Tariffs Must Remain Until China Enacts Meaningful Reform to Unfair Trade Practices

Bilateral meetings with Chinese government officials present an opportunity to affect meaningful change in the United States’ lopsided trade relationship with that country, but results oriented, enforceable commitments must be their goal, according to an Alliance for American Manufacturing (AAM) letter sent to Trump administration officials on Sunday.

AAM President Scott Paul writes:

“China is not holding up its end of the bargain, at the World Trade Organization or via its bilateral relationships, and kicking the can further down the road is simply not a smart trade policy strategy. The past 20 years of seemingly endless dialogue with China show that polite requests to curtail state driven industrial overcapacity or to refrain from forced technology transfers and joint ownership partnerships in exchange for market access do not yield meaningful results.”

Indeed, such non-market practices have fueled a significant annual goods trade deficit that has steadily grown since China’s entry into the WTO, and has contributed to the loss of 3.4 million American jobs since that time. The letter urged the U.S. delegation to toe a tough line with its counterparts, and to not rescind the threat of tariffs until specific disciplines to curtail unfair trade are agreed to. Paul writes:

“Withdrawing the threat of tariffs without achieving meaningful results would be tantamount to waving the white flag of trade surrender – signaling to China and other trade cheats that there will be no consequences for predatory trade behaviors.” 

Included in the letter were a number of issues that Paul encouraged the delegation to raise, including the massive production overcapacity in China’s steel and aluminum sectors, its program of intellectual property theft, and its support of state-owned enterprises. Before tariffs can be lifted, legitimate corrections must be made to these and other mercantilist policies. Paul continues:

“We strongly urge against any rush to make trade concessions to China in exchange for promises of reforms. Any deal with China must be comprehensive, binding, enforceable, and backed by strong penalties if Beijing fails to live up to its words – as has repeatedly been the case under previous administrations of both political parties.”

Read the full letter.