WASHINGTON — President-elect Donald Trump's plan to use steep tariffs to punish companies that move overseas is running into an obstacle: Congressional Republicans.
House Majority Leader Kevin McCarthy warned Monday that such an approach could cause a trade war. A better way to achieve the goal of keeping companies in the U.S. and growing jobs would be to rewrite the tax code and lower corporate rates, McCarthy said.
"I think that's a better way of solving the problem than getting into a trade war with a 35 percent tariff," the California Republican told reporters at the Capitol. "We've got to have a level playing field, that companies in America can compete on a level playing field across the world, and right now we do not have one."
McCarthy's comments came in response to Trump's threat, made in a series of tweets over the weekend, that he would level taxes on companies that relocate overseas and then try to sell their products back into the U.S. "There will be a tax on our soon to be strong border of 35% for these companies," Trump wrote.
Republicans have typically opposed such tariffs as an intrusion on the free market, and it was just the latest example of Trump making a statement or coming up with a plan that flouts GOP orthodoxy.
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But Republican leaders are proving reluctant to challenge the president-elect, and McCarthy wrangled at some length with reporters at a pen-and-pad session.
For example, Republicans routinely criticized the Obama administration for taking steps that favored individual corporations, accusing the administration of "picking winners and losers." Yet GOP leaders applauded when Trump got involved to save hundreds of jobs at a Carrier plant in Indiana last week, even though it came with a cost to state taxpayers of about $7 million in tax breaks and grants.
"I think a president wants to get involved any time it's about jobs being created in America, and I think that's healthy," McCarthy argued Monday.
A few moments later, though, he appeared to contradict himself, asserting: "You want to know my philosophical belief? I believe in the free market, I don't think government should be picking winners or losers."
Trump would likely need congressional approval to impose tariffs on a specific company or a group of companies, trade law experts said. The president has broad authority to impose tariffs on specific categories of imported goods, but not to single out individual companies that make them.