On June 4, 2025, Commerce Secretary Howard Lutnick testified before the Senate Appropriations Subcommittee on Commerce, Justice, Science, and Related Agencies, addressing the Department of Commerce’s Fiscal Year 2026 budget request.
Key topics discussed included semiconductor subsidies, AI export controls, trade policies, and staffing at the National Oceanic and Atmospheric Administration (NOAA).
Secretary Lutnick discussed his renegotiating of semiconductor grants issued under last year's CHIPS and Science Act. Calling the agreements “overly generous, ” Lutnick emphasized that only poorly negotiated deals would be canceled, while others would be improved to encourage additional domestic investment
Sen. John Kennedy (R-LA) pressed Secretary Lutnick on the administration’s tariff actions and sought to understand Lutnick’s strategic logic. When asked if he would accept a hypothetical offer from Vietnam to mutually eliminate all tariffs and trade barriers, Lutnick responded unequivocally:
“Absolutely not. That would be the silliest thing we could do.” He explained that Vietnam acts as a transshipment point for Chinese goods, exporting $125 billion to the U.S. while importing only $12.5 billion.
Challenging Lutnick’s response, Kennedy asked whether the administration truly sought reciprocity in trade negotiations. Lutnick clarified:
“We are absolutely seeking reciprocity with respect to things that can be reciprocal.”
However, he reiterated that blanket tariff elimination would be unacceptable if it allowed indirect Chinese market penetration.
Kennedy then pivoted to broader economic theory, questioning whether Lutnick viewed trade deficits as inherently negative. Lutnick replied:
“No,” adding that deficits can be justified when importing essential, high-value products unavailable domestically—such as “a cure for cancer.”
Turning to legal authority, Kennedy pressed Lutnick on why the administration had not relied on Section 232 of the Trade Expansion Act of 1962 to impose tariffs, instead opting for the International Emergency Economic Powers Act (IEEPA). Lutnick replied:
“The president chose IEEPA because he could do it swiftly and he could do it sweeping in order to address the underlying problems.”
When asked about the major questions doctrine as it pertained to the administration’s legal strategy in tariff-related litigation (referencing V.O.S. Selections v. United States), Lutnick acknowledged reading the opinion but conceded, “I’m not a lawyer… I tend not to focus on titles,” and deferred interpretation.
Kennedy contended that the administration’s expansive use of emergency powers may not align with judicial expectations under the major questions doctrine, which demands clear congressional authorization for agency actions of vast economic or political significance.
Sen. Jeanne Shaheen (D-NH) challenged Secretary Lutnick on the national security implications of the administration’s steel tariffs, particularly their impact on U.S. defense contractors and supply chains.
Shaheen cited concerns from a New Hampshire aerospace manufacturer supplying the Department of Defense. The firm reported that steel tariffs had drastically extended lead times—from 20 weeks to two and a half years—due to the loss of Indo-Pacific and Canadian suppliers and the overreliance on a single U.S. source.
“They said not only has their cost gone up, but the lead time to get the steel to make the bearings… has gone from 20 weeks to two and a half years,” Shaheen stated.
Lutnick downplayed the concern, framing tariffs as purely economic measures: “It’s just a tariff, which is monetary. It’s not a sanction,” he said. “It would be more expensive." He asserted that tariffs affect price, not access, and that shortages cited by the company were “illogical.”
Senator Shaheen rebutted: “It affects their ability to get the product… they don’t need you to explain it to them. They know because they’ve been in business for years.”
In defending the administration’s approach, Lutnick emphasized the strategic rationale for domestic industrial capacity: “You can’t fight a war without steel and aluminum production in America… If you don’t have the ability to make your own steel and aluminum, you can’t fight a war.”
While both parties agreed on the need for a resilient defense industrial base, Shaheen argued that the policy implementation lacked sufficient planning: “We’re not going to have the steel that we need immediately to provide the supplies that we need immediately.”
She called for improved coordination between the Departments of Commerce and Defense to assess how tariffs impact military readiness and urged reconsideration of implementation methods.
Shaheen also voiced strong support for the Manufacturing Extension Partnership (MEP), citing high returns on federal investment and its relevance to technological modernization in New Hampshire. She urged continued funding, particularly in light of ongoing manufacturing sector contraction.
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