Trump taps China hawk who went to prison, unnerving some on Wall Street

PALM BEACH, Fla. - President-elect Donald Trump on Wednesday announced that Peter Navarro, a combative China hawk and stalwart loyalist, will return to the White House as a senior adviser, empowering one of the most aggressive proponents of tariffs in Trump’s orbit.

In a social media post, Trump said Navarro would serve as his “senior counselor for trade and manufacturing” in his second administration. Navarro was sentenced to four months in prison for his refusal to cooperate with a congressional investigation into the insurrection of Jan. 6, 2021, and frequently clashed with Democrats, other Trump aides and even Cabinet officials during Trump’s first presidency.

The choice puts Trump’s second-term team on track to reprise the fierce battles over economic policy that characterized much of his first four years as president. Trump has often been torn between imposing trade restrictions aimed at bringing manufacturing jobs back to the United States and ensuring stock market investments continue to perform well - two goals that are in tension, if not incompatible.

Navarro, widely feared by investors on Wall Street, is expected to push hard for tough action against China in particular, which could hurt U.S. firms and consumers while risking a broader trade war.

“During my First Term, few were more effective or tenacious than Peter in enforcing my two sacred rules,” Trump said on Truth Social, his social media network, citing Navarro’s work on ensuring that federal projects employ American workers and firms. Trump added that Navarro was “treated horribly by the Deep State, or whatever else you would like to call it.”

Navarro’s selection unnerved some investors and economists who had grown cautiously optimistic that Trump would refrain from implementing his sweeping campaign pledges to upend the international trade order.

The stock market reaction to Navarro’s selection was muted Wednesday. But numerous analysts and economists said they saw the move as a signal of the president-elect’s commitment to his trade agenda. Trump has already announced he will impose 25 percent tariffs on all imports from Mexico and Canada, as well as additional import duties on China, if they do not meet his demands on immigration and other issues.

In the past few weeks, Trump selected hedge fund executive Scott Bessent to be his treasury secretary and conservative economist Kevin Hassett to run the White House’s economic council. Both Bessent and Hassett are regarded by many Democratic and Republican economists as relatively conventional choices likely to check Trump’s plans to implement “universal” tariffs on every U.S. trading partner.

Navarro’s elevation, however, suggests that internal White House debates over trade policy will at least include one prominent voice pushing for tougher action. Navarro has written books highly critical of Beijing, including “The Coming China Wars” and “Death by China,” and frequently sparred with Steven Mnuchin, Trump’s first treasury secretary, over how aggressively to combat China with new trade restrictions - disputes that sometimes devolved into yelling matches.

Trump and outside advisers to his campaign have floated numerous measures to reshape U.S. trade with China, including import duties above 60 percent, a crackdown on loopholes allowing packages worth less than $800 to enter the U.S. with little scrutiny, and action against Chinese imports routed through Mexico.

“Trump’s decision to appoint Peter Navarro as senior counselor for trade and manufacturing makes it clear that he is absolutely serious about implementing the trade and tariff agenda he campaigned on,” said Nick Iacovella, senior vice president at the Coalition for a Prosperous America, a group that supports higher tariffs. “His return signals a bold commitment to restoring America’s industrial base implementing policies that protect American jobs, reduce our dependency on adversarial nations like China, and build a stronger, more resilient U.S. economy.”

The move could indicate that Trump’s rhetoric on trade is more serious than some investors have been hoping.

“Wall Street has been put on notice,” said Chris Rupkey, chief economist at FWDBonds, a research firm. “If you thought Bessent was going to have a moderating effect on tariffs and trade friction you better think again. … There will be no moderation on trade initiatives in Trump 2.0.”

Navarro’s return to the White House will cap several years of loyal allegiance to Trump.

The longtime Trump adviser, who claimed credit for coming up with a plan to overturn the 2020 election results, was convicted of contempt of Congress after ignoring a subpoena from the House Jan. 6 committee and sentenced to four months in prison.

Navarro argued unsuccessfully that he was protected by executive privilege from testifying as a close aide to the president. He put forth conspiracy theories that the Jan. 6 attack on the Capitol had been carried out by the FBI and Democrats. He asked the Supreme Court to delay his prison time, which Chief Justice John G. Roberts Jr. denied.

Navarro was released from prison in July and hours later spoke at the Republican National Convention.

While in prison, Navarro told Semafor that former Trump aide Gary Cohn “did everything he could to block Trump’s trade agenda” and took credit for having “outmaneuvered” Wilbur Ross, who served as Trump’s commerce secretary.

Navarro also told Semafor: “American multinational corporations naturally want to offshore American jobs in their search for cheap, sweatshop labor and pollution havens. That’s why God created tariffs.”