#737 – Tariffs Are a Necessary Response to China’s Intransigence: Op-Ed

Posted on | The Agurban

Last week we shared an article on
How Higher Tariffs Affect Different Industries. This week we are sharing a piece, in part, that discusses the reasons why the higher tariffs have been imposed. As you know, we try our best to remain politically neutral, and our goal is to share the facts the best that we can.

Tariffs Are a Necessary Response to China’s Intransigence: Op-Ed

Beijing has run roughshod over our economic well-being.
Michael Stumo | May 13, 2019

Why the hysteria about China? The Trump administration just spent months negotiating a seven-chapter trade deal with Beijing. The resulting agreement was intended to address the very trade disputes that compelled the president to take a hard line on China in the first place: intellectual property theft, hacking of trade secrets, forced technology transfer, trade barriers, and currency manipulation.

These are longstanding challenges that prior administrations failed to address — predatory trade practices that Beijing has continually used to seize market share from U.S. producers. The resulting carnage has been evident for two decades now, with 3.4 million U.S. jobs lost to China between 2001 and 2017, and a goods trade deficit that clocked a stunning new record in 2018 of $419 billion.

These are legitimate grievances that both Sen. Chuck Schumer (D-N.Y.) and President Trump agree on. Beijing has unilaterally cheated its way to the top — particularly with the rampant theft of intellectual property from iconic American companies like U.S. Steel, American Superconductor, and J.P. Morgan. And the U.S. middle class has seen the results, with more than 60,000 factories closed.

What was Beijing’s response to President Trump? The Chinese negotiating team returned a 150-page draft agreement last week that reversed most of their prior commitments. As Reuters reported, “In each of the seven chapters of the draft trade deal, China had deleted its commitments to change laws to resolve core complaints that caused the United States to launch a trade war.”

In other words, and even after 10 months of tariffs from the Trump administration, Beijing simply said “Forget it.” Or, as Reuters noted, Beijing chose to “blow up months of negotiations” with “systematic edits” to nearly the entire document.

On Sunday morning (May 10th), President Trump announced his response: Tariffs of 25% would continue on $50 billion worth of Chinese imports. And the current 10% tariffs on another $200 billion worth of goods would be raised to 25%.

Critics of President Trump are letting political passions run ahead of economic common sense. China’s predatory capitalism and military aggression bear shades of the Soviet challenge during the Cold War.

Take the aluminum and steel tariffs that the president imposed in March 2018. Trade Partnership Worldwide warned that a staggering 470,000 U.S. jobs would be lost. But federal data shows US GDP grew at an impressive 3.5% in the 3rd quarter of 2018 — after the tariffs had taken full effect. Since then, U.S. manufacturing employment has increased, and now exceeds 12.8 million jobs — the highest level since the Great Recession. Inflation remains low, demonstrating that consumers aren’t seeing price increases. And robust job growth continues, with both steel and aluminum producers hiring and expanding operations.

Michael Stumo is CEO of the Coalition for a Prosperous America, a nonprofit organization working at the intersection of trade, jobs, tax and economic growth. CPA is nonpartisan and represents American domestic producers, manufacturers, ranchers, organized labor, and farmers.