All this will make it easier for Chinese manufacturers to take American jobs and keep the United States dependent on China as the source for products critical to national security like semiconductors and personal protective equipment.
The tariffs President Donald Trump imposed to combat the forced transfer of technology from American firms to Chinese ones as a price of doing business in China and other market-distorting Chinese trade practices are a critical component of this strategy.
The notion that all tariffs are bad is foolish and counterproductive. They have been an effective tool of economic policy since the beginning of the Republic. They can offset unfair subsidies by foreign governments and industrial policy; break reliance on foreign suppliers; and raise import costs, thus encouraging companies to bring jobs back to this country. To the extent that tariffs might raise consumer prices (which is itself debatable), that is a small price to pay to achieve a strong manufacturing base and secure access to critical supplies.
The amendment would cut tariffs on broad categories of protective gear and other medical products — some of the very goods that are the focus of the Innovation and Competition Act’s provisions aiming to strengthen manufacturing capacity here. In other words, while the overall bill seeks to encourage P.P.E. production in the United States, the trade amendment would undermine that goal by making it cheaper to import protective gear from China. Further, the categories of products in the amendment are far broader than health-related; indeed, the 114 tariff lines cut include such odd items as certain drinking alcohol.
In addition, by renewing the Miscellaneous Tariff Bill, the Senate bill would undercut our ability to compete with China. The Miscellaneous Tariff Bill was originally meant to help manufacturers by reducing tariffs on parts that would be included in products made in the United States. Unfortunately, it degenerated into a lobbyist-driven giveaway and its renewal would reduce almost 2,300 tariffs with an estimated loss of revenue of more than $1 billion a year. Over 40 percent of the tariff reductions would benefit material imported from China, and a majority are for finished items.
Finally, the most problematic and counterproductive part of the proposed Trade Act amendment is language that would gut a provision that President Trump used to impose tariffs on Chinese goods in 2018. The Trump administration helped American companies, through a program of exclusions to what are known as Section 301 tariffs, transition from reliance on Chinese suppliers.
The amendment would reopen this process — and worse, make it much more likely that a company would be granted an exclusion that would discourage it from bringing back jobs and capacity to America. The Senate bill would erect nearly insurmountable barriers to any effective use of Section 301 and fairly quickly lead to the elimination of most of the Trump tariffs.
This is all good news for Washington lawyers and lobbyists but not for America’s workers or long-term competitiveness.