The Case for Tariffs

Scott Paul

Scott Paul Director, AAM

There is growing bipartisan agreement that China cheats at trade. We’re now faced with a new question: Do we continue to ignore China’s cheating or do we finally act decisively to stop it?

The only progress the U.S. has ever made with serial trade cheats has been the result of extraordinary pressure applied by Congress and the White House, including, but not limited to, the threat of tariffs. We must therefore stick together. Now is not the time for Washington to demonstrate to the governments of China, Russia, or other mercantilist nations that our resolve is anything less than strong and unified.

The past 20 years of endless dialogue with China and other nations show that polite requests to curtail state-driven industrial overcapacity or to refrain from forced technology transfers and joint ownership partnerships in exchange for market access do not yield meaningful results.

China is not holding up its end of the bargain, at the WTO or via its bilateral relationships, and kicking the can further down the road is simply not a smart trade policy strategy.

This is true particularly in the steel sector, where the United States has for years worked at the OECD and for the last two years at the Global Forum on Steel Overcapacity to address these serious problems and achieve enforceable multilateral disciplines. But these efforts have not produced meaningful results and we cannot afford to wait any longer.

As time has passed, our bilateral trade deficit with China has surged to unthinkable levels. The theft of our intellectual property has inflicted serious injury and dampened our future economic outlook. China’s industrial overcapacity has spread like a virus through global markets, putting at risk our ability to produce essential materials like steel and aluminum for our national security and domestic preparedness requirements.

Regrettably, our trading partners have refused to act.

That’s why I support the administration’s recent imposition of tariffs on steel and aluminum under Section 232 of the Trade Expansion Act of 1962 to defend our national security capabilities. I also support the intention to impose tariffs under Section 301 of the Trade Act of 1974 to protect our intellectual property.

The threat (or imposition) of tariffs as a necessary step to achieving real progress, which includes reforming anti-competitive practices and reducing market-distorting behaviors.

Returning to a posture of “endless dialogue” with China, on the other hand, simply will not work. And withdrawing the threat of tariffs without achieving results would be tantamount to waving the white flag of trade surrender – signaling to China and other trade cheats that there will be no consequences for their non-market actions that harm the American economy.

If a negotiated multilateral solution with specific disciplines and automatic enforcement provisions can be agreed to, then, and only then, we should look at lifting the tariffs. Otherwise, we are simply abandoning the most effective leverage we have had in years.

The U.S.-China trade relationship is on an unsustainable path. Since Beijing’s 2001 entry into the World Trade Organization (WTO), the U.S. bilateral goods trade deficit with China has more than quadrupled, from $83 billion in 2001 to a record $375 billion in 2017. Too often, the impact of this surging U.S-China trade deficit on U.S. companies and American workers has been overlooked or even characterized as a positive development.

Our communities have shed more than 54,000 manufacturing facilities. A staggering 3.4 million jobs, largely in manufacturing, have been lost because of this massive trade imbalance. Each state and every congressional district in the United States has experienced lost jobs. And the losses extend into nearly every sector of the economy, ranging from computer and electronic parts to textiles and apparel, furniture, steel, aluminum, and other capital-intensive sectors.

The time for this to end is now.

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Reposted from Industry Today

Posted In: Allied Approaches, From Alliance for American Manufacturing

Union Matters

Federal Minimum Wage Reaches Disappointing Milestone

By Kathleen Mackey
USW Intern

A disgraceful milestone occurred last Sunday, June 16.

That date officially marked the longest period that the United States has gone without increasing federal the minimum wage.

That means Congress has denied raises for a decade to 1.8 million American workers, that is, those workers who earn $7.25 an hour or less. These 1.8 million Americans have watched in frustration as Congress not only denied them wages increases, but used their tax dollars to raise Congressional pay. They continued to watch in disappointment as the Trump administration failed to keep its promise that the 2017 tax cut law would increase every worker’s pay by $4,000 per year.

More than 12 years ago, in May 2007, Congress passed legislation to raise the minimum wage to $7.25 per hour. It took effect two years later. Congress has failed to act since then, so it has, in effect, now imposed a decade-long wage freeze on the nation’s lowest income workers.

To combat this unjust situation, minimum wage workers could rally and call their lawmakers to demand action, but they’re typically working more than one job just to get by, so few have the energy or patience.

The Economic Policy Institute points out in a recent report on the federal minimum wage that as the cost of living rose over the past 10 years, Congress’ inaction cut the take-home pay of working families.  

At the current dismal rate, full-time workers receiving minimum wage earn $15,080 a year. It was virtually impossible to scrape by on $15,080 a decade ago, let alone support a family. But with the cost of living having risen 18% over that time, the situation now is far worse for the working poor. The current federal minimum wage is not a living wage. And no full-time worker should live in poverty.

While ignoring the needs of low-income workers, members of Congress, who taxpayers pay at least $174,000 a year, are scheduled to receive an automatic $4,500 cost-of-living raise this year. Congress increased its own pay from $169,300 to $174,000 in 2009, in the middle of the Great Recession when low income people across the country were out of work and losing their homes. While Congress has frozen its own pay since then, that’s little consolation to minimum wage workers who take home less than a tenth of Congressional salaries.

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A Friendly Reminder

A Friendly Reminder