Billionaire Koch brothers' political network will spend millions to oppose Trump's tariffs – the group's biggest split with the president so far

Key Points
  • The Koch political network unveils a multiyear, multimillion-dollar campaign opposing the tariffs implemented by President Donald Trump's administration.
  • The campaign will include media buys, activist education, grass-roots mobilization, lobbying and policy analysis.
  • The network calls on the president to lift the recent steel and aluminum tariffs and the proposed levies on Chinese imports.
Billionaire Koch brothers will spend millions to oppose Trump's tariffs

The political network backed by billionaire industrialists Charles and David Koch on Monday unveiled a multiyear, multimillion-dollar campaign opposing the tariffs implemented by President Donald Trump's administration.

Last week's decision by the Trump's administration to place tariffs on imported steel and aluminium from key U.S. allies the European Union, Canada and Mexico apparently was the tipping point for the influential Koch network, which typically supports Republicans and conservative causes. The group is now moving ahead with a pro-free trade campaign that will include media buys, activist education, grass-roots mobilization, lobbying and policy analysis.

Koch network groups Freedom Partners, Americans for Prosperity and the Libre Initiative made it clear in an announcement Monday that they are opposed to Trump's tariffs and that their media and PR blitz is determined to show the benefits of open trade policies.

Conservative Koch network denounces Trump's tariffs: 'Trade wars hurt everyone'

"This campaign makes a clear statement: Trade is a major priority for our network," James Davis, executive vice president of Freedom Partners, said in a statement. "We will work aggressively to educate policymakers and others about the facts. Trade lifts people out of poverty and improves lives. It is critical to America's future prosperity and our consumers, workers and companies. Tariffs and other trade barriers make us poorer. They raise prices for those who can least afford it."

While Americans for Prosperity President Tim Phillips praised the administration for other economic policies, he did not hold back in denouncing the tariffs.

"The Trump administration has taken some incredibly positive steps for the American economy, but tariffs will undercut that progress and needlessly hamstring our full economic potential. There are better ways to negotiate trade deals than by punishing American consumers and businesses with higher costs," Phillips said.

Daniel Garza, president of the Libre Initiative, argued that tariffs would hurt those who are part of the Hispanic community and, in particular, low-income workers.

"Elected officials and policy leaders need to recognize that free and open trade policies make American workers and families more prosperous," Garza said. "The taxes and trade barriers imposed by our government on U.S. consumers raise their cost of living and impose unnecessary costs on American firms in competition with others based abroad."

The White House announced Thursday that it would move ahead with import tariffs of 25 percent on steel and 10 percent on aluminum products coming from the EU, Canada and Mexico. That led to immediate retaliation from Canada and Mexico, while the EU has yet to officially respond with trade barriers of its own.

Defining rift between Trump and the Koch network

The Koch network's new campaign could become a defining moment between the administration and the powerful Koch-backed groups.

Up until Monday, the network was willing to air its disagreements with Trump through public statements alone.

The new, more aggressive stance could be particularly dangerous for Republicans who are looking to use Trump's policies as a way fight off a potential Democratic blue wave in November.

In a new outline of principles meant to promote free trade policies provided to CNBC, the network calls on the president to "reduce or eliminate trade barriers through international agreements." The network argues for a four-pronged approach: modernizing the North American Free Trade Agreement, concluding an agreement with the United Kingdom, resuming negotiations on the Transatlantic Trade and Investment Partnership with the European Union, and returning to the negotiating table on the Trans-Pacific Partnership.

It also calls on the president to lift the recent steel and aluminum tariffs, as well as proposed levies on Chinese imports.

The Koch network's sweeping effort could force Republican candidates to pause before they start using Trump's tariffs as a way to connect with voters.

"Anything that threatens an incumbent, including a campaign like this, is something Republicans will look to, especially when it comes to money because politics is about money and they will bow to the dollar," political strategist Hank Sheinkopf said in an interview.

"Who are they more afraid of? The Koch brothers and their millions of dollars tossed at them or Donald Trump? An unemployed politician doesn't know what to do with himself when he's out of politics," he added.

Koch network focusing on policy initiatives 

The new campaign rebuke of the Trump trade policies also comes as the network has been pivoting from supporting often Republican candidates to focusing more on specific policy initiatives, which includes cutting down on government spending and protecting participants in the Deferred Action for Childhood Arrivals programs, or DACA.

Koch-backed groups have spent on digital ads against those who don't support their goals, including a recent six-figure digital media blitz opposing Democrats and Republicans who chose to vote for a $1.3 trillion spending bill.

On the other hand, on Friday, the network launched a digital ad campaign thanking North Dakota Democratic lawmaker Heidi Heitkamp for co-sponsoring a bank deregulation bill that gave more freedom to consumer banks.

Multiyear campaign could spell trouble for Trump in 2020

With the campaign being labeled as a multiyear event, the network is on a collision course with the president's 2020 re-election ambitions.

During his last run for the White House, Trump promised his supporters that when he became president he would overturn trade deals and implement tariffs.

The Koch network is clearly not in favor of this approach and voters could see competing messages across the country from groups like those within the network versus the Trump campaign.

There are already potential presidential candidates from both sides of the aisle who are also coming out against the tariffs, including Ohio Republican Gov. John Kasich. He called on Republicans on Sunday "to do whatever they can do legislatively" to stop Trump from imposing tariffs.

The White House did not immediately respond to CNBC's request for comment.

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