Senators hammer commerce secretary over tariffs
June 21, 2018
When Commerce Secretary Wilbur Ross testified before the Senate Finance Committee on Wednesday, senators of both parties criticized him over the impact of the Trump administration's tariffs on steel and aluminum, particularly on agriculture and food exports.
"The tariff actions taken by the president are necessary to protect America's essential steel and aluminum industries, which have been harmed by the quantities and circumstances of imports to the point that allowing imports to continue unchecked threatens to impair our national security," Ross said in an opening statement. "These imports stem from a variety of reasons, including industrial export policies of our trading partners, unfair trade practices, and massive global excess production, particularly by China."
Sen. Orrin Hatch, R-Utah, noted that the quotas on steel from Brazil are delaying construction on a project in Pennsylvania and have resulted in retaliation on U.S. pork products. "As you are aware, Mr. Secretary, the Shell Pennsylvania Chemical Project is one of the largest economic development projects in the United States. The negative consequences of the steel and aluminum tariffs are not isolated to manufacturing. Rather, the effects have spread throughout the economy.
"Take, for example, American farmers who are bearing the brunt of retaliation for these actions.
“I just don’t see how the damage posed on all of these sectors could possibly advance our national security.” Sen. Orrin Hatch, R-Utah
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"As many of us know, Mexico is the largest export market for American pork, including pig farmers in Utah. Recently, Mexico announced it will impose tariffs of 20 percent on U.S. pork in retaliation for U.S. steel and aluminum tariffs. China, our second largest overseas market for American pork, is increasing tariffs by 25 percent.
"I just don't see how the damage posed on all of these sectors could possibly advance our national security," Hatch added.
"The steel and aluminum tariffs distract from the real trade issue that must be addressed. The president has repeatedly stated that Chinese mercantilist policies harm U.S. companies and the U.S. economy — something I fully agree with," he said. "However, these steel and aluminum tariffs utterly fail to address Chinese overproduction. Of the steel and aluminum products targeted, only around 5 percent are from China."
Hatch said he was "stunned to hear on May 23rd that the Department of Commerce has initiated another investigation under Section 232, this time into the national security implications of imports of automobiles and auto parts. This investigation covers more than $200 billion worth of trade, four times larger than that under the steel and aluminum investigations combined.
"A car isn't a can of soup, Mr. Secretary," Hatch said, referring to Ross some time ago holding up a can of Campbell's soup and saying that it would not go up much in price if tariffs were imposed.
"For most American families, their car is the second biggest purchase they make, and many require a car to get to their jobs," Hatch continued.
"It is a significant financial commitment for most families, often paid for with debt, and I'm shocked that anyone would consider making it more expensive.
"The average price of an imported car is $23,200. If the Department of Commerce were to recommend a 25 percent tariff on cars, it would be recommending raising the cost of an average imported car for an American family by $5,800," he said. "To put that in perspective, the median household income in the United States is just over $59,000. That means that roughly 10 percent of the median household income could be erased purely by the additional cost of a single car.
"That's why I call tariffs a tax on American families," Hatch concluded.
Senate Finance ranking member Ron Wyden, D-Ore., said, "I'm on board with several of the administration's top trade priorities. Tougher enforcement of our trade laws, cracking down on China ripping off our technology and jobs, updating NAFTA – those are challenges that demand action, but taking action gets harder when you're surrounded by the specter of conflict. It undermines the credibility of our negotiators, it makes it harder to work in a bipartisan way in Congress, and it makes it a lot less likely the American people are going to accept the end results.
"It's also frustrating to watch as the administration's trade moves tend to seem more like knee-jerk impulses than any kind of carefully thought-out strategy," Wyden said. "Its most obvious accomplishment on trade is sowing economic chaos that's united our allies and China against us – unless you rank that behind the rescue of ZTE, an action that sold out American security and got nothing in return.
"Chaos has consequences, but you don't have to take it from me," he said. "Tariffs on steel and aluminum imports are in place, but the process of determining what imports will be excluded is in a state of disarray. American businesses filing for those exclusions are waiting for the Commerce Department to do its job.
"I've heard from potato farmers in my home state of Oregon who export nearly a third of what they grow and will now face tariffs in key markets like Mexico. I've heard from Pacific Northwest cherry growers who've got nearly 1.5 million boxes of cherries ready to ship to China. They're worried those cherries are going to end up stuck on the dock or rotting in a warehouse due to China's retaliation. Small brewers find their costs skyrocketing when they need new can lines and holding tanks, which are largely made from steel and aluminum," Wyden said.
"A strong, well-planned strategy on trade would bring the full economic might of the United States and our allies to bear on China's trade cheating," he added. "It would give confidence to American farmers, manufacturers and service firms, rather than creating chaos. And there would be bipartisan interest here on Capitol Hill in fresh policies that would strengthen trade enforcement and protect American workers."
Sen. John Thune, R-S.D., said, "I'm increasingly concerned that the tariffs, both those in place and those that have been proposed, are going to hurt American consumers and our domestic businesses – especially in the agricultural sector – far more than they're going to persuade the Chinese to change their unfair trade practices."
–The Hagstrom Report