We’re At a Critical Moment When it Comes to Unfair Trade With China. Let’s Not Blow It.

Today I testified before the House Ways and Means Committee on the effects President Trump’s tariffs on Chinese imports will have on the U.S. economy.

There’s no disagreement across the American political spectrum that Chinese trade policies are predatory, which is why these tariffs are now on the table. Testimony provided by others on steel, as well as the Section 301 report prepared by the U.S. Trade Representative on intellectual property rights violations, both demonstrate that.

The question is: Should they stay there?

I believe they should. The fact that we’re even talking about our extraordinarily uneven trading relationship with China is proof positive of how necessary they are.

Tariffs have forced the issue. The United States has only ever made progress with countries that don’t trade in good faith — like China — when extraordinary pressure is applied by Congress and the administration. That includes, but is not limited to, the threat of tariffs.

I can think of several examples from Democratic and Republican administrations of that effect in action: Reagan on automobiles, Clinton on Japanese semiconductors, Congress pushing George W. Bush on steel, legislative actions on China’s intentional currency misalignments. All influenced dramatic changes in trade behavior from our trading partners. Now is not the time for Congress to demonstrate to the governments of China, Russia, or other mercantilist nations that our resolve is anything less than strong and unified. 
 
The Alliance for American Manufacturing supports trade actions on steel, aluminum, and intellectual property. We view the possibility of tariffs as a necessary step to achieving real progress, which includes reforming anti-competitive practices and reducing market-distorting behaviors.

Withdrawing the threat of tariffs without achieving results would be tantamount to waving a white flag; signaling to China and others that there will be no consequences for predatory trade behaviors. If a negotiated solution with specific disciplines and automatic enforcement provisions can be agreed to, then — and only then — should we look at lifting tariffs. Otherwise, we would be abandoning the best leverage we’ve had in years.

On steel and aluminum, we’re already seeing positive results, with nearly 3,500 American jobs announced, and new cooperation from trading partners like South Korea and Canada.

JSW USA plans an expansion of its steel plant in Baytown, Texas, a move that will add up to 500 new jobs at an average salary of $65,000. New steel and aluminum jobs have also been announced in Illinois, Ohio, Florida, and Kentucky.

More broadly, manufacturing contributed a whopping 21 percent of all private sector job growth last month when the tariffs kicked in, and employment in metals-consuming industries rose substantially. 
Internationally, allies are joining Washington to combat unfair trade practices. Canada is working to strengthen its anti-circumvention and evasion provisions. The European Union is ready to adopt safeguards on imported steel and aluminum. The agreement with South Korea to better level the playing field on steel and autos is also an encouraging sign. 

Chinese President Xi Jinping has now promised “a new phase of opening up” and allowing more imports. That’s a nice statement, but after years of China making unfulfilled promises, the United States must impose a sustained and credible threat of consequences should China yet again fail to deliver, particularly with Made In China 2025 looming on the horizon. 
 
Let’s acknowledge that the way in which this administration is delivering tariffs is far from perfect. The administration waited too long to conclude the Section 232 process. Steel imports soared over 15 percent in 2017, putting further pressure on an already stressed sector. Mixed signals on timing, scope, and applicability put more emphasis on the day-to-day tactics than on the overall strategy.

But that doesn’t wash away the need for action.

The “three-legged stool” of trade policy — expansion, enforcement, and adjustment — was established through the Trade Expansion Act of 1962, and it provided a solid foundation for progress. But enforcement and adjustment have been largely neglected as trade and imports have dramatically expanded. 

A growing body of evidence shows Chinese imports were a major cause in the loss of nearly one in three factory jobs since 1998. Trade-impacted workers are unlikely to ever find a better job than the one they lost, and many will never work full time again.

From the perspective of those workers, our nation has been in a trade surrender for decades. They don’t view the administration as having fired the opening shots of a trade war. And they’re right.

We shouldn’t be afraid to enforce trade laws. We have the leverage to do so. The tariffs — many of which are still aspirational — represent a fraction of our $20 trillion economy. Goods exports to China amount to less than 0.7 percent of U.S. GDP, while more than 20 percent of China’s exports head straight to the United States. If China won’t play by the rules, it should lose some of its access to our market.

Fair is fair. And we owe American workers a level playing field. These tariffs are getting us there, and we shouldn’t withdraw them.

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