Charles Koch says Trump tariffs could trigger U.S. recession

Billionaire industrialist Charles Koch, who leads a powerful policy and political network, said Sunday he worries President Donald Trump’s actions on trade and tariffs put the booming U.S. economy at risk of recession.

While saying it’s impossible to know for sure because the president’s trade policy remains fluid, Koch said the greater the level of trade restrictions, the greater the risk of severe economic fallout.

“It depends on the degree,” he said in Colorado during a rare on-the-record meeting with reporters. “If it’s severe enough, it could.”

Koch said any protectionism at any level is very detrimental. “Every nation that’s prospered is one that didn’t engage in trade wars,” he said.

Trump has already imposed tariffs on steel and aluminum imports in the name of national security, as well as duties on certain Chinese products in response to allegations of intellectual property theft. That’s drawn retaliatory tariffs on soybeans and other U.S. goods in an escalating conflict, although Trump struck a truce with the European Union last week pending further negotiations.

Strong quarter

The U.S. economy in the second quarter expanded at its strongest pace since 2014, the government reported on Friday. But many economists see growth tailing off from here, and the potential for a trade war are part of their assessments.

Charles Koch, 82, and brother David Koch, 78, didn’t support Trump in the 2016 campaign, but the network they built has since praised his administration’s efforts to cut taxes and regulations. A White House spokesman didn’t immediately respond to an email seeking comment.

In June, the Koch network said it was planning a “multi-year, multi-million-dollar” campaign to promote free trade and oppose Trump’s moves to impose tariffs. The effort is to include advertising, voter mobilization and lobbying.

Koch’s comments came as network donors are gathered for a three-day meeting at a luxury resort in Colorado Springs that ends on Monday. The network, with more than 700 donors who give at least $100,000 per year, has convened such gatherings twice annually since 2003.

Midterms approach

So far this weekend, the network sought to downplay its role in this year’s midterm congressional campaign, even as ads it paid for have hammered Democrats in battleground states. Planned spending on campaign-associated activities was prominent when the network last assembled in January.

Since then, analysts and polling have increasingly suggested Democrats have a good chance of winning control of the U.S. House in November’s midterm elections, in line with historical trends. The party needs a net gain of 23 seats to do that.

Speaking to reporters, Koch indicated a willingness to work with Democrats, so long as they embrace free-market solutions.

“I don’t care what initials are in front of after somebody’s name,” he said. “I would like there to be many more politicians who would embrace and have the courage to run on a platform like this.”

Koch also indicated he wants to have the network do a better job of holding Republicans accountable when they stray from what they’ve promised. The network is going to be “much stricter” in holding people it supports to their commitments, he said.

‘Irresponsible Budget’

That was a message Brian Hooks, president of the Charles Koch Foundation and Charles Koch Institute, shared with donors earlier in the day, as he criticized increased federal spending passed by Congress, where Republicans have a majority in both chambers.

“Many of you watched in disgust as the most fiscally irresponsible budget in the history of our country was passed in March under a Republican government,” Hooks said. “We supported the election of some of these guys that just voted for a $1.3 trillion federal spending bill.”

Hooks added: “People are taking us for granted, and so if we want things to change, we have to do things differently. No more waiting for others to set the agenda. This network has got to lead.”

Hate the sin

While Hooks blamed Trump for the nation’s divisions a day earlier, Koch stopped short of that.

“We’ve had divisiveness long before Trump became president,” Koch said. “I’m into hating the sin, not the sinner.”

Some of the elected officials attending the gathering include Gov. Rick Scott of Florida, who’s running for U.S. Senate; Kentucky Gov. Matt Bevin; Sen. John Cornyn of Texas; Sen. Tim Scott of South Carolina; Rep. Marsha Blackburn of Tennessee, who’s running for U.S. Senate; Rep. Doug Collins of Georgia; and Nevada Attorney General Adam Laxalt, who’s running for governor. All are Republicans.

Plans call for the network to spend about $400 million on state and federal policy and politics during the two-year cycle that culminates with November’s balloting, a 60 percent increase over 2015-16. Besides trying to influence electoral politics, the network also works on education, criminal justice, workforce and poverty issues.

Please enable JavaScript to view this content.

Story Continues Below

Editor's note: You can comment on IBJ stories by signing in to your IBJ account. If you have not registered, please sign up for a free account now. Please note our updated comment policy that will govern how comments are moderated.