AAM Letter to President Trump: Time to Rebalance the China Trade Relationship

By Matthew McMullan
Apr 05 2017 |
Photo by Gage Skidmore

The president meets the leader of China at Mar-a-Lago on Thursday.

President Donald Trump, the Ric Flair of recent American presidents (or Tony the Spider, hard to say), is due to meet President Xi Jinping of China at his Mar-a-Lago resort on Thursday.

This is an opportunity for the president to have a frank conversation with Xi about the serious trade issues between our two countries. We’ve written about it on our blog, and we’ve sent the administration a letter that outlines key trade priorities for American manufacturers.

The full letter can be found here, but here are its topline issues, which we hope the president brings up:

  1. Eliminating Industrial Overcapacity with Establishment of Enforceable Benchmarks. Many U.S. industrial sectors are suffering from unprecedented challenges due to global overcapacity – largely fueled by China – which dampens prices and has forced plant closures and massive layoffs. Despite slowing demand in the Chinese market, Beijing continues to maintain high levels of production with subsidies and other state support, undermining U.S. companies that compete based on market considerations.
  2. Reducing the U.S.-China Bilateral Trade Deficit. We applaud your administration for prioritizing the elimination of trade deficits and for issuing a directive to examine the causes of our bilateral trade deficit with China and other nations. This is an important first step, but must be followed by the establishment of clear priorities for expanding exports and forcing China to reform its state-directed, export-focused economy.
  3. Maintain China’s Non-Market Economy Status. No one can seriously claim that Beijing runs a market economy, but the Chinese government desperately wants to be treated that way. Under U.S. law, China is and should continue to be treated as a non-market economy (NME). Any change to this status would severely undermine America’s trade remedy laws and expose U.S. companies and American workers to more dumped imports.

UPDATE: We’re not the only ones in Washington urging Trump to get tough on the Chinese government. The leadership of both the Senate Finance Commitee and House Ways and Means Committee put their concern in the mail, too. They wrote:

Only by undertaking necessary reforms will China qualify as a market economy. China's overcapacities in steel, aluminum, solar, cement, soda ash and other commodities — generated by by its continued use of subsidies and other market-distorting policies, often through state-owned enterprises — have distored global markets.

Separately, 12 Senate Democrats put their names to a similar letter.

They wrote:

Since joining the World Trade Organization in 2001, China has consistently failed to comply with its international trade obligations.  And workers across the U.S., including workers in our home states, have paid the price.  You pledged to support American workers and go after trade cheaters, and we hope you take this opportunity with your first one-on-one meeting with Chinese President Xi to keep this promise to American workers and strongly affirm these priorities.

Check out their letter here. And let President Trump know it’s time to get tough with the Chinese government.