Mnuchin, Lighthizer Reportedly Opposed Trump's Mexico Tariffs

Update: That didn't take long...

Robert Lighthizer - perhaps having seen the latest headlines about what happened to a senior North Korean envoy who got out of line - has issued a statement denying the contents of the WSJ story.

  • LIGHTHIZER'S OFFICE DENIES REPORT CHINA TARIFFS ON HOLD: CNBC

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Though this shouldn't surprise anybody who possesses even a glancing familiarity with the policy-making dynamics in the West Wing, WSJ and CNBC are reporting that Robert Lighthizer and Steve Mnuchin had opposed President Trump's plan to slap new punitive tariffs on Mexico over the new government's failure to curb the flow of illegal immigrants.

It's yet another example of Trump overruling senior administration officials on policy issues.

Mnuchin

The senior administration officials feared the tariffs could jeopardize USMCA, the 'Nafta 2.0' trade deal that the administration negotiated with Mexico and Canada. But in the end, Trump's frustration with the border crisis won out.

According to WSJ, Trump's frustration with the border situation led to the tariffs (though we could have told you that). Since Mexico responded when Trump threatened 25% tariffs and a possible border closure, he felt like giving it another try might produce a similar result.

In recent days the president lost his patience, according to one of the people who spoke about Mr. Lighthizer’s concerns and a senior administration official. He had listened to his advisers for months, who told him not to take action against President Andrés Manuel López Obrador’s new administration while it was forming its government, they said.

"He got tired of waiting for the new government to settle in," one of the people familiar with the situation said.

"The last time he did tariffs on Mexico, Mexico responded, so he wanted to try again in the context of border security," the senior administration official said.

There was a meeting with the president’s trade team on Wednesday and again on Thursday, when the president phoned in from Air Force One, according to one of the people.

"In both meetings, the president made very clear that he wants to do this," one of the people said.

But Trump did find one ally among his top aides who fully supported the plan: Steve Miller, who has been quietly consolidating control over the administration's immigration policy, according to CNBC. Furthermore, with Mike Pence in Canada and Larry Kudlow undergoing surgery,two potential moderating voices were effectively absent when the decisions were made. And, judging by his interview with CNBC earlier today, Peter Navarro appears to also have supported the policy.

With that in mind, the motivation behind this latest 'leak' is pretty transparent: It looks like an effort by Lighthizer's camp to salvage his 'working relationship' with Pelosi. "Lighthizer is not happy," one of CNBC's sources said.

Meanwhile, WSJ stressed that Lighthizer was responsible for successfully softening Democratic resistance to USMCA.

U.S. officials, including Mr.  Lighthizer, have stressed to Congress the importance of enacting USMCA, meant to replace the North American Free Trade Agreement, in part to show other trading partners that high-pressure talks with Mr. Trump can lead to a win for all sides.

One of the officials noted that Mr. Lighthizer has a particularly good working relationship with House Speaker Nancy Pelosi, and behind closed doors, he has managed to leverage that relationship to make progress in advancing the USMCA through Congress. Some in the administration now fear that the president’s latest move may derail any progress Mr. Lighthizer has made, the people familiar with the situation said.

Goldman said in a note published Friday that it still expects USMCA to pass eventually, but if Trump follows through with the tariffs, furious Democrats might force the administration to put USMCA on the shelf until after the 2020 vote.