Lutnick Says Deals Will Include Zero Tariffs on Some Natural Resources
Commerce Secretary Howard Lutnick, after receiving critiques over 10% tariffs on bananas and tariffs on Asian food imports from House Appropriations Committee members, said that countries that sell "unavailable natural resources" like bananas, cocoa, coffee and spices will be allowed to export those goods duty-free, as long as they don't have barriers to U.S. agricultural exports.
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He gave the example of Ghana being allowed to export cocoa duty-free, "but you will allow our farmers to sell soybeans." He added, "Our chicken and beef are treated horribly around the world."
Rep. Madeline Dean, D-Pa., held up a banana as she noted that Walmart has hiked the price of bananas by 8% since the administration imposed a 10% tariff on bananas.
A note of impatience crept into Lutnick's voice as he said, "As countries do deals with us, that will go to zero."
Most Republicans in the hearing praised the administration's tariff push, as forcing countries to the negotiating table, though some posed a few gentle questions suggesting they don't fully agree with the administration's approach.
Rep. Tony Gonzales, R-Texas, told Lutnick that in his district, economic ties with Mexico and other Latin American countries are essential for prosperity. He asked how Mexico's production of inputs can help North America compete with China.
Lutnick suggested, though he didn't directly say, that the U.S. doesn't want any manufacturing in Mexico in sectors where the U.S. competes.
"What has happened is NAFTA allowed corporate chieftains to take their factories out of Michigan, and out of Ohio and move it to where there's cheaper labor," he said. "So they attacked American workers for the benefit of corporate profits."
"It’s illogical that we’re making cars in Mexico for Americans," Lutnick argued.
However, he added that Mexico "should be in the mining business, they should be in the refining business."
He said the U.S. wants "to lean on our great partner just to our south," but said that partnership "just needs to be reimagined."
Rep. Dale Strong, R-Ala., noted that his district has Mazda and Toyota manufacturing before asking Lutnick which sectors the Commerce Department should be acting to protect through national security tariffs.
Lutnick said aircraft parts, semiconductors and pharmaceutical production each need to be a focus. "You can’t fight a war and ask your adversary to send you antibiotics," he said. The U.S. already has the most production of aerospace engines and components in the world, and the sector is responsible for the No. 1 manufactured export.
One of the Republicans praised the tariffs as working, citing the projection of how much they would lower the deficit over the next 10 years (if they did not change over that time).
Lutnick bragged that the Treasury is collecting "$34 billion a month because of tariffs. Anyone who says tariffs aren’t working can’t count to $34 billion."
Lutnick faced more skepticism from Sen. John Kennedy, R-La., during a Senate Appropriations Committee hearing the day before (see 2506040048). Kennedy also said on MSNBC June 5 that he thinks reciprocity negotiations should be aimed at lowering tariffs on non-trade barriers in both the U.S. and among trading partners.
"Let there be a free exchange of goods and services -- may the best product and the best service win," Kennedy said, describing his philosophy of trade. He said he doesn't know if Lutnick doesn't know where the administration is heading, but said, "I'm going to assume he was being purposely evasive."