Pascrell in Bergen Record Op-Ed: Use tariffs as potential tool, not a weapon
Washington, DC, May 1, 2018
Tags: Labor and Trade
Bill Pascrell, Jr. | Guest Columnist
I support taking strong action to halt China’s flouting the rules of the international economy. For too long, our workers and businesses have suffered because of a flood of subsidized, cheap imports from China. The tariffs being rolled out by the Trump administration are one instrument to combat China’s cheating. But meaningful help for American workers will require working with our allies to craft multinational policy that China will abide.
In China, manufacturers are supported by the state, giving them an unfair competitive advantage. This edge has allowed China to grow its economy and to flood U.S. markets with their products, including resources like steel and aluminum, whose lower price tags have driven U.S. producers who can’t keep pace into bankruptcy and also led to the elimination of jobs.
Previous administrations have recognized China’s cheating. But our usual responses, including calling for new dialogue, have had minimal impact. Our trade policy has not worked. For this reason, I don’t view imposing tariffs as a nonstarter. But tariffs will only be effective under two key conditions: they are carefully targeted and they are used as a tool rather than a weapon.
Throughout 2016, Donald Trump vowed to get tough on China. While he has yet to fulfill his promises to address China’s currency manipulation, in March he imposed a 25 percent tariff on all steel imports and a 10 percent tariff on all aluminum imports. These levies were not targeted only at China, but China is the driver of the steel overcapacity plaguing the global marketplace.
In April, the administration followed up with a response to China’s forced transfers and intellectual property theft that China uses to gain access to our technology secrets. It announced the initiation of a trade case at the World Trade Organization, potential new investment restrictions, and 25 percent tariffs on more than a thousand imported goods from China.
In fast response, China announced a list of American goods it is prepared to hit with retaliatory tariffs, taking care to include numerous U.S. agricultural and manufacturing products. While the tariffs have not taken effect, they could have a devastating impact on farms and businesses across the country. Nonetheless, it remains my hope these threatened tariffs can be used as a negotiating tool to bring China to the table to change its protectionist policies.
The president has seemingly cheered for a trade war, calling them “easy to win.” On April 4 he suggested the U.S. “can’t lose” a trade war. This comment sounds more like the bravado of a reckless gambler than a sensible trade policy. Now Mr. Trump is reportedly considering $100 billion in additional tariffs against China. It isn’t clear what, if any, reasoning brought him to this conclusion. But such a move would surely provoke a fierce Chinese response.
U.S. Trade Representative Robert Lighthizer has argued that the tariffs were designed to impose maximum impact on Chinese industries and to “minimize the impact on U.S. consumers.” I work closely with Ambassador Lighthizer and, unlike most members of the administration, I trust his skill and reasoning. But ultimately the President steers the ship.
These f proposals must be used as a negotiating tool, not to open a trade war. A protracted conflict with the second largest economy on Earth would risk spiking prices on consumer goods and possibly even raise inflation rates. As we see from the recent dips in the stock market, Trump’s pronouncements make world markets wobbly.
To chart a new trade path, we will need leadership from the top which, diplomatically, has yet to materialize. While tariffs are one tool to counter Chinese cheating, long-term we must work hand-in-glove with global partners to fashion solutions.
I am pleased that Congress is taking a second look at the failed trade policies of the past. I voted against the Trans-Pacific Partnership and have opposed almost every free trade agreement in office because I believe they have favored multinational corporate interests over American workers.
I am fighting for good jobs and the dignity inherent in working them. Protecting jobs that still exist in today’s economy and working to create new ones must be the lens through which we assess all trade issues. If tariffs can ultimately help buoy American industries and create new jobs, I will support them.
Despite his promises and overtures on trade, in some ways, the president has made matters worse for everyday workers. He recently signed tax cuts for corporations that will pass new burdens onto working Americans and states like New Jersey, and are predicted to increase our trade deficit. The new tax law also encourages outsourcing, as companies have a new incentive to go abroad where they’ll be given a preferential tax rate. Meantime, congressional Republicans have shredded worker protections and continue a generation’s long crusade to destroy organized labor.
If the Trump White House is truly committed to creating American jobs through a new trade policy, it will have its chance. I hope we seize it.