The first in a series of occasional AAM policy recommendations to coincide with the beginning of a new era in Washington.
President Trump returned to the White House and correctly identified the problem. That is, the obsession with free trade in recent decades has not helped America’s economy or national security. The United States is highly vulnerable to the effects of job losses, price fluctuations, and supply chain disruptions. As such, a U.S. policy framework that emphasizes enforcement for companies facing unfair trade and the welfare of U.S. workers will be one of the most important ways Congress and the Trump administration can make America stronger. .
The President’s trade and economic infrastructure is built on using broadly applicable tariffs to rebalance a lopsided trade deficit. If activated, it would follow an earlier phase of more targeted tariffs on steel, aluminum and other Chinese imports introduced during President Trump’s first term and mostly maintained or increased by the Biden administration. Become.
Both President Trump and President Biden have refused to negotiate new free trade agreements, a long-standing priority of free trade advocates. The first Trump administration quickly ended the prospect of a long-negotiated and deeply flawed Trans-Pacific Partnership agreement. The president and Congress worked together to renegotiate the North American Free Trade Agreement (NAFTA), which was renamed the United States-Mexico-Canada Agreement (USMCA) and included new rules regarding vehicle content and worker wages. took innovative but ultimately insufficient steps to address this issue. . Even as U.S. trade policy increasingly emphasizes the resiliency of U.S. workers and supply chains through tariffs and other measures, the U.S. continues to struggle with the surge in global excess capacity and the impact of dumping and subsidies. exposed to the surging wave of imported products. And there is a reason for this excess production capacity.
As AAM claimed in its 2024 report; “Shockwaves: The ripple effects of China’s industrial overcapacity on American manufacturing and factory workers.” China’s unfair and unforgiving trade practices have called into question the viability of U.S. industrial capacity.
For decades, the Chinese government has poured billions into emerging technologies in heavy industries such as glass, paper and steel, and downstream sectors such as solar panels, batteries and cars. Part of this strategy is driven by domestic concerns. China is trying to cope with slow economic growth by exporting its products and taking market share around the world. This plan is also fundamental to China’s global objectives, as China’s leaders want to control critical sectors and create dangerous dependencies on other countries. As a result, China’s vast manufacturing industry is rife with overcapacity and overproduction, much of which is exported and arrives in the United States, growing our industrial base and manufacturing in areas that will determine our nation’s future. It is undermining U.S. efforts to build capabilities.
Aggressively protecting American manufacturing and the welfare of American workers from this fraud should be a top priority for the second Trump administration and policymakers. Because the scope and scale of China’s intervention overwhelms the mechanisms available under the World Trade Organization and our domestic trade laws. .
Effectively countering this aggressive mercantilism will require extraordinary measures and address the multifaceted problems involving other countries, such as Mexico and Vietnam, that are complicit in Chinese activities. President Trump and policymakers should maximize and strengthen existing trade enforcement tools and create new ones as needed. Existing tariffs may prove insufficient to address evasion, evasion, and other evolving threats. And the strategic application of tariffs must be maintained and, in some cases, expanded.
Failure to address these threats will have a devastating impact on the security of our nation, the strength of our industrial base, and the lives of American workers.
Policy recommendations
1. Existing trade laws, such as antidumping and countervailing duties, Sections 232 and 301, to level the playing field and address the proliferation of industrial overcapacity that distorts markets and undermines U.S. national security. Fully enforced.
2. Strengthen existing tools to combat avoidance and evasion tactics by enacting the Level Playing Field Act 2.0 and the Trade Abuse Act.
3. Create new trade enforcement tools, such as reinstating the Section 421 import surge mechanism, when existing remedies are no longer sufficient to meet the evolving threats posed by China and other countries.
4. Revoke China’s Permanent Normal Trade Relations (PNTR) status.
5. closing trade loopholes minimal How shipments from China are exploited to compromise the safety of U.S. businesses, U.S. workers, and consumers.
6. Strengthening rules of origin (ROO) through a “joint review” mechanism and imposing limits on trade agreements and preferential programs, including the USMCA, will give China and other non-signatories backdoor preferential treatment in automobiles and other critical sectors. prevent you from getting.
7. Identify key trading partners that violate currency manipulation standards to gain an unfair competitive advantage and address the consequences, including voluntary and streamlined processes for claimants to apply countervailing duties (CVD). Take decisive action to counter this.
8. Reauthorizes Trade Adjustment Assistance (TAA) for workers who have experienced job loss or wage reductions due to unfair trade or other trade interference.
