K Street Lobbyists Are Loving Trump's Tariff Threats
The president's aggressive but rudderless trade policy is watering the swamp.
President Donald Trump's threat to start a trade war with China by imposing tariffs on steel, aluminum, and potentially thousands of other goods is rattling global markets and causing serious economic pain for American businesses and consumers. But at least the lobbyists are happy.
Federal lobbyists reported pulling in more than $90 million for work related to "tariffs" during the first quarter of 2018, up from just $10 million spent on the same issue during the final quarter of 2017, according to an analysis by The Daily Beast's Lachlan Markay and Betsy Woodruff. Lobbyists who reported working on "tariff" (in the singular) were paid more than $70 million in the first three months of this year, up from a quarterly average of about $32 million last year, the Beast reports.
A good chunk of that money is coming from Chinese firms, probably trying to blunt Trump's proposed tariffs. A 25 percent tariff on steel and 10 percent tariff on aluminum are already in place, as are tariffs on washing machines and solar panels, and Trump is mulling additional tariffs on more than 1,300 Chinese-made goods. But major American companies, including Google, Amazon, and Exxon Mobil, also ramped up lobbying on trade issues during the first quarter of 2018.
All of this activity is a boon to the network of longtime government insiders that Trump campaigned against. As Lachlan and Woodruff put it, "A man who pledged to drain the swamp is dramatically contributing to it by having little in the way of straightforward policy strategy."
This lobbying is playing out on two levels. In March, Trump announced plans to slap tariffs on all imported steel and aluminum but then quickly moved to issue temporary exemptions for major U.S. trading partners such as Canada, the E.U., and Mexico. The administration has been negotiating with those countries on new, bilateral trade deals, with Trump using the threat of tariffs to force them to the table. But all those negotiations require negotiators—and that's where the lobbyists come in.
On a smaller scale, individual businesses and trade groups such as the U.S. Chamber of Commerce are pressuring the administration to keep or excise certain elements of the tariff plan. If the government is going to be picking winners and losers, which is what deciding to put tariffs on product X but not on product Y amounts to, there is a strong incentive to hire lobbyists to make sure you don't come out on the losing end.
This cajoling is a good thing to the extent that lobbyists are pushing back against Trump's impulsive trade warring. But some lobbyists have more nefarious agendas. Perversely, Trump's trade agenda has encouraged some businesses to demand more tariffs as a way to blunt the effects of the ones he has already proposed. The COO of a small company that makes steel wheels for tractors and other equipment told Bloomberg News last week that his company is paying 25 percent more for steel because of Trump's tariffs, which creates "an unfair price advantage for Chinese companies that sell finished steel wheels" without having to pay tariffs.
That company, Americana Development, probably doesn't have a six-figure lobbying budget, but the same dynamic is playing out in other corporate offices across the country. If you're going to get hit by Trump's tariffs, you have an incentive to lobby for tariffs on your competitors. As long as the government has the ability to make or break companies' balance sheets, those companies are going to have an interest in hiring lobbyists to protect them (or at least to hurt their competitors in equal measure).
Rather than reducing the influence of the K Street swamp, Trump is recklessly pursuing a major economic policy shift without clearly defined goals, or even a basic understanding of the policy he's pursuing. That course of action creates openings for lobbyists. The swamp wins again.