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Neal Opening Statement at Hearing on the Effects of Tariff Increases on the U.S. Economy and Jobs

April 12, 2018
Press Release

(As prepared for delivery)

Thank you, Chairman Brady. Today’s hearing is an important opportunity to discuss the tariffs that the Administration has started imposing recently as a result of its Section 232 investigations and the tariffs that the Administration has announced that it will impose as part of the Section 301 investigation.

In discussing the impact of these tariffs on the U.S. economy and jobs, it is obviously important for us to hear from our stakeholders about the processes that the Administration has established for finalizing and implementing the tariffs to ensure that they are fair, transparent, and effective.

It seems just as obvious to me that in discussing these tariffs, we also need to talk about what these tariffs are intended to accomplish – and whether we think the tariffs will be successful at accomplishing their intended goals.

It’s important to keep in mind that the reasons for both the Section 232 and Section 301 investigations that are leading to this discussion about tariffs, are China’s unfair trade practices that undercut American workers and businesses.

The Section 232 investigations determined that global steel and aluminum imports are threatening U.S. national security.  Our producers and workers in these two industries have been seriously hurt by the global overcapacity crisis.  It’s no secret that China has been the leading driver of this crisis.

The Chinese government owns many of the steel firms in China and has provided massive government subsidies to many of the firms that it doesn’t outright own.  As a result, China has started producing steel and aluminum at a pace that is simply not based on economics or fair competition.

China now produces about half of the world’s entire supply of steel and singlehandedly produces as much steel as the entire world did in 2000. During that same time frame, the U.S. share of global production has been cut in half.

China’s aggressive state-sponsored economic intervention goes beyond just the steel and aluminum sectors.  As USTR’s Section 301 investigation report has documented, China’s government has used its economic and political leverage over a sustained period of time to extort, force, or outright steal intellectual property and technology from American innovators.

I’ve heard the stories from individual inventors, small businesses, our largest multinational corporations, and our intelligence community about the harmful impact that these IP-related policies have had on the U.S. economy and on our national security.

Now we are in a situation where the Administration has decided to respond to both of these problems, at least in part, through tariffs.

In the case of the Section 232 steel and aluminum tariffs, the logic is pretty direct.  The tariffs could, if implemented and designed thoughtfully, bring about a recovery of U.S. steel and aluminum production.  In the case of the Section 301 proposed tariffs, the logic is less direct.  It seems that for the Administration, the tariffs are intended to be used as leverage to bring about changes in China’s practices or to re-calibrate the U.S.-China trading relationship.

In both cases, the tariffs will bring disruption to the U.S. economy.  The tariffs will raise costs for some, disrupt supply chains, and they are also provoking threats of retaliation and real retaliation from countries like China.

The key policy question that we are grappling with now is whether the Administration has a plan to use these tariffs effectively.  It seems to me that after today’s hearing, we should seriously consider holding another hearing on the Administration’s China trade strategy. 

I look forward to hearing from our witnesses today and I thank them for joining us to share their perspectives, concerns, and recommendations.

 

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