Koch Network Official Says Trump Tariffs Are `Crony Capitalism'

(Bloomberg) -- The political network backed by billionaires Charles and David Koch isn't happy about the steel and aluminum tariffs proposed by President Donald Trump and is mobilizing grass-roots activists in 36 states against them.

“The tariffs are, in many ways, crony capitalism,” James Davis, the network's top spokesman, told reporters and editors Thursday at Bloomberg's Washington bureau. “It's supporting a few jobs, potentially, at the expense of many.”

Last week, Trump signed a proclamation that authorizes a 25 percent tariff on imported steel and 10 percent on imported aluminum, to take effect March 23. He's argued they're needed to help level a global playing field he views as tilted against American workers.

Davis said the Koch network, which includes Americans for Prosperity and other groups, has no immediate plans to run advertising against the president on the topic of tariffs. Still, he said, that option isn't “off the table.”

Keeping the Kochs and their donors happy is important for Republicans in an election year, especially as Democrats show signs of momentum as they seek the 24 seats they need to gain control of the House in November's midterm elections.

Tip the Balance

The network, which could make a difference in key states that could tip the balance of power on Capitol Hill, plans to spend roughly $400 million on state and federal policy and politics during the two-year election cycle that culminates with the November balloting. That marks about a 60 percent increase over 2015-16, although leaders have said more than a third of the 2017-18 total has already been spent.

The Koch organization, the most influential conservative entity outside the Republican Party, has clashed with Trump before on trade and immigration. The brothers, who each have a net worth of about $47 billion according to Bloomberg estimates, didn't support Trump in the 2016 campaign, although they've since praised his efforts to cut taxes and regulations.

On Thursday, Americans for Prosperity started running a second wave of tax-related television and online ads against Democratic Senators Claire McCaskill of Missouri and Joe Donnelly of Indiana, who are seen as vulnerable because they're from states Trump won in 2016. The first and second wave of spending is expected to total $8 million.

Wall Street

Wall Street has largely taken the prospect of tariffs in stride after stocks fell initially and Treasuries rallied on the announcement. But the added fees remain deeply troubling to many business leaders, including the Koch brothers.

“We're going to be proactively stating what our position is,” Davis said. “I think we've done that pretty aggressively.”

Charles Koch wrote an opinion piece last week for the Washington Post where he said the tariffs Trump has imposed on steel, aluminum tariffs, washing machines and solar panels are harmful for the economy.

Davis also said the network isn't pleased with everything that's been done by the Republican-controlled Congress.

“The budget's atrocious,” he said, as he compared it to “a tremendous amount of success” on tax reform, the confirmation of Supreme Court Justice Neil Gorsuch, and regulatory rollbacks.

--With assistance from Ben Brody

To contact the reporter on this story: John McCormick in Chicago at jmccormick16@bloomberg.net.

To contact the editors responsible for this story: Sara Forden at sforden@bloomberg.net, Ros Krasny

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