Koch network admits its push against Trump's tariffs has fallen flat

The Soro Enshi container ship at the Yangshan Deep Water Port in Shanghai on July 10, 2018. Bloomberg photo by Qilai Shen.

The Koch network political arm is conceding it has lost the early fight in its battle against President Donald Trump's tariffs.

The conservative powerhouse group funded partly by billionaire industrialist Charles Koch remains committed to the cause. But its leaders are acknowledging their attempt to turn voters against Trump's preferred weapon in his trade wars through a massive political advertising campaign has mostly fallen flat and the strategy needs retooling, as CNBC's Brian Schwartz was the first to report.

"We remain fully committed to free trade and are always adjusting our plans and tactics," an official with Americans for Prosperity, the Koch grass-roots lobbying group, tells me in an email. "Tariffs are destructive, but we recognize that the economic toll is diffuse and not felt evenly among all Americans."

That is, only a relatively small slice of the population has suffered acutely from Trump's escalating import duties. That cohort includes farmers, manufacturers, and some in the retail and tech industries. But many continue backing Trump and his trade offensive nevertheless. And so do everyday consumers who haven't felt enough pain to reassess their support of the president's strategy.

Polls bear out the Koch group's finding. The most recent Washington Post-ABC News poll, for example, found while 56 percent of voters say they disapprove of his trade offensive against China, another 35 percent approve, a number that aligns roughly with his overall support. Similarly, 6 in 10 said they are worried the confrontation with China will drive up the price of household staples, while 4 in 10, a healthy minority, said they were less concerned.

And the White House has doubled down on a strategy for bailing out at least one of the constituencies pinched hardest by its tit-for-tat with Beijing. The administration is doling out $28 billion in relief to farmers, a tab that makes the program "more than twice as expensive as the 2009 bailout of Detroit's Big Three automakers, which cost taxpayers $12 billion," Bloomberg News' reports. "And farmers expect the money to keep flowing: In an August survey by Purdue University and the CME Group, 58% said they anticipate another round of trade aid next year."

The polling and the Koch group's pivot point to an advantage for the Trump team, and a challenge facing Democrats as they seek to put the economy front and center in the 2020 campaign. Economists agree the trade war is taking a meaningful bite out of growth at home, with Fed researchers pegging the damage at a full percentage point through the early part of next year. The conflict has stoked concerns it will hurry the arrival of the next recession.

But it's arguably less clear Trump's tariffs are diminishing his support among his base. "The argument that, you know, the tariffs are adding a couple thousand dollars to the pickup truck that you're buying is not persuasive," a senior Koch official told CNBC's Schwartz. "It doesn't penetrate with the people that are willing to go along with the argument that you have to punish China."

The Koch network hasn't yet settled on its next strategy. But it appears aimed at taking advantage of growing popular support for free trade generally. "You can look for us to engage in making the benefits of trade - taken for granted for decades - more widely appreciated," the official told me. "Ultimately that will impact our nation's trade policy more favorably for the benefit of more Americans."

The group first entered the fray over Trump's trade offensive in June 2018. At the time, it pledged to wage a multiyear, multimillion-dollar campaign against the imposition of tariffs, just days after Trump slapped duties on steel and aluminum imports and prepared the first round of duties on $50 billion of Chinese goods. Now, $250 billion of Chinese imports face a 25 percent tariff, and another $112 billion face a 15 percent tariff. And Trump has pledged to further dial up the import taxes next month and again in December.

Mid-level negotiations between the countries resumed this week, an attempt to lay a foundation for more senior-level talks next month. But expectations for a breakthrough remain low.

This article was written by Tory Newmyer, a reporter for The Washington Post.

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