No Chickening Out on Trade Retaliation

Trade relations between the U.S. and China are heating up, with both countries bringing antidumping charges against the other — some in retaliation for earlier actions.  With the House of Representatives primed to take up a bill allowing the U.S. to levy tariffs on Chinese imports to protest China’s currency intervention, China announced it was slapping a huge tariff on imports of U.S. poultry. This would up the chicken tariff to a minimum of 50.3 percent and a maximum of 105.4 percent on chicken products imported from the U.S. — an escalation from an earlier tariff tacked on by China in retaliation for the U.S. slapping a higher tariff on Chinese tires last year.

Last Friday, the House Ways and Means Committee approved H.R. 2378, the Currency Reform for Fair Trade Act. (Note to readers: whenever “fair trade” is used instead of “free trade,” it’s almost always supporting a protectionist policy.)  Almost immediately on September 26 — though apparently not connected — China’s ministry of commerce announced that it had concluded a year-long antidumping investigation of U.S. poultry imports and concluded that the chickens were being sold to China at lower than production costs.

This was followed quickly by a September 27 announcement by the U.S. Department of Commerce that the People’s Republic of China and Mexico were unfairly dumping seamless refined copper pipe and tube, and the U.S. would be imposing dumping duties on those imports pending a thorough investigation by the International Trade Commission.

Currently, the ITC has numerous investigations in their final stages involving Chinese imports. Here’s the current list: Certain Coated Paper Suitable for High-Quality Print Graphics Using Sheet-Fed Presses from China and Indonesia; Drill Pipe from China; Magnesia Carbon Bricks from China and Mexico; Narrow Woven Ribbons from China and Taiwan; Seamless Refined Copper Pipe and Tube from China and Mexico; Seamless SLP Pipe from China; Woven Electric Blankets from China. 

It’s not likely that these actions and others will advance President Obama’s goal of doubling exports in five years as part of an economic recovery plan.  Important trade partners such as China and Mexico that have retaliated against some U.S. protectionist policies may encourage other countries to take action.  Tit-for-tat trade remedies won’t improve U.S. competitiveness, but can undermine the international trading system.