Spicer: No One in Administration Trying to Thwart Trump's Tariff Instincts

Sean Spicer, who participated in a Q&A with Nicole Bivens Collinson from Sandler Travis at the Washington International Trade Association conference, told the audience Feb. 11 that the resistance Trump faced to ideas like reciprocal tariffs that he wanted to do in 2018, but never came to pass (see 1802120034), is no longer there.

There might be arguments from staffers on "how can we do this best, maybe more targeted, more surgical," he said, but no one is trying to thwart Trump's desire to hike tariffs.

"Anybody who doesn't think he's going to keep going back to the tariff well is sadly mistaken," he said.

He said Trump has spent decades believing that American trade policy has meant other countries are taking advantage of us. "You're not going to convince him otherwise."

"If I were Europe right now, I would be very concerned about your auto sector."

Spicer predicted that an executive order on reciprocal tariffs would come by Feb. 14.

He advised countries that levy tariffs on U.S. goods to look at their tariff schedules. "If you guys are screwing us on something ... it could be actual tariffs, it could be an emissions issue, we're going to fight you."

When asked by International Trade Today if the EU could avoid punishment by dropping its auto tariff to 2.5%, as an EU parliamentarian has said they might do, or whether Trump would still be angered by the value-added tax, Spicer said it depends.

The VAT is a consumer tax, like a sales tax, charged for purchases of both imported and domestically produced cars. However, exports from the EU are not subject to the VAT, similar to how a car produced in a foreign-trade zone and exported to the EU can avoid import taxes on the materials imported to build the car.

Spicer said he doesn't speak for the president anymore, but he said he could see a situation where the president accepted that getting the lower tariff rate was a win, and wouldn't seek to hike tariffs on cars exported from the EU to account for the VAT.

"Does [National Economic Council Director] Kevin Hassett say: the VAT has this much impact on a vehicle sale, if you look at our sales tax, average across the states, is this, it's a wash. If that's the case, I think it fares well."

"But then the question becomes what else do they have on their dance card?" He pointed out that the EU's prohibitions on some U.S. agricultural practices, such as GMO, are a non-tariff barrier that irritates U.S. policymakers.

"I don't know, but you know by default the president really cares about the auto sector," he said, so maybe getting the EU to drop its tariff from 10% to 2.5% will satisfy him.

"I would assume by the end of the week you have a much clearer answer to that question," he said.

The White House spokeswoman said the president would make an announcement Feb. 12. Some reporting, however, has said that even if the president makes an announcement on reciprocal trade this week, it seems it will be more like what was in the America First Trade Memo, because all the angles of how to implement such an approach are not yet worked out.

Peter Navarro, the most hawkish of Trump's trade advisors, who Spicer said has a "huge" amount of credibility with the president, told CNN on Feb. 11: "What's going to happen is, we're going to look at all of our trading partners, starting with the ones which we run the biggest deficits with, find out if they're cheating the American people, and, if they are, we're going to take measures to correct that wrong.

"They're going to study the landscape here, figure out what the biggest trade deficits are, and those are what's damaging to us, and then figure out which countries are responsible and whether or not they're engaged in tariffs, barriers, or what the president likes to call non-monetary barriers or non-tariff barriers.

"Once that happens, then the president will be guided by that."

Spicer said Navarro often got Trump to tweet about trade by slipping into the president's dining room, presenting him with charts, and suggesting it was time to post. "Last time, it was always the last person in the room" that influenced policy the most, Spicer said, and called Navarro "a ninja" at making sure he was that last person.

The president has a relationship with Commerce Secretary Howard Lutnick more than Treasury Secretary Scott Bessent, and that could mean that Lutnick's views are weighted more, because relationships "mean a ton to him," Spicer said. He said domestic policy advisor Stephen Miller also has a "huge" amount of credibility on trade with the president.

The future U.S. trade representative, Jamieson Greer, doesn't have the personal relationship with Trump yet to make him powerful in the trade discussion, Spicer said.

Trump once said he was his own trade representative, and Spicer pointed out it's not like Navarro is convincing Trump that trade deficits are a result of trade barriers to U.S. exports that importers don't face. (One of the larger bilateral trade deficits the U.S. has is with Mexico, and nearly all of U.S. exports to Mexico are duty free.)

"He truly believes that it's ridiculous, the way that we're allowing certain products, giving more market access to the United States, and then basically not allowing our products of a similar nature into their markets.

"That is something he has said over and over again. He says it privately and publicly."

Bivens Collinson pointed out that it would be difficult for customs brokers to have to determine the tariff rate for 192 different countries for a particular Harmonized Tariff Schedule classification, particularly when HTS codes are only unified to six digits internationally.

Spicer replied, "That's where the staff comes in, right?" He said the president isn't thinking at that level of detail, and the staff will have to "fight it out." Does Hassett argue for tariff reciprocity at a category level, while Navarro argues to "go much more specific?"

"That's where you guys make your money," Spicer said, speaking to lobbyists in the room. He said U.S. importers will tell officials like Bessent or Lutnick, "This is the least painful way to do this."

But, he said, you can't necessarily go by the lines of authority laid out in the memo (that Bessent would be in charge of the trade deficit study). It could be that Lutnick assigns responsibility to an undersecretary in his agency, Spicer said.

"Kind of the problem is that President Trump doesn't care what your title is," he said.

Bivens Collinson said wryly, "Well, I think that's clear. You've got the Commerce Department notifying when duties can be collected."

Spicer said the fact that Bivens Collinson was referring to the fact that CBP collects revenue shows she's stuck in the past.

"'It always works this way, and you can't do this' is gone," he said.

Spicer said he, too, was still thinking that way during the first Trump term, when he told the president that NAFTA couldn't be renegotiated because the pact was in force. He said Trump said: "So?"

"The mentality that you just can't do something is pervasive in this town," Spicer said.

Spicer said lobbying, whether to Trump directly, or to Cabinet members or other political appointees cannot be about how integrated your markets are, or that adding 25% to the cost of potash, say, will harm your sector.

"You don't think that [Canadian Prime Minister Justin] Trudeau and the foreign minister aren't bringing up bilateral trade with the U.S.? The agricultural community in particular has been very forceful -- making the case on the impact for what some of those products have on our agriculture. It's not that those arguments aren't being made."

Telling Trump that he's wrong about the meaning of trade deficits, or he's wrong that foreign producers pay the tariffs just won't work, he advised.

However, explaining the impact of a tariff -- like you're a manufacturer who imports components that aren't available in the U.S., and increasing your prices by X will mean Y for your business -- that might work.

He said all messages should be tied to U.S. jobs and investment. "So if what you're doing leads to greater U.S. jobs, spell that out."

If tariffs do cause consumer price increases, and that leads to political blowback in his party, that might matter -- but it might not.

"He's consistently said there might be some short-term pain, but the long-term benefit will be to bring manufacturers home."

He also said that although there will be arguments that certain goods aren't available in the U.S., and therefore tariffs should not be levied on them, he doesn't think they'll succeed.

"I don't think that President Trump is very high on exceptions this time around. He saw how that was abused, and about how everybody could make that an exception. It's going to be a much harder sell."