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'We were wrong': Koch network to change strategy against Trump's trade war

CNBC logo CNBC 9/19/2019 Brian Schwartz

The political network funded in part by billionaire libertarian Charles Koch is going to try a new strategy against President Donald Trump's trade war with China after conceding that its previous campaign hasn't worked.

Koch network leaders said Thursday that their digital and TV ad blitz that emphasized how Americans could experience financial pain from the tariff fight wasn't panning out the way they had hoped.

"The argument that, you know, the tariffs are adding a couple thousand dollars to the pickup truck that you're buying is not persuasive," a senior Koch official, who declined to be named, said during a briefing in New York. "It doesn't penetrate with the people that are willing to go along with the argument that you have to punish China."

The official said the network came to this conclusion after conducting weekly focus groups on trade policies. Public polling also backs the conclusion. A recent Harvard CAPS/ Harris poll shows that 63% of registered voters believe tariffs will ultimately hurt the United States more than China, but 67% of the electorate are convinced it's necessary to confront China over their trade practices.

Koch network officials said the organization will put out ads with a new message, although, according to one network leader, it is unclear what that message will be. Officials also said voters should expect more of a Koch focus on grassroots activism throughout the 2020 election cycle. The network's multimillion-dollar public relations campaign against the trade war started in 2018 when the first round of tariffs were levied against a variety of Chinese imports.

"I think that we were wrong about how to change this one. We made a bet that the kind of retail, running ads and rallies, that sort of thing, to talk about the coming harm of tariffs, which we know is coming, would be persuasive," one official said. "And we were wrong about that."

Related video: Here's a sneak peek of the exclusive Koch summit (July 1, 2019)

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The leaders then went on to describe what they call a "two steps back strategy," which will involve putting together a team of almost 100 business leaders to call on the Trump administration and lawmakers to end the trade war with China. Some of these executives have ties to the farming business, an industry that has been negatively impacted by the tariffs.

They're also aiming to educate 100,000 activists across in at least 35 states about the potential negative impact of using tariffs to battle China. Those volunteers will then be expected to start reaching out to their congressional leaders. The network hopes these activists can convince lawmakers on Capitol Hill to stand up against the administration's current trade policy. The latest phase of the Koch campaign is expected to cost the network millions of dollars.

Anti-tariff activism has not swayed Trump, who has plowed ahead with the trade war even as he backs off in some respects.

Last week, Trump announced he would delay an increase of tariffs on $250 billion worth of Chinese goods as "gesture of good will."

Trump said the postponement came "at the request of the Vice Premier of China, Liu He, and due to the fact that the People's Republic of China will be celebrating their 70th Anniversary."

Prior to the delay, Trump was privately telling aides that he wanted to double tariff rates on Chinese goods after Beijing's latest retaliation in the trade war. Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer then enlisted multiple CEOs to call Trump and warn him about the impact such a move would have on the stock market and the economy.

A White House representative didn't immediately respond to a request for comment.

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