Testifying before a Senate subcommittee, Tai says that the U.S. risks losing critical industries, especially given unfair trade practices by China’s government.
U.S. Trade Representative Katherine Tai came to Capitol Hill on Wednesday to testify before a Senate Appropriations subcommittee, and several Senators were primed to ask her questions about trade enforcement actions like the Section 232 tariffs on steel and aluminum imports.
Tai offered a warning.
The United States risks losing critical industries — from steel to cement to even products like Vitamin C — because of unfair trade practices by countries like China.
That’s why it’s so important for the United States to work to strengthen its domestic industries while also meeting with allies and partners to take on the fundamental issues driving many of the trade disputes we’re facing today, Tai said. Otherwise, we risk losing key industries (and being left with few options).
The solar panel industry is an example of this. When Sen. Chris Van Hollen (D-Md.) raised the issue of tariffs on imported solar panels, Tai pointed out that it was domestic industry that brought forth a trade case in the first place because it had been left decimated by unfair trade practices.
“The story of the solar panel industry in the United States really gets at a fundamental issue that we really to confront in our competition with China,” Tai said.
“Today, we have a sole producer left in the United States for solar panels, when 10, 12 years ago we had quite a few in this burgeoning industry,” Tai added. “Given the role that we think these types of products are going to play, this is actually a very sad story that we are in right now, where we are struggling with the applications of these tariffs that are meant to save maybe the last producer that we have here in the United States.”
(While Tai focused on unfair trade practices in her testimony, we’ll also note that there is growing international consensus that China’s solar industry is heavily dependent on forced labor. That, of course, raises a number of additional concerns.)
In any case, the United States cannot afford to lose sight of the bigger picture, Tai said. Industries like steel and aluminum could suffer the same fate if the United States isn’t willing to take action.
“If we don’t keep our eye on the ball, we will continue to experience these types of fights over the last scraps of an industry that we have lost to a competitor and, in particular, to the Chinese,” she said.
Tai added: “We can see where this pattern will play out, again and again, if we are not ready to anticipate the loss of industries to anticompetitive practices and massive subsidies that are coming from our biggest competitor.”
The Section 232 tariffs on steel and aluminum put into place by the Trump administration were designed to mitigate the impacts of those anticompetitive practices.
Global industrial overcapacity, largely driven by China, led to a surge of dumped steel and aluminum imports into the United States. It cost thousands of good-paying jobs and led to dozens of plant closures.
And Section 232 worked. It stabilized domestic industry, leading to investments in a number of facilities and the creation of thousands of new jobs.
But the problem of global overcapacity remains. Tai testified that the United States is now “looking for solutions that come through cooperation” by working with allies like the European Union.
Trade enforcement action like Section 232 tariffs is “not for the sake” of “hitting each other with tariffs,” Tai said. “It’s about getting the two sides to get at resolving the cause of the issue.”
“We really do need to work with others, especially the European Union, on the overall steel overcapacity problem,” she said.
In her opening remarks, Tai said her goal as U.S. Trade Representative will be to “seize the opportunity to set America on a strong and clear path to a competitive future.”
“That’s why President Biden proposed the American Jobs Plan that would make bold investments and build a better foundation for decades of economic growth and good-paying jobs for this generation of Americans and future generations,” Tai continued.
“This is why USTR is developing and implementing a worker-centered trade policy that complements and supports the domestic investments in the American Jobs Plan. The President’s trade agenda will foster broad-based, equitable growth that increases innovation and enhances the country’s competitive edge and that’s crafted with workers at the table.”
Tai also noted that USTR helped resolve a trade dispute between LG Energy Solution and SK Innovation, two South Korean companies that make electric vehicle batteries in the United States. That dispute had threatened domestic battery manufacturing at a critical time when the United States is looking to transition to electric vehicles.
“The settlement is the type of trade policy I believe we need: it supports a larger strategy for creating jobs and investing in innovation and manufacturing leadership by bolstering sustainable renewable energy supply chains, leveling the playing field, [and] discouraging regulatory arbitrage,” she said.