Fresh Controversy Over H-1B Visas, Canadian Aluminum As Trump Plays the Populist Card

Insights and Market Perspectives

Author: Greg Valliere

June 24, 2020

Print

PRESIDENT TRUMP QUITE CLEARLY is returning to the populist themes that propelled him to the presidency in 2016, including restrictions on skilled immigration and new trade tariffs, both of which are back on the front-burner this week — to the dismay of the Wall Street Journal editorial page and Washington business lobbyists. 

AN EXECUTIVE ORDER ISSUED ON MONDAY will restrict immigration through year-end for several classes of workers, including the H-1B category that tech companies rely upon for skilled workers from abroad. This is a particularly sensitive issue in India.

THE IMMIGRATION BAN PROMPTED a sharp rebuke from U.S. Chamber of Commerce CEO Thomas Donohue. “Putting up a ‘not welcome’ sign for engineers, executives, IT experts, doctors, nurses and other workers won’t help our country, it will hold us back,” he said.

OFFICIALS AT THE CHAMBER, the National Association of Manufacturers, and the tech industry’s trade association hinted that litigation is possible to block the ban, which is slated to continue through the end of 2020. The threat of legal action is reported in this morning’s TheHill.com.

A SCATHING EDITORIAL in this morning’s Wall Street Journal said the visa freeze  will impair the national recovery. “Mr. Trump’s immigration limits won’t help American workers even as they hurt American companies and the economy,” the editorial asserted. This is a classic dispute between pro-business conservatives and the anti-immigration Trump base; the latter is likely to prevail.

A SIMILAR FIGHT involves trade, with pre-election tariff disputes likely — perhaps beginning with U.S. tariffs against Canadian aluminum before the end of this month. The timing is provocative: with the USMCA trade deal scheduled to take effect on July 1, the Trump Administration has threatened a 10% duty on aluminum.

ONCE AGAIN, U.S. BUSINESS GROUPS ARE HOWLING: Opponents claim that aluminum tariffs are opposed by the majority of aluminum manufacturers, and that higher tariffs would hurt U.S. companies that rely on the metal. The key is whether imports into the U.S. are “surging,” which Trump trade officials insist is the case.

THE RISK, OF COURSE, IS RETALIATION AND MORE RETALIATION:  Canadian officials have hinted that they could impose tariffs on U.S. products, especially agricultural goods. An even bigger trade dispute looms with Western Europe, which faces higher U.S. tariffs by autumn over the issue of Europe’s taxation of U.S. tech companies. EU officials, like those in Canada, are weighing which U.S. products to target.

THESE TWO ISSUES — immigration and tariffs — are crucial for Trump’s re-election. He needs to show testosterone on both fronts, as unemployment stays near 10% through the campaign. Trump’s populist base demands jobs — and protectionism.
*   *   *   *   *
LAST NIGHT’S ELECTIONS: Results aren’t fully in, but it appears that Rep. Eliot Engel badly trails a leftist challenger in New York, and other progressives in the state are leading as well. Even in Kentucky, a mainstream Democrat who appeared well on her way to a primary victory will have to sweat out a slow vote-count against a left-wing challenger.

AS WE WROTE YESTERDAY, signs that the Democrats are veering leftward will put pressure on Joe Biden to keep his promise to embrace an activist agenda. This could be exceedingly good news for President Trump, who needs a foil and is eager to brand the Democrats as socialists.