Kentucky Governor Says People Should Have Patience on Tariffs
Kentucky Gov. Matt Bevin says there shouldn't be steel and aluminum tariffs on Canadian products, but expressed confidence that the Trump administration will make the situation right eventually. Bevin is a Republican who leads a state that is third-highest in auto industry jobs as a proportion of the workforce. "I wish people would just have patience," he said at a Feb. 21 event sponsored by the Canadian American Business Council. He suggested the reason the tariffs are still in place is "there's a limited amount of bandwidth" at the Office of the U.S. Trade Representative, and they have "a limited amount of ability to fight all these fires at once."
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Bevin echoed President Donald Trump in saying that the U.S.-Mexico-Canada Agreement is "a much better product than was NAFTA," and dismissed some conservatives' criticism that the auto rules of origin will increase costs in the North American auto industry, and therefore make it less competitive. Autos and auto parts are Kentucky's second-largest export. "To the extent any particular model has to squeeze the balloon a little bit, it'll be fine," he said. An automaker might have to buy more North American parts, put more of the work in the two more developed economies in the region or increase North American metal content to "squeeze the balloon."
Although Kentucky has been targeted for retaliatory tariffs because the Senate's leader is from Kentucky, Bevin also minimized the economic harm of those actions. Everyone talks about bourbon, he joked, but "people don't talk about yogurt and ketchup, they got hit, too." He said even with Canadian tariffs on bourbon, people in Canada bought more bourbon in 2018 than in 2017. "Is it putting people out of business? It is not," he said.
He also was sanguine about the threat of Section 232 tariffs on autos. "They are very powerful to get people to sit down and have a conversation," he said, and repeated Trump's argument that Europe's 10 percent tariffs on autos is unfair when the U.S. rate is 2.5 percent. In response to a question from International Trade Today after his talk, on whether the U.S. should be willing to drop its 25 percent tariff on pickup trucks to zero, he said, "Of course. If we really want to be equitable across the board, you need to look at everything. I'm not saying what the end result would be, it's not fair for me to say what [U.S. Trade Representative Robert] Lighthizer should be doing ... everything should be on the table, and then we'll see."
Bevin also expressed confidence that the USMCA will be ratified in Congress. "There's nobody that does charm like the Canadians," he said of the lobbying effort Canadian politicians are engaged in. "Everyone's just loving on us governors." But he said that a new NAFTA is not on the political radar in Kentucky. "People care more about how their college basketball team is doing in the run-up to March Madness than about this issue," he said.