Five things to watch on Trump’s tariffs

President Trump is expected this week to unveil the final details of new U.S. tariffs on steel and aluminum.

Trump’s move is drawing heavy opposition from his party, with lawmakers warning the tariffs will spark a damaging trade war, but he shows no signs of backing down. 

Here are five things to watch for as Trump prepares his announcement. 

1.) Will Trump scale back the tariffs?

Trump last week surprised his own staff by announcing he would impose tariffs of 25 percent on steel and 10 percent on aluminum.

U.S. allies, congressional Republicans and even some Trump administration officials have been working furiously to try and change Trump’s mind, pushing him to lower the tariffs or at least consider carving out exceptions. 

White House press secretary Sarah Huckabee Sanders didn’t provide any additional details about the tariffs on Monday, saying, “we’re still finalizing what the final deal would look like and I’m not going to get ahead of the president’s announcement.” 

Peter Navarro, a Trump official who has been exerting more influence on trade policy, said it’s possible the tariffs will include some narrow business exemptions. But he insisted that no countries would be excluded.

“There’ll be a clause that will have exemptions for very specific one-off type situations but nothing, like, for beer cans,” Navarro told Fox Business Network on Monday. 

2.) Will the divide between Trump and the GOP grow?

Trump’s tariff push has created one of the biggest intraparty rifts of his presidency. 

The office of Speaker Paul Ryan (R-Wis.) on Monday said, “We are extremely worried about the consequences of a trade war and are urging the White House to not advance with this plan.” 

Ryan has appealed to Trump numerous times over the past week, arguing that the tariffs would start a trade war and hurt the U.S. economy.

Meanwhile, House Ways and Means Committee Republicans — led by Chairman Kevin Brady (Texas) and Trade Subcommittee Chairman Dave Reichert (Wash.) — on Monday drafted a letter to the president expressing concerns about “the prospect of broad, global tariffs” on aluminum and steel. 

Brady and Reichert said the administration and Congress must work together on trade to reap the full benefits of tax reform. The Senate Finance Committee sent the White House a similar letter.

Many Republicans have expressed opposition to the sweeping nature of the tariffs and suggested Trump take a more targeted approach. 

3.) How do Democrats react? 

Democrats and unions were the first to cheer Trump’s plan to impose across-the-board tariffs, but not everyone in the party is on board. 

Some Democrats up for reelection this year, such as Sen. Sherrod Brown (Ohio) and Sen. Bob Casey (Pa.), have enthusiastically supported the trade moves, focusing on how the action would protect U.S. industries from China’s cheating. 

But others are more wary. 

“For every action in trade there’s a reaction, so the unintended consequences, we have to be very, very careful of, and I’m not sure they’ve figure that out,” said Sen. Claire McCaskill (Mo.), another Democrat up for reelection this year. 

The AFL-CIO has said the steep tariffs on steel and aluminum will revitalize the sagging U.S. industries.

“The admin’s steel & aluminum tariffs are good steps towards fixing predatory practices that hurt workers & cheat companies that produce in US,” wrote Richard Trumka, the president of the AFL-CIO union, in a tweet.

The United Steelworkers also praised the move, saying “it’s about time,” but added that Canada should be excluded from the tariffs.

“Canada and U.S. have integrated manufacturing markets & our union represents trade-impacted workers in both nations. Any solution must exempt Canadian production,” the union wrote in a Tweet. 

Caught between opposing Trump and supporting their union allies, Democratic leadership is remaining neutral for now.

“We’ll have to wait and see where they come down, see how they’ve implemented this, then make a judgment on it,” said Senate Minority Leader Charles Schumer (D-N.Y.) in a CNN interview Friday.

House Minority Leader Nancy Pelosi (D-Calif.) has yet to mention the tariffs.

4.) Do U.S. trading partners boost their retaliation threats? 

British Prime Minister Theresa May said after a call with Trump Monday that she has “deep concern” about the tariffs and that “multilateral action was the only way to resolve the problem of global overcapacity in all parties’ interests.” 

Canada’s government reiterated on Monday that it would not back down if faced with tariffs on their steel and aluminum industries. The country is the biggest exporter of those products into the U.S.

The EU has threatened to retaliate against the United States with targeted tariffs, such as bourbon and blue jeans, should Trump follow through with his threats. 

But other major trade partners, such as South Korea and Japan, could seek to pick fights on trade as well.

Roberto Azevêdo, the director-general of the World Trade Organization, warned that “recent announcements” had increased the risks of harmful trade wars.

“Once we start down this path, it will be very difficult to reverse direction. An eye for an eye will leave us all blind and the world in deep recession,” he said.

The president suggested on Monday that steel and aluminum tariffs could be negotiated in an overhaul of the North American Free Trade Agreement (NAFTA). But a seventh round of talks on changing NAFTA ended with few signs of progress. 

“Mexico, and really Canada, want to talk about it,” Trump said. “If they aren’t going to make a fair NAFTA deal, we’re just going to leave it this way.” 

Trump threatened to withdraw from the trade agreement if a good deal couldn’t be reached.

5.) What happens to the stock market?

When Trump made his initial tariff announcement, U.S. stocks were nearly a month into a volatile correction period. The prospect of a trade war did little to settle that volatility, sending the market downward. 

Trump attempted to tamp down concerns about a trade war on Monday, and markets recovered after a quick drop at the opening bell. 

“I don’t think you’re going to have a trade war. I don’t think so. I don’t think you’re going to have a trade war,” Trump told reporters at the White House. 

By day’s end, the Dow Jones industrial average had bounced back from the losses it incurred since Thursday’s announcement. 

Trump, who frequently touted the stock market’s record highs during his first year in office, may be swayed by the reaction to his trade threats. Ryan specifically mentioned the market to Trump in his attempts to persuade the president to reverse course.