US manufacturing group calls for stronger protection against Chinese imports, ET Auto

A policy group led by the United Steelworkers union and domestic manufacturers is calling on the United States to impose stronger trade barriers on Chinese imports after President Joe Biden imposed steep tariffs on Chinese electric vehicles, solar panels and other strategic goods. The Alliance for American Manufacturing (AAM) released a report on China’s manufacturing overcapacity on Friday that echoes concerns expressed by the Biden administration and U.S. allies in recent months, arguing that quick action is needed to stem the rising tide of cheap and subsidized exports. which threatens Work in the USA.

The group called for the restoration of a long-extinct tool to protect against import surges, which was created after Beijing joined the World Trade Organization in 2001, making China a global export powerhouse.

continued below

The so-called Section 421 backstop was intended to allow the United States to impose temporary tariffs to ease market disruptions caused by a surge in imports from China’s low-cost manufacturing base, which was admitted to the global trading system 23 years ago. The idea was to give domestic industries a break as China transitioned to a market economy with a more level playing field – a transition that never happened.

Part 421 was invoked only once, in 2009, by then-President Barack Obama, at the request of the United Steelworkers, whose members were being laid off by American tire factories hit by a flood of Chinese imports. As part of this action, the customs duty on Chinese tires was temporarily increased to 35% from 4% of the WTO rate, but Art. 421 expired in 2013.

With the threat of new import increases in new industries including electric vehicles, solar energy and semiconductors, as well as continued increases in older sectors such as steel, glass and tires, Section 421 should be revitalized and modernized, AAM said.

“Beijing has failed to honor its WTO commitments and remains a non-market economy,” AAM said in the report. “This state-led support for critical sectors creates massive overcapacity and threatens to surge imports in the United States, necessitating the restoration of the Section 421 tool,” AAM said in the report.

He called for changes to allow tariffs on Chinese imports from plants in third countries such as Mexico and Vietnam, and for a faster process to impose tariffs before lasting damage is done to American manufacturing. It also said support options should be wider and longer.

The Office of the U.S. Trade Representative did not immediately respond to a request for comment on the AAM recommendations.

The report cited job losses and plant closures in the U.S. paper, glass, steel and tire industries due to imports from China and said the United States needs a more proactive approach to avoid a repeat of the situation in newer sectors. Overcapacity is “a feature, not a bug” of China’s state-led economic model, he said.

G7 confronts China

The recommendations were published during a meeting of leaders of the Group of Seven industrial democracies in southern Italy, and in a joint statement they pledged to protect their industries from China’s “unfair practices.”

It also follows a decision this week by European Union officials to impose punitive tariffs of between 17.4% and 38.1% on Chinese electric vehicles to counter findings of excessive government subsidies for the sector.

AAM President Scott Paul said he was encouraged by the U.S. and EU tariff actions, calling Biden’s move a watershed moment to address China’s overcapacity at a time when Washington is investing heavily in a new energy transition.

European tariffs show Biden “is not alone in his concerns about China’s electric vehicle overcapacity and subsidies. “This is an acknowledgment that there are widespread concerns about Beijing’s policies and practices.”

Among other safeguards, the group recommended several steps to prevent China from circumventing U.S. tariffs by shifting production to third countries such as Mexico and Vietnam, including the adoption of proposed rules to strengthen U.S. anti-dumping and anti-subsidy rules to cover production from countries third-party domestic investments and strengthening rules of origin requirements in US free trade agreements to exclude Chinese content.

Most read in the industry