Trump Tariffs Give Democrats Ammunition in Mid-Term Races (1)

The International Trade Practice Center on Bloomberg Law® provides in one comprehensive, time-saving resource.

By Rossella Brevetti

Republicans may face voter blowback in the mid-term elections from President Donald Trump ‘s multi-pronged tariff offensive if the administration doesn’t reverse course, analysts told Bloomberg Law.

Soybean farmers and pork producers—already hit hard by trade retaliation from countries responding to U.S. tariffs on their goods—will vote in close Senate races, including those in Missouri, North Dakota, and Tennessee, where Democrats are already blasting the administration’s trade policies. The Senate races in all three states are listed as toss ups by the Cook Political Report.

Agricultural companies Archer-Daniels-Midland and Bunge as well as car manufacturers Ford, BMW, Mercedes-Benz, Lexus and Toyota will be among the worst hit in the first wave of retaliatory tariffs from China, according to a Bloomberg Intelligence analysis. Pork producers, including Tyson Foods and Triumph Foods, also stand to take a hit.

As a result of the tariffs and tit-for-tat retaliation, U.S. farmers may be squeezed out of top markets, consumer prices will rise, and costs for construction and infrastructure projects will increase. On the other hand, the tariffs could be withdrawn or result in wins for U.S. manufacturing and farming, blurring the mid-term picture further.

While many Republicans have come out strongly against the tariffs, the question for impacted voters could be whether Republicans have done enough. Republican incumbents and challengers to current Democratic senators will be vulnerable from the tariff cross-fire, Casie Daugherty, Prime Policy Group director, told Bloomberg Law. Prime Policy Group is a lobbying firm that works on policy objectives with corporations, associations, domestic and foreign governments, and political candidates.

Negative Consequences

“As these tariffs hurt more Americans, they absolutely can have negative consequences for Republicans in the mid-terms,” Americans for Prosperity (AFP) President Tim Phillips told Bloomberg Law. The administration’s trade policies risk undermining the economic recovery that President Donald Trump deserves much credit for, Phillips, a former Republican strategist, said. AFP is a non-partisan, grassroots advocacy organization affiliated with the Koch Network.

Senate Democratic incumbents and Republican challengers in farm states will have to carefully thread the needle to support the administration’s actions pressuring China on trade, yet underscoring that retaliation could hurt exports and jobs, Welles Orr, former assistant U.S. trade representative under the George H. W. Bush administration, now at Miller & Chevalier, told Bloomberg Law in an email. He said Democratic senators Heidi Heitkamp (N.D.), who will face Rep. Kevin Cramer (R-N.D.), in November, and Claire McCaskill (Mo.) are good examples with both saying the U.S. must confront China, but tariffs are the wrong tool.

Both states are prime Republican targets for “pick-ups” and both incumbents are doing a good job of handling their positions based on current poll numbers, according to Orr. The U.S. Chamber of Commerce said that $881 million in Missouri exports and $61 million in North Dakota exports are threatened by the emerging trade war.

Trump hit steel and aluminum as well as a host of products from China with tariffs. He threatened an additional $200 billion in tariffs on Chinese products as well as new tariffs on auto and auto parts. The tariffs sparked waves of retaliation from U.S. trading partners on products such as pork, soybeans, bourbon, whiskey, citrus fruit, and steel.

Layoffs Announced

Missouri’s Mid-Continent Nail Corp. announced layoffs and fears of a complete shutdown stemming from the steel and aluminum tariffs. Missouri is among the most hotly contested Senate races, Mid-Continent spokesman James Glassman said, adding that “It puts the Republican in a difficult position.”

Pork- and soy bean-producing states are already hurting, and consumers will start feeling the pinch if tariffs continue to pile on, Daugherty said. “When you start putting tariffs on products that consumers buy, people are not going to stay ignorant for long,” she said. As long as North American Free Trade Agreement renegotiation continues to stay in the background, NAFTA is not likely to have much of an overall election impact, she said.

In Tennessee, Democrat Phil Bredesen is campaigning against the steel and aluminum tariffs that led to retaliation on iconic Tennessee whiskey. Rep. Marsha Blackburn (R-Tenn.), the Republican expected to face him in November, jumped on the anti-tariff bandwagon by joining a Tennessee delegation letter blasting the tariffs.

Tennessee will also be impacted by any auto tariffs, because it has a significant number of foreign auto plants, Daugherty said. “Bredesen is going to have a really good story to tell,” she said.

Consumers Pinched

Consumers will soon see higher prices on the items they buy every day at Walmart or Dollar General, Phillips said. “It’s still reversible. But it’s reaching a point where it absolutely will have an impact if they don’t reverse course,” he said.

In Florida, Sen. Bill Nelson (D) July 16 visited Correct Craft to criticize the tariffs. Retaliation is causing prices to rise for the boats and engines Correct Craft manufacturers, making it harder to sell in global markets, Correct Craft said. In a tweet, Nelson said Correct Craft officials worry they may have to start laying people off if the administration doesn’t reverse course. Nelson is expected to face Gov. Rick Scott (R) in November.

“If you are a skillful Democrat, you can use [the tariff issue] against just about any [incumbent] Republican,” Edward Gerwin, Jr., senior fellow, Progressive Policy Institute, told Bloomberg Law. Democrats can say “this Republican is not doing enough” to stop the president’s trade actions, which are hurting U.S. farmers and manufacturers, he said. “It cuts many ways against the incumbent Republicans,” he said. PPI has close ties to New Democrats in Congress.

Several Southern states, including Alabama and Kentucky, have large foreign automobile manufacturing plants, which could get hit with auto tariffs before the mid-terms, Daugherty said. Alabama is home to Mercedes-Benz U.S. International, Honda Manufacturing of Alabama, and Hyundai Motor Manufacturing Alabama. Toyota has a large manufacturing plant in Kentucky. BMW has said it will have to cut South Carolina operations because of the tariff cross-fire, Daugherty said.

Todd Tucker, a fellow at the Roosevelt Institute, told Bloomberg Law in an email that the latest polls show Democratic voters have swung in a pro-trade direction, while Republican voters have gone the opposite way.

The lines have blurred in the sense that Democrats are now coming out in opposition to protectionism, Clark Packard, trade policy counsel at the R Street Institute, told Bloomberg Law. “I don’t know if we’re seeing a realignment. I do see candidates using this issue in trying to make a strategic calculation,” Packard said.

Request International Trade Practice Center on Bloomberg Law