Sen. Cantwell Says Republicans Are at Wait-and-See on Tariffs

A former chief trade counsel for a Republican Senate Finance Committee chairman, Nasim Fussell, moderated a panel that included Cantwell and two former U.S. trade representatives under Republican presidents.

Fussell noted that Cantwell introduced a bill with Sen. Chuck Grassley, R-Iowa, (see 2504030018), which would prevent long-term tariffs under sections 232, 301 and 338 or the International Emergency Economic Powers Act. If that bill became law, tariffs imposed by the president would expire after 60 days unless Congress were to approve them.

"You have been a leading voice in Congress on the Trump administration’s tariffs," said Fussell, now with the Business Roundtable. "However, the rest of your colleagues have been a little more reluctant to engage. What will it take?"

Other Democrats have tried to stop IEEPA tariffs on Canada and Mexico and stop the reciprocal tariffs on most other countries, and a vote to end tariffs on Canada passed the Senate with a few Republican supporters, but it was blocked in the House.

Cantwell replied, "I think my colleagues are waiting to see what happens in the next month. They’re trying to give the president the benefit of the doubt."

However, she said many senators are hearing from their constituents about the consequences of higher tariffs. She noted that Seattle's port traffic in May was down a third from May 2024.

She also told an anecdote about Molly Moon ice cream shops, a Seattle chain with 11 locations. The owner told Cantwell that she didn't think she needed to worry about the tariffs, given her ingredients are local, but then heard from an underling, "Your [compostable] spoons come from India, and it is going to cost you $240,000 to replace that spoon in the United States of America."

Cantwell said small businesses don't fly to Washington often, so "they don’t get to deliver this message, but they are feeling the pinch." She added, "Our colleagues need to get a little closer to the ground back home."

Cantwell said every time she returns to Washington state, she hears about tariffs. Businesses are telling her they're already feeling the effects, but the impact could be even more in the third and fourth quarters of the year.

"We will see what happens at the end of these deadlines," she said. The executive order on reciprocal tariffs said the original high rates would go into effect at 12:01 a.m. on July 9; the China trade truce has a deadline in August, and Canada is hoping to convince the U.S. to roll back tariffs by late July.

Cantwell chuckled about the likelihood of 90 deals in 90 days, but said whatever agreements are reached, she expects South Korean and European discrimination against U.S. tech companies to end, and she said Washington state growers expect sanitary-phytosanitary rule changes in Australia, India and Japan, since they feel that those countries have non-science-based SPS restrictions.

Former USTR Susan Schwab, who concluded free-trade agreements with Peru, Colombia and South Korea, said, "We did as much negotiating with our side as we did with the foreigners, and that was a good use of time." She said the cleared advisory structure allowed USTR to hear from people about what they would go to the Hill to try to kill a deal over. She said consulting with the private sector wasn't just hearing from importers and exporters, it was also hearing from unions and environmentalists, and that she spent "a huge amount of time with the Congress, both sides of the aisle."

She said the current trade war suggests a fundamental misunderstanding of the economy. "International commerce is not a spigot you can turn on and off. There are politicians who think you can."

She said not only are tariffs often a financial burden to the consumers of imported goods, exporters can lose market share as countries decide we are not a reliable supplier.

She said the issue that she believes "has the potential to do the most irreparable damage is the damage to our competitiveness." She noted that CBP is requiring that aluminum products, including derivatives, report where the aluminum was smelt and cast to avoid 200% tariffs on the aluminum. Similarly, importers have to say where steel was melted and poured, and if it was the U.S., they can avoid 50% tariffs. Auto parts suppliers also have to trace the origin to help the automakers qualify for USMCA benefits.

"The third and fourth tier folks frequently have no clue," she said. She said the cost of tracing back to where the iron ore or pig iron was processed, or where the alumina was processed, is substantial, and is a huge regulatory burden.

Cantwell told the WITA audience that she plans to introduce legislation authorizing negotiating a free trade agreement in the Middle East, what she said is a $5 trillion market.

"I believe we need more diplomatic solutions for the region, and I think trade could be a part of that," she said. In exchange for joining the Abraham Accords and officially recognizing Israel, supporting the reconstruction of Gaza and coordinating strong export controls, she said, Middle Eastern Arab countries should get an FTA with a focus on information and communication technology. She said it's clear they're interested in AI.

"I’ve always liked the fact that Israel is a technology powerhouse," she said. "Why not use trade as part of a diplomatic tool to further our nation’s interests, as opposed to making everybody mad at us?"

Schwab said for those who are considering how trade policy can support competitiveness, they need to think about the services sector, such as foreign students enrolled in U.S. universities, and express carriers like FedEx, UPS and DHL.

"FedEx is the first- or second-largest purchaser of airplanes in the world," she said, and its purchases of Boeing 767s made Boeing refueling tankers more affordable for the Pentagon.

"When we’re thinking about … cross-border data flows, we need to be thinking about it more broadly," she said, as it has implications for manufacturing.

The panel was asked to talk about competitiveness and tariffs, and Cantwell said tariffs make it harder for producers, but so does the current administration's pull-back from research grants and tax credits for green technology manufacturing.

Cantwell said the U.S. is such a strong innovator because many players are involved in creating new products -- the government, universities, companies. She said the U.S. needs to do a better job of getting those new ideas to commercial scale faster, but its innovation is unmatched.

She noted that Microsoft has a power-purchase agreement to buy from a fusion technology startup by 2028. If fusion energy can be made commercially viable, it would provide carbon-free energy without radioactive waste or meltdown dangers. China and the U.S. are both trying to make fusion work with massive investments.

"What we need to do is keep innovating," she said. "I have concerns about the amount of cuts to NIH, NSF. That’s the opposite direction [of where] we should be going."