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A nervous, frustrated Washington braces for a U.S.-China trade war

A worker sits near a shelve displaying bottles of American whiskey for sale at a supermarket in Beijing Wednesday.
A worker sits near a shelve displaying bottles of American whiskey for sale at a supermarket in Beijing Wednesday. AP

Senators raged. Lobbyists called emergency meetings. Stocks plunged. And White House aides implored Americans not to panic.

Welcome to Washington on the brink of a trade war.

Kansas Sen. Pat Roberts, chairman of the Senate Agriculture Committee, could only watch helplessly on Wednesday as commodity futures sank on the news that China would impose retaliatory tariffs on soybeans, corn, and more than 100 other U.S. products.

By mid morning, soybean prices were down 40 cents a bushel — a $1.72 billion loss.

“It’s very disconcerting,” said Roberts, who paused in the middle of an interview to check the prices again.

“We do have a little time to round up the farm posse and get our message across,” the Republican senator said.

Roberts is losing hope that the president will listen as agriculture trade groups mobilized their thousands of members, desperate to turn up the volume on their message that Trump should take a less punitive approach to trade policy — or risk harming some of his most loyal voters in rural communities.

“We are encouraging our farmers at every level to get the ear of their elected officials, whether that’s governors, whether that's members of Congress, cabinet officials whatever that looks like,” said Patrick Delaney, director of policy communication with American Soybean Association.

But hopes were fading. Senate Majority Leader Mitch McConnell, R-Ky., conceded he’s anxious “about what appears to be a growing trend in the administration to levy tariffs.”

China listed whiskey on its second wave of tariffs targeting U.S. products and the European Union has threatened to impose tariffs on Kentucky’s signature bourbon if the White House goes forward with its plan to impose tariffs on aluminum and steel.

“This is a slippery slope, so my hope is that this will stop before it gets into a broader tit-for-tat that can't be good for our country,” McConnell told business leaders and farmers in Shelbyville, Kentucky.

“I am nervous about getting into trade wars and I hope this doesn’t go too far,” he said.

Adding to McConnell and Roberts’ distress is that despite all their political clout, there’s very little they can do to stem Trump’s protectionist policies.

Congress may hold the power of the purse, but it has little leverage over trade, which falls largely under the purview of the executive branch of government.

As a result, McConnell, Roberts and other Republican leaders in Congress find themselves relatively powerless as the president — the head of their own party — pursues policies in direct conflict with the GOP’s longstanding free trade stance.

“It’s just a very unfortunate outlook that we have protectionists advising the president and that it seems he has an intrinsic belief in protectionism,” Roberts said.

Lawmakers can and will hold hearings. A session on China trade policy is scheduled in the Senate Finance Committee next week. Roberts said he’d like the chance to question Peter Navarro, the president’s trade adviser, and Wilbur Ross, the Commerce Secretary, at an agriculture committee hearing.

Senators could stall Trump’s nominees, but Roberts dismissed that idea as counterproductive.

Legislative action to stop, dilute or delay the tariffs could run into constitutional problems.

Sen. Jeff Flake, R-Ariz. introduced legislation last month that he said would “nullify” what he called the Trump administration’s “ill-conceived” tariffs on steel and aluminum.

“We’ll be considering any legislative action that we think is appropriate,” Roberts said. “You don’t want to set a precedent of Congress stepping into the middle of any trade negotiations. You hope for the best.”

Roberts also suggested that Congress might not be so quick to renew the president’s Trade Promotion Authority when it expires at the end of June. Trump has requested a three-year extension of the law, which allows Trump to submit trade deals to Congress for a straight up-or-down vote without any amendments.

Usually renewal of this fast-track trade authority is “a given,” Roberts said.

On Wednesday he warned: “I’m not too sure that it will be a given today.”

Roberts is still hopeful the president is just using the threat of tariffs in order to gain a better negotiating position with China.

Farmers and ranchers shouldn’t be collateral damage, though, Roberts said.

“These are real people, real families. You don’t use them as a playing card,” Roberts said. “I think that’s the most upsetting thing that has happened.”

An irate Sen. Charles Grassley, R-Iowa, threatened to do what he could to blunt the effect of the tariffs on his farm state.

Farmers and ranchers, he said, “shouldn’t be expected to bear the brunt of retaliation for the entire country,” Grassley said.

Grassley said that he’d warned Trump at a White House meeting that China would retaliate by targeting agriculture.With the financial markets trending south and Republican lawmakers in an uproar, Trump’s new economic adviser, Larry Kudlow, went into damage control mode. He urged caution, saying “back channel talks” already are underway to quell the crisis.

“Don't overreact, we'll see how this works out,” Kudlow said on Fox Business on Wednesday. “I think at the end of this whole process, the end of the rainbow, there’s a pot of gold. And if you open up that pot, you will see better economic growth, more trading going on, improved wages for both sides.”

By close of business on Wednesday, the Dow had erased its earlier 510 point loss, ending up 230 points.

Lindsay Wise: 202-383-6007, @lindsaywise

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