(The Hill) – Republican lawmakers are growing alarmed over signs that President Trump’s expanding trade war is hurting the economy, something they’re hearing from constituents at home who are struggling to adapt to Trump’s zigzagging tariff pronouncements.
GOP lawmakers say they’re hearing from business owners, exporters, farmers and local leaders that Trump’s threat of steep tariffs against Canada, Mexico and Europe are chilling business sentiment in the United States.
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Companies feel less confident about expanding operations and hiring new workers, given their uncertainty about the costs of imported goods and the potential loss of foreign markets over the next year.
“The Canadian tariffs will definitely have a detrimental impact on the economy of Maine and on border communities in particular,” said Sen. Susan Collins (R-Maine). “We have for example a major paper mill in Northern Maine right on the border that gets its pulp from Canada.”
“That mill alone, which is by far the biggest employer in the region, employs 510 people directly. I’ve talked to the owner of that mill, the imposition of a 25-percent tariff could be devastating,” she warned.
Trump announced Thursday that he would pause 25-percent tariffs on imports from Canada and Mexico until April 2, but Collins warned that the looming threat of high fees is having a chilling effect on her state’s economy.
“I think it freezes investment until they know exactly what the impact is going to be. So I understand the president’s desire to level the playing field, but Canada’s just not the problem in Maine,” she said, citing wood products, blueberries, lobsters and potatoes that go back-and-forth across the border as key drivers of the economy.
Sen. Rand Paul (R-Ky.) said he’s hearing a deluge of complaints from business leaders in Kentucky about the potential impact of Trump’s trade policies on the local economy.
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“I have every major industry in Kentucky lobbying me against them: the cargo shippers, the farmers, the bourbon manufacturers, the homebuilders, the home sellers — you name it — fence manufacturers,” Paul told The Hill.
“The bourbon industry says they’re still hurt from the retaliatory tariffs” during Trump’s first term, he said. “So do the farmers.”
He said the federal government had to pay $20 billion to $30 billion in the “last administration” to farmers to mitigate the economic impact of tariffs.
“It shows the fallacy of believing in a policy of tariffs if you immediately have to borrow a bunch of money and give it to the people your hurt,” he said. “There need to be Republicans who are still extolling the benefits of international trade.”
One Republican senator who requested anonymity to speak with The Hill expressed fear that Republicans will suffer a political backlash if the economy slumps, predicting that Trump’s tariff threats coupled with tech mogul Elon Musk’s push to cut federal spending will get the blame.
“People are concerned that we’re about to take a hit in the stock market,” the senator said of fears shared by fellow GOP senators about the direction of the economy.
The S&P 500 on Friday finished its worst week of trading since September, which wiped out all of the stock market’s gains since Trump’s election in November. Meanwhile, the Nasdaq composite fell into correction territory on Friday. Financial stocks such as JPMorgan, Chase and Bank of America were some of the biggest losers of the week.
A second Republican senator who requested anonymity to speak with The Hill about a sensitive political topic expressed hope that the turmoil in the stock market would prompt Trump to back away from tariffs as a core element of his economic strategy.
“Maybe if his approvals keep diving and the economy starts to pinch, maybe” Trump will shift on tariffs, “but in the meantime what damage are we doing?” the senator asked.
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“Tomorrow he might lift all these sanctions that he just put on yesterday. It’s crazy,” the senator remarked.
The White House announced over the weekend that Trump would proceed with implementing tariffs on Canada and Mexico under the International Emergency Economic Powers Act before pausing them for a second time Thursday.
GOP lawmakers worry the tariff battles risk dampening the broader economy.
The Labor Department on Friday reported that the economy added 151,000 jobs in February, below the 170,000 jobs that economists had predicted would be created last month. The unemployment rate ticked up slightly from 4 percent to 4.1 percent.
Private employers hired just 77,000 workers in February, the smallest increase since July, according to ADP Research.
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Speaking at the U.S. Monetary Policy Forum in New York on Friday, Federal Reserve Chair Jerome Powell said the nation’s economy remains strong but warned that there’s “high” uncertainty around the economic impacts of Trump’s trade policies.
He said the Fed would wait for “greater clarity” before making decisions about monetary policy, signaling that the U.S. central bank would be ready to step in if the economy slows suddenly.
He said that tariffs will “hit the exporters, the importers, the retailers and, to some extent, the consumers.”
The Atlanta Fed’s GDPNow tracker projected at the end of last month that gross domestic product (GDP) is on track to shrink by 1.5 percent in the first quarter.
U.S. consumer sentiment dropped to a 15-month low in February as worries about inflation and Trump’s tariffs rattled Americans’ views of their buying power, according to the University of Michigan’s Surveys of Consumers.
Trump on Thursday waved off the turmoil in the stock markets, telling reporters that the United States will benefit because of his policies.
“I’m not even looking at the market, because long term the United States will be very strong with what is happening here,” he said in the Oval Office.
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Trump often took credit for the booming stock market during his first term, when the S&P 500 climbed 67 percent over four years, despite the COVID-19 pandemic, which paralyzed the economy for months.
Sen. Mike Rounds (R-S.D.), who is up for reelection next year, said farmers in South Dakota support Trump strongly, but they’re telling him to relay the message to Washington that threats of tariffs are weighing heavily on their business outlooks.
“These are really strong Trump supporters. Most of them are saying, ‘We get it. We don’t like the idea. You need to talk to him about what tariffs are going to do,’” he said of farmers in his home state.
“They say, ‘We get it, but you guys got to tell him how seriously we’re concerned about it,’” he added.
Rounds, however, predicted the market would bounce back if Trump can manage to cut the deficit and bring down interest rates.
“Once we get some stability … I think the market is going to come back again and I think interest rates are going to start to fall, which is really going to drive the markets,” he said. “The most important thing we can do right now is public policy that brings down interest rates.”
Sen. John Cornyn (R-Texas), whose home state counts Mexico as its biggest trading partner, said he hopes the uncertainty over tariffs “will settle down soon.”
“I saw the president has decided not to impose the 25 percent tariffs on Canada and Mexico. Hopefully things will settle down,” he said. “I think a lot of the pro-growth things that the president is doing on energy and regulation and frankly rolling back a lot of the spending, which has been the principal fuel for inflation … I think that will have a huge pro-growth impact.”
But he warned that “markets prefer stability rather than uncertainty.”
Trade between Texas and Mexico totaled $272 billion in 2023.
