President Donald Trump is so far unwilling to back down from a trade war with China, but that may change as pressure mounts from the influential political and donor network backed by the conservative billionaire Koch brothers.
Executives at Americans for Prosperity, just one part of the ever-growing Koch influence empire, said that tariffs will only hurt American consumers and possibly cancel out positive effects from the Republican tax-cut bill passed in December.
“From the beginning we’ve said that tariffs and protectionism is a bad idea,” Tim Phillips, president of Americans for Prosperity, said in an interview on Friday. “It’s a tax on American consumers because a lot of the product they’re buying will cost more and it hurts American industries when countries retaliate.”
The group has also expressed its concerns directly with the White House.
Charles and David Koch, the leaders of Koch Industries, one of the largest private corporations in the world, exert vast political power and influence on the right for an array of pet conservative issues, such as tax cuts.
The political wing of the Koch network was one of the most vocal supporters of the tax reform bill Trump signed last year. The group pushed the message that changes to the tax code will lead to economic growth across the country.
On Friday, with the president ratcheting up his trade rhetoric, Americans for Prosperity continued to make the case for the GOP tax cuts. In a recent article titled “5 Things to Look Forward to Under the New Tax Code,” the group promoted the notion that the reduced corporate tax rate – which was cut from 35 percent to 21 percent in the tax bill – will not only lead to strong growth, but more investments in the United States.
However, there is concern within Koch-backed groups that the ripple effects from a trade war could cancel out tax-reform wins.
“We think when you look at tariffs this is a significant threat that can undermine tax reform and increase costs for people who are only just starting to feel the relief,” Americans for Prosperity’s top spokesman, Bill Riggs, told CNBC.
The group has privately spoken with the White House about the tariffs. So far, the two sides have failed to see eye-to-eye on the administration’s trade policies.
“It’s been an ongoing conversation. We have a good line of communication with the White House’s economic policy team. They’ve explained their reasoning behind it and we just strongly disagree,” said Phillips, the Americans for Prosperity president.