Peter Navarro Has Antagonized Multinational Companies. Now He’s in Charge.

WASHINGTON — For three years, Peter Navarro has been corporate America’s biggest nemesis, punishing multinational companies for moving jobs offshore by advocating tariffs and other trade barriers in pursuit of President Trump’s “America First” strategy.

Now, as the United States scrambles to secure equipment to fight the coronavirus, Mr. Navarro has been handed expansive authority over those multinational firms and their global supply chains.

As the policy coordinator for the Defense Production Act, a Korean War-era law that the president recently invoked, Mr. Navarro is tasked with marshaling American industry to procure face masks, ventilators and other products hospitals need in their fight against the coronavirus. He has been given the authority to order up products, block exports and claim goods made overseas by subsidiaries of American companies. He can also seize products from hoarders and price gougers and channel them to where they are most needed.

It is a vast expansion of power for the 70-year-old Mr. Navarro, as well as a rare opportunity to advance the type of protectionist agenda that has endeared him to Mr. Trump. A Harvard-trained economist whose ideas put him at odds with most of his profession, Mr. Navarro has antagonized multinational companies by pushing to scrap trade deals and impose tariffs on foreign products. He is now positioned to channel government resources into bolstering American manufacturing and to bully multinational companies to sever their ties abroad.

Already Mr. Navarro has used his newfound authority to help force General Motors to ramp up its production of ventilators and to seize caches of face masks from hoarders around the country. On Friday, the administration issued a potentially sweeping executive order granting Mr. Navarro and other officials the authority to prevent 3M and other companies from sending medical supplies overseas.

Mr. Navarro’s aggressive approach has not been confined to industry. He has played the antagonist within the Trump administration, clashing with more moderate economic advisers like Treasury Secretary Steven Mnuchin over trade issues. During a meeting in the White House Situation Room on Saturday, Mr. Navarro sparred with Dr. Anthony S. Fauci, the director of the National Institute of Allergy and Infectious Diseases, over potential drug treatments for the coronavirus.

Mr. Navarro has been working to shore up the supply chain for hydroxychloroquine, an anti-malarial drug Mr. Trump has promoted for treating the virus, despite little proof of its efficacy. When Dr. Fauci argued that the drug’s benefits were unproven and that rigorous study was still necessary, Mr. Navarro shot back, saying that the studies and information he had collected on the drug were “science,” according to people familiar with the episode.

The question is whether Mr. Navarro’s aggressive tactics will help the United States respond to its current crisis and ultimately result in a stronger American industry, as he claims, or whether they will further disrupt global supply chains, leaving the United States cut off from medicines and other supplies.

“What you are seeing is just the beginning,” Daniel DiMicco, a former trade adviser to Mr. Trump who leads the Coalition for a Prosperous America, said of Mr. Navarro using the law to reshore American manufacturing. “It’s time for our multinationals to get on board.”

Latest Updates: Markets and Business

  • The S&P 500 is up 20 percent since its March low.
  • The Fed lifts a Wells Fargo growth restriction.
  • Food banks are squeezed by rising hunger and dwindling resources.

See more updates

Updated 28m ago

More live coverage:

Global

U.S.

New York

Mr. Navarro has plenty of critics who say the tactics will roil geopolitical relations and could hurt the United States by prompting other countries to restrict their exports, too.

“There’s a real danger that in an attempt to try to safeguard your own citizens you actually make the situation much, much worse,” said Rufus Yerxa, the president of the National Foreign Trade Council, which represents the United States’ largest exporters. “The reality is for a lot of types of medical equipment, we import more than we export.”

“We should be trying to figure out how to coordinate with other countries to come up with some solution other than everybody getting involved in a beggar-thy-neighbor death spiral,” Mr. Yerxa added.

Mr. Trump initially seemed reluctant to use the Defense Production Act, which offers broad powers, including the ability to force a company to prioritize government contracts and distribute their products where the government dictates.

Even as governors and mayors scrambled through much of March to secure limited supplies of ventilators and protective gear, the president said that taking control of industry through the law would be un-American, and that private companies were voluntarily meeting America’s needs.

But in the last two weeks, as the U.S. case count grew and hospitals warned of deadly supply shortages, Mr. Trump reversed course. He appointed Mr. Navarro to oversee the application of the production act, and began weaponizing it against companies he viewed as too reluctant to help, including General Motors and 3M.

On Saturday, Mr. Trump acknowledged that his use of the act was a form of “retaliation” against these companies.

“If people don’t give us what we need for our people, we’re going to be very tough, and we’ve been very tough,” he said. “Usually, we don’t have to use it, but we’ve used it plenty. It’s turning out more and more, unfortunately. And it works very well.”

In an interview, Mr. Navarro said he had spoken to hundreds of American executives, including from General Dynamics, Raytheon, Pernod Ricard, UPS, FedEx and Honeywell, as well as New York hospital and law enforcement personnel and Mayor Bill de Blasio, to try to ramp up production and surge supplies to hot spots.

