Sen. Ruben Gallego told Phoenix business leaders that the Trump administration’s tariffs are destabilizing Arizona’s economy, but he’s optimistic there is room for compromise with congressional Republicans to rein in the president.
At an event hosted by the Greater Phoenix Chamber, Gallego said Arizona’s economy is strong and specifically highlighted the state’s growing tech sector, which includes data centers and semiconductor chip manufacturers.
“And it's something that was specifically thought out by policymakers — Democrats, Republicans — through different tenures and done in a very bipartisan and thoughtful way,” Gallego, Arizona’s Democratic senator, said. “What I fear right now is what's happening in Washington, D.C., is that all that type of work can be quickly undone.”
Tariffs
Gallego pointed to the Trump administration’s volatile tariff policies and its impact on Arizona’s relationship with its two largest trading partners, Mexico and Canada.
“We are a richer state because of our trade with Mexico,” Gallego said. “We are a richer state because Canadians love coming down here.”
A 35% import tariff on Canada went into effect at the end of July.
“And now we're hearing about some of these Canadian businesses that are no longer deciding to invest in Arizona,” Gallego said.
Trump recently announced a 90-day pause on similar tariffs on Mexican imports, though a 17% tax on Mexican tomatoes is in effect.
The president has defended the tariffs, saying the import taxes will enrich the U.S. The Department of the Treasury brought in $29 billion from “customs and excise taxes” in July, though that money is coming from American businesses who pay the tariffs and, indirectly, their American customers, according to NPR.
The White House has argued its trade policies are also designed to boost domestic manufacturing.
Gallego said that isn’t a bad goal but argued the administration’s policies are counterproductive.
“They're trying to bring back the auto industry — not a bad idea,” he said. The problem is they're also putting tariffs on some of the auto parts.”
Many industries, including automotive manufacturers, construct parts of products on both sides of the border, with some products crossing the border multiple times during that process.
Each time that product crosses the border, it could face a tariff, Gallego said.
“The president has some really smart people around him, and he's got some really, really dumb people around him, but it seems like the dumb people have made the smart people dumber when it comes to trade and policy,” he said.
Courage
Gallego said it’s imperative that Congress reassert its authority over tariffs.
“Because the craziness about whether someone has a tariff, doesn't have a tariff, it makes it totally unstable for our business market,” Gallego said. “We're becoming a poor, poor country because our businesses can't sell overseas anymore.”
So far, Republicans in Congress have not shown a willingness to go against the president, even as some have expressed concern over the potential impacts on the economy.
Gallego told the Phoenix Chamber that doesn’t surprise him.
“Courage is a very uncommon virtue in the Senate and in the House, and it's that this is not just a Republican problem,” he said.
But Gallego said he is more confident some Republicans could speak out more forcefully after next year’s primary elections when there is less political risk that they could face a GOP challenger backed by the president. And he told KJZZ he is confident that Democrats and Republicans in Congress could actually come together to rein in the president’s tariffs.
“I think it's hard, but courage is built and learned. It’s not innate in people,” Gallego said.
