariff war will cut down on dairy export options and will hurt milk prices and processor profitability.

"Canada, as we spoke about, treats our dairy farmers horribly. That’s gotta end," he replied. "If Canada is going to rely on America for its economic growth, how about you treat our farmers, ranchers and fishermen with respect? I'm going to make sure [U.S. dairy exporters] do much, much better in Canada than ever before this administration."

Sen. Jerry Moran, R-Kan., asked Lutnick if the department would provide due process to Section 232 tariff exclusion requesters.

Lutnick said the trade memo issued by the administration directed Commerce to study the existing exclusions, exemptions and quota arrangements for Section 232, and he said it will be a rigorous study. "So I'm going to let the experts drive that study," he said, but he added that there had been 560,000 exclusion requests, and that seemed like too many, so he would like to simplify it.

The Bureau of Industry and Security promulgated a rule last year (see 2405170060) that created more generally approved exclusions and generally denied exclusions, which does cut down on the number of requests. Originally, the system was such that each importer of each type of product in each dimension had to apply, even if another importer was successful in obtaining an exclusion for the same good.

When Sen. Amy Klobuchar, D-Minn., reminded Lutnick that she told him she thinks selective tariffs make more sense than universal tariffs, he replied, "I prefer across the board," and said that if the U.S. were to put tariffs just on Mexican avocados, then Mexico would retaliate with tariffs on white corn. If the U.S. put tariffs on Mexican tomatoes, Mexico would retaliate against American yellow corn exports.

"My way of thinking, and I've discussed this with the president, is country by country. Macro. Let America make it more fair. We are treated horribly by the global trading environment. They all have higher tariffs, non-tariff trade barriers and subsidies, they treat us poorly. We need to be treated better, we need to be treated with respect. And we can use tariffs to create reciprocity, fairness and respect."

Although Lutnick used the same "respect" language to describe the goal of 25% tariffs on Canada and Mexico, he drew a distinction between those tariffs, which were threatened to begin on Feb. 1, with the ones that could follow studies that are due April 1.

Sen. Gary Peters, D-Mich., told Lutnick he believes that tariffs are powerful, and can be positive, "but they need to be used strategically. They need to be used thoughtfully," he said, giving a 100% tariff on Chinese cars as an example. Imposing 25% tariffs on Canadian and Mexican inputs, in contrast, would damage the highly integrated North American auto industry, he argued.

Lutnick said that Trump simply wants Mexico and Canada to stop irregular migration across their borders with the U.S. and end the smuggling of fentanyl. "We are your biggest trading partner," Lutnick said, addressing the two countries. "Show us the respect." Lutnick said the threat of 25% tariffs on USMCA partners isn't "a tariff per se, it's an action of domestic policy."

Lutnick said, as far as he knows, "they are acting swiftly, and if they execute it, there will be no tariff. But if they don't, then there will be, but it's an action-oriented model that's not the ordinary tariff."