The vast majority of executives had been eager to do whatever was asked of them, Mr. Navarro said. But he said Mr. Trump would not hesitate to take additional actions under the act to mobilize industry, allocate resources and prevent hoarding in the coming weeks. He also said Customs and Border Protection, working with the United States Postal Service, was prepared to begin seizing black-market exports of masks and other medical supplies.

Mr. Navarro said that the administration was using the authority of the Defense Production Act as a “helping hand” to assist companies, but that “when patriotic volunteerism or the invisible hand of the market isn’t working, you may need the visible foot of the D.P.A.”

He pointed to 3M, saying that the company had been unwilling to disclose information about the distribution of masks it produces around the world and to provide them to the American people.

“It basically wants to act like a sovereign nation in terms of what it allows the United States to have with its production, and where it wants to export its masks,” Mr. Navarro said. “And in this crisis, there is only one country and only one president.”

In a statement on Friday, 3M said that it had complied with a federal government request to increase the number of imported respirators from its overseas operations, in particular securing approval from China to export 10 million N95 respirators to the United States.

But it pushed back against a request to halt exports of its U.S.-made masks, which go to Canada and Latin America, saying the move would have “significant humanitarian implications” and would probably cause other countries to impose their own restrictions, decreasing America’s respirator supplies overall.

Like Mr. Trump, Mr. Navarro has never seemed too concerned about prompting retaliation. Over the last three years, he has used his perch at the White House to push for tariffs on foreign metals, solar panels, washing machines and a wide variety of Chinese products, igniting multiple trade spats.

His efforts have earned some praise from labor unions, but the ire of multinational businesses, which have faced higher costs and reduced access to other markets as a result of Mr. Trump’s trade wars.

Mr. Navarro has long criticized multinational companies for putting profits before workers. In his 2011 book “Death by China,” Mr. Navarro accused major American firms including General Motors, Microsoft and Caterpillar of helping China take down the American industries, as they offshored jobs to maximize their profits.

To Mr. Navarro, the current predicament is a vivid illustration of that phenomenon: Decades of offshoring have eroded American manufacturing, leaving the country unable to produce an array of goods and putting it at the mercy of foreign governments in times of crisis.

Mr. Navarro has spent the past few months working on an executive order that would try to bolster domestic manufacturing of pharmaceuticals by toughening “Buy American” rules for the federal government. Momentum for that order appears to have stalled after opposition from the pharmaceutical industry, Republican lawmakers and some in the White House, who argued that the measure could result in higher prices or even shortages.

But it is clear that Mr. Navarro thinks the production act, and especially its funding provision known as Title III, might provide him with another way to bolster drug manufacturing. The economic stabilization package Congress passed last month included $1 billion in funding for the law, including for purchases of medicines and protective gear. Trump administration officials have said they may seek more.

Mr. Navarro’s role has prompted concern among both Democrats and Republicans, including fellow China hawks like Senator Chuck Schumer, Democrat of New York.

“I’ve spoken to him. He’s a very nice man. He’s very erudite about trade with China,” Mr. Schumer, the minority leader, said during a news conference on Monday. “He’s never done anything like this, and he’s not up for the job.”

Daniel Price, a former top trade adviser to President George W. Bush, warned that Mr. Navarro could use his newfound power in more destabilizing ways.

“Frankly, his appointment poses the risk that D.P.A. authorities will be used opportunistically to pursue an isolationist Fortress America agenda that long preceded the present crisis and that would further divide us from allies,” he said.

Foreign leaders have already expressed concern about America’s moves to commandeer 3M’s global production.

Canada’s deputy prime minister, Chrystia Freeland, said at a news conference on Friday that the country’s ministers were reaching out to American officials “very energetically” and would “press very hard” to ensure that 3M could still provide its American-made masks.

German officials also criticized the American government for seizing a shipment of 200,000 masks in Thailand that were headed for the Berlin Police Department last week. According to the German news media, the masks were made by 3M.

“We view this as an act of modern piracy,” Andrea Geisel, a Berlin official who oversees the Police Department, said in a statement. “That’s not how you treat trans-Atlantic partners.”

In a statement Sunday, 3M disputed the report, saying it had no record of any such order, nor evidence to suggest its products had been seized.

Supporters of the Trump administration’s tactics say the United States is not the only country playing tough. Germany has placed restrictions on exports of protective equipment and other medical products, as have India, China, Turkey and other European nations.

As of April 4, 69 nations had put limits on exports of medical supplies at some point this year, including the United States, according to tracking by Simon Evenett, a professor of international trade at the University of St. Gallen in Switzerland.

Maggie Haberman contributed reporting from New York, and Jack Ewing from Frankfurt.

The Coronavirus Outbreak

Advertisement

Continue reading the main story