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GOP senators worry metal tariffs could derail Trump's new NAFTA

·Chief Political Correspondent

This post has been updated.

A group of Republican senators met with President Trump at the White House Thursday afternoon to talk about trade and tariffs as Congress considers ratifying the Trump-led United States–Mexico–Canada Agreement (USMCA).

Senate Finance Chairman Chuck Grassley (R-IA), Sen. Rob Portman (R-OH), Sen. John Thune (R-SD), Sen. Tim Scott (R-SC), Sen. John Cornyn (R-TX), and Sen. Johnny Isakson (R-GA) attended the meeting.

Grassley said he once again urged the president to drop the tariffs on steel and aluminum or risk losing the USMCA, which is the revised North American Free Trade Agreement (NAFTA).

“If these tariffs aren’t lifted, USMCA is dead,” wrote Grassley in a recent Wall Street Journal op-ed.

The legislatures in all three countries still need to approve the trade deal. Grassley and others worry Canada and Mexico won’t sign off on the deal with tariffs in place.

In a statement about the meeting, Grassley said he told the President he wanted to help him get a victory on trade.

“I’ll continue to work with my colleagues in Congress and the Trump administration to make sure the tariffs go so USMCA can replace NAFTA and become law this year,” Grassley said in a statement after the meeting. “We should keep in mind that tariffs are a tax on Americans and we shouldn’t undermine the benefits of historic tax reform with tariffs.”

‘Tariffs are working’

Earlier this year, Grassley told reporters his previous attempt to convince the President to lift the tariffs was not well received. It’s unclear if Thursday’s attempt was any more successful. Shortly after the meeting, President Trump tweeted “tariffs are working.”

Grassley, the most senior Republican in the Senate, complimented Trump in his statement while also reiterating the need to lift tariffs: “The USMCA is a historic achievement for President Trump. Lifting metal tariffs on Canada and Mexico will help the broader U.S. economy realize the agreement’s full benefits and will help a strong economy grow even stronger.”

Ahead of the meeting, Portman — a former US Trade Representative —also said Trump needs to deal with the tariffs on aluminum and steel.

“Right now, these tariffs ... are being imposed against those countries that are our allies and those countries with whom we are now doing a new agreement,” Portman told Yahoo Finance. “I think it should be resolved. It's the right thing to do and I think it probably will be, because I don't think the agreement can go forward again in those two countries or even in the U.S. Congress without addressing that issue.”

Sen. Rob Portman, R-Ohio, arrives for a closed-door briefing for the members of the Senate Foreign Relations Committee, Tuesday, March 5, 2019, in Washington. (AP Photo/Alex Brandon)
Sen. Rob Portman, R-Ohio, arrives for a closed-door briefing for the members of the Senate Foreign Relations Committee, Tuesday, March 5, 2019, in Washington. (AP Photo/Alex Brandon)

“I think for Republicans, it's going to be harder to find the votes unless we deal with the tariffs at the same time. Recall that the steel and aluminum tariffs were put in place based on a national security waiver with regard to Mexico and Canada. These are not national security threats to us,” said Portman.

Portman said he, his colleagues and the President discussed working together to pass the USMCA.

“Our economy is strong but resolving these trade and tariff issues will build on the progress we’ve made and spur even more economic growth and job creation right here in America,” said Portman in a statement after the meeting.

Portman told Yahoo Finance he ultimately thinks Congress will approve the trade deal.

“Everything in there is better than the existing NAFTA if you are concerned about protecting and preserving jobs in America,” said Portman.

Minivans a national security threat?

Before the meeting, Portman told Yahoo Finance he wanted to discuss looming auto tariffs with the president. Trump has threatened to slap tariffs on auto imports on the basis of national security.

The Commerce Department submitted the results of its investigation into whether auto imports pose a national security threat in February. The department’s recommendations have not been made public. The president has until May 18 to make a decision.

“We haven't seen the recommendation yet, but the rumor is that it says that he could go ahead and impose a national security tariff against automobiles as well,” Portman said. “That would be tough for us, in Ohio. We're the second-biggest auto state in the country and $2,000 per car is the estimated increase in cost if we did that. That's for domestically produced cars. To me, that would be a concern.”

A spokesperson for Isakson said the senator told President Trump that Georgia companies would have to decrease capacity and delay planned expansion if he imposes auto tariffs.

“He warned the president that moving forward with tariffs on foreign automobiles will hurt the American economy,” said the spokesperson. “The foreign automobile industry generates nearly 70,000 jobs in Georgia and contributes $7 billion dollars annually to Georgia’s gross state product.”

Portman has authored legislation to rein in the president’s ability to impose tariffs on a national security basis.

“Minivans from Canada are not at all a national security threat,” he said.

Sen. Pat Toomey (R-PA) has introduced a bill that goes even further to curb the president’s tariff authority. The Senate Finance committee is currently working on a compromise bill.

Portman told reporters earlier this year that he wanted to pass the legislation before Trump acted on auto tariffs.

Going into the meeting, Portman wanted to get an update on trade negotiations with China. He said he thinks Ambassador Robert Lighthizer and Treasury Secretary Steve Mnuchin are getting “very close” to a deal.

“I want to talk about that and be sure that we're getting to some of the fundamentals, some of the structural problems in our trade relationship, not just in buying more stuff, but to stop them from playing outside the rules,” said Portman.

Portman said talks with China were discussed, but did not reveal details about where negotiations stand.

Jessica Smith is a reporter for Yahoo Finance based in Washington, D.C. Follow her on Twitter at @JessicaASmith8.

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