Fear: Trump in the White House(90)

Porter tried to prepare organized briefing papers with relevant information, different viewpoints, costs/benefits, pros and cons and consequences of a decision. It didn’t work.



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Gary Cohn and Robert Lighthizer, the U.S. trade representative, had worked for months to get Trump to agree to authorize an intellectual property inquiry into China’s trade practices. It was a case where Trump could flex his antitrade muscle without blowing up a trade agreement. The authority came from section 301 of the Trade Act of 1974, which gave the president power to unilaterally institute punitive trade restrictions on countries that engage in unfair trading with the U.S.

The Chinese broke every rule. They stole everything, from tech companies’ trade secrets to pirated software, film and music, and counterfeited luxury goods and pharmaceuticals. They bought parts of companies and stole the technology. They stole intellectual property from American companies that had been required to move their technology to China to operate there. Cohn considered the Chinese dirty rotten scoundrels. The administration estimated China had committed $600 billion in intellectual property theft.

A 301 investigation, 301 for short, would give Lighthizer one year to determine whether the office of the U.S. Trade Representative should open a formal investigation of China. If so, Trump would have the authority to impose tariffs, sanctions and other measures against China.

The Europeans, Japanese and Canadians would join the United States in a massive, coordinated effort against Chinese intellectual property violations. This would be the first trade enforcement by Trump.

Trump had finally agreed to sign a memo and announce in a speech a year-long investigation of China’s intellectual property violations. It had been a long march to provide him with clear definable action on the trade front.

During an August meeting in the residence with his economic and trade teams, Trump balked. He had just talked to President Xi. He didn’t want to target China. “We’re going to need their help for North Korea,” he said. “It’s not just one U.N. Security Council vote. We’ll need their help on an ongoing basis. I want to take all the references to China out of the speech.” He did not want to jeopardize his great relations with President Xi.

Porter said the short two-page memo mentioned China five times, and only China. It was all about China as they had been discussing for months.

“No, no, no,” Trump said. “I don’t want to make it China-specific. Let’s just do it for the whole world.”

Under the law, these investigations have to be about particular unfair trade practices by a specific country.

“In this case it’s China,” Porter said. “We can’t get around the fact.”

“Well, okay,” the president said, “I can sign whatever, but I don’t want to mention China in the remarks.”

“We can’t explain what this is without mentioning that we’re targeting China.”

Okay, Trump said. In his public remarks, he said, “The theft of intellectual property by foreign countries costs our nation millions of jobs and billions and billions of dollars each and every year. For too long, this wealth has been drained from our country while Washington has done nothing. . . . But Washington will turn a blind eye no longer.” He made one mention of China.

Cohn and Porter hoped signing the memo authorizing a 301 investigation would divert Trump from imposing steel and aluminum tariffs immediately.

Whenever either of them would challenge Trump’s conviction on the importance of trade deficits and the need to impose tariffs, Trump was immovable. “I know I’m right,” he said. “If you disagree with me, you’re wrong.”



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Cohn knew the real battle was going to be over tariffs, where Trump had the most rigid views and where he could do the most damage to the U.S. and world economies. He shoveled all the data he could to the president about how tariffs on imported steel would be a disaster and hurt the economy.

A 17-page document that Cohn sent contained a chart showing the minuscule revenue earned in 2002–03 when President Bush had imposed steel tariffs for similar reasons. It showed that the revenue that came in was $650 million. That was .04 percent of the total federal revenue of $1.78 trillion.

The estimated revenue from a 25 percent steel tariff would now be $3.4 billion, or .09 percent of expected total revenue of $3.7 trillion for 2018.

Tens of thousands of U.S. jobs had been lost in industries that consumed steel, Cohn said, and produced a chart to prove it.

Trump had three allies who agreed with him that trade deficits mattered: Secretary of Commerce Wilbur Ross, Peter Navarro and Bob Lighthizer, the U.S. trade representative.

Navarro said that the data did not include the jobs created in the steel mills under the Bush tariffs of 2002–03.

“You’re right,” Cohn said. “We created 6,000 jobs in steel mills.”

“Your data is just wrong,” Navarro said.

Trump was determined to impose steel tariffs. “Look,” Trump said, “we’ll try it. If it doesn’t work, we’ll undo it.”

“Mr. President,” Cohn said, “that’s not what you do with the U.S. economy.” Because the stakes were so high, it was crucial to be conservative. “You do something when you’re 100 percent certain it will work, and then you pray like hell that you’re right. You don’t do 50/50s with the U.S. economy.”