Trade cheating is a threat to American workers, and the exercise of enforcement tools is vital if we want the rules of international trade to remain fair.
There’s always a lot of complaining when a domestic manufacturer asks the federal government to enforce U.S. trade law.
Importing industries, or their associations, will often smear petitioners, as happened to the California solar panel manufacturer that accused Chinese companies of circumventing U.S. duties.
Like-minded ideologues, like those on the editorial board of a national newspaper, will effectively call petitioners crony capitalists, like they did recently when opining on a pending trade case that alleged more than half a dozen countries are dumping tin-mill products in the American market.
But there’s often a through line to these complaints: They ignore the reality that trade enforcement works.
It uncovers inconvenient truths and forces uncomfortable changes to existing business models. That’s why importers fight it tooth and nail.
These cases exist in the context of Washington’s newfound appreciation for industrial policy, rediscovered after the coronavirus pandemic caused trade bottlenecks and outright shortages of important goods in the United States. Industrial policy is meant in part to assuage those problems and rebuild industrial resiliency that for decades was allowed to atrophy as companies chased lower production costs overseas.
Congress has passed investments in targeted industries like semiconductor chips and electric vehicle battery production. But industrial policy, for it to work, must be holistic. And that means we can’t abandon legacy obligations, like the enforcement of existing trade rules. These new investments won’t get far if we allow them to leak out by ignoring the trade rules that are supposed to shape them.
And we have tin and solar as recent examples.
It was found to be true by U.S. International Trade Commission investigators that already-dominant Chinese solar manufacturers, whose supply chains run through a region dotted with labor camps, were routing their products through third-party countries to avoid U.S. import duties. These cheap, unfairly traded imports kept solar installers happy but for years suppressed any chance for nascent U.S. solar manufacturers to find their footing.
It was also found to be true that tin-mill steel imports from China and other countries were being dumped – or sold below fair market value – in the American market. Those imports set an artificially low price for tin-mill steel, which is used to make food cans. That flood of unfair import competition in recent years led to the idling of tin mills in Gary and East Chicago, Indiana and the layoff of 300 steelworkers at a tin mill in Weirton, West Virginia.
These instances of fundamental unfairness didn’t stop the complaints that domestic solar manufacturing was too insignificant to register, or the dismissive commentaries that the workers at American tin mills didn’t matter – but the ITC investigations established the facts in these cases. Importers were cheating, flouting established U.S. trade rules.
The facts aren’t in dispute. And so now, with the facts established and these wins in hand, these industries will get some relief.
The application of the solar tariffs has been delayed after a successful rearguard lobbying campaign by importers, but they will take effect next summer. Those tariffs, combined with the Biden administration’s industrial policies that prioritize American clean energy production, have the domestic manufacture of solar products primed to explode.
With preliminary tariffs on unfairly traded tin steel in place, meanwhile, fair prices will be restored and the market for this product will stabilize. Domestic manufacturers can consider restarting their mills. And American steelworkers won’t have to sacrifice their jobs because consuming industries like their inputs artificially cheap.
Trade cheating is a threat to American workers, and the exercise of trade enforcement tools – like anti-dumping and countervailing duties and rules against circumvention – is vital if we want the rules of international trade to remain fair. The outcomes of these cases are steps in the right direction if we want to ensure that fairness. They provide a partial blueprint for how all trade cases should be handled.
The U.S. government, first of all, needs to strictly enforce trade rules that are already on the books.
The U.S. Congress, meanwhile, should reject importers’ attempts to add a vague ‘public interest’ exception for trade enforcement actions. The ambiguity is intentional, meant to invite political interference into what is currently a rules-based economic analysis, and is an obvious mistake.
Instead, Congress should pass legislation to tighten up trade rules further. The solar case, which revealed that circumvention is widespread in the import of Chinese solar panels, demonstrated that foreign manufacturers can relatively quickly adjust their schemes to stay ahead of the cumbersome U.S. enforcement apparatus. A proposal to make it more responsive has already been introduced: It’s called the Leveling The Playing Field Act 2.0, and is sponsored in the Senate by Sens. Sherrod Brown (D-OH) and Todd Young (R-IN) and in the House by Reps. Terri Sewell (D-AL), Bill Johnson (R-OH), Frank Mrvan (D-IN) and Beth Van Duyne (R-TX). It should be advanced immediately.
Manufacturing in America is poised for great things, with stringent trade enforcement and significant public investment paired together to reindustrialize our economy. It will founder, however, if our trade policies or enforcement allow too much of the investment to leak out.
Ignore these complaints. To keep it made in America, we must honor our trade rules – just like we’re doing in the case of solar and tin imports.