Washington, D.C.—Alliance for American Manufacturing (AAM) President Scott Paul testified before the International Trade Commission (ITC) on Thursday to explain how trade enforcement actions have successfully improved industry conditions and created jobs – and why removing tariffs would be a mistake that would benefit China and do nothing to fix inflation.
The ITC is hosting a three-day hearing on the impact of Section 232 and Section 301 tariffs on U.S. industries. Testifying on behalf of AAM – a partnership between leading manufacturers and the United Steelworkers, the nation’s largest industrial union – Paul explained that these trade enforcement measures are a key part of the effort to combat the predatory trade practices of China and other countries.
Section 232 tariffs on steel imports stabilized a market that had been overwhelmed by global overcapacity and dumped imports. Since Section 232 went into effect in 2018, American steelmakers have announced 3,200 direct jobs and investments of $15.7 billion in plant expansions and upgrades, including efforts to lower carbon emissions.
And Section 232 did this with “zero” impact on consumer prices. Adam Hersh of the Economic Policy Institute found that Section 232 “simply did not have a meaningful, real world impact on prices for steel-consuming products,” Paul noted.
But removing tariffs now would be a step backward, as global overcapacity remains and the U.S. market would likely be flooded if Section 232 was removed. Paul testified:
“Until an enforceable global agreement can be reached to curtail overcapacity and state-led investments, the Section 232 action must remain in place for the sake of our economic and national security.”
Likewise, removing Section 301 tariffs on Chinese imports would be “ill conceived and inherently flawed given China’s continued reliance on market distorting policies, acts, and practices,” Paul testified.
Paul told the ITC:
“Abandoning or eroding the Section 301 tariffs would discard our negotiating leverage, be the optimal outcome for President Xi, and subject U.S. producers and American workers to a flood of imports.
“Rolling back Section 301 tariffs, however, would do little to nothing to address inflation, and would, instead, benefit China’s Communist Party and China’s manufacturing sector, which would make up the difference by increasing prices.”
Paul noted that even organizations that traditionally aren’t supportive of tariffs have admitted that revoking them won’t curb inflation. For example, Barclay’s estimated that “a complete rollback of the tariffs” would have a “maximum direct effect on US inflation” of “a one-time reduction of 0.3 percentage point.” Meanwhile, the Peterson Institute for International Economics found lifting the tariffs “could” cut Consumer Price Index inflation by just 0.26 percent.