The Alliance for American Manufacturing (AAM) has called for the U.S. to enact stronger trade barriers to Chinese imports after President Joe Biden imposed steep tariffs on Chinese electric vehicles, solar panels and other strategic goods.
AAM published a report on China‘s excess industrial capacity that echoes concerns raised by the Biden administration and U.S. allies in recent months, saying quick action was needed to stem a rising tide of cheap and subsidized exports that threatens U.S. jobs.
The group called for the return of a long-expired import surge protection tool that was created when Beijing joined the World Trade Organization in 2001, the event that turned China into a global export powerhouse.
The so-called Section 421 safeguard was designed to allow the U.S. to impose temporary tariffs to ease market disruptions caused by surges of imports from China’s low-cost manufacturing base that was welcomed into the global trading system 23 years ago. The idea was to give domestic industries some breathing room as China transitioned to a market economy with a more level playing field – a transition that never came.
“Beijing has failed to abide by its WTO commitments and remains a non-market economy. Its state-driven support for critical sectors is causing massive overcapacity and threatens import surges in the United States, necessitating the reinstatement of the Section 421 tool,” AAM said in the report.
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Section 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 U.S. tire plants hit by a flood of Chinese imports. The action temporarily raised the tariff rate on Chinese tires to up to 35% from the 4% WTO rate, but Section 421 expired in 2013.
AAM called for changes to allow such duties on Chinese import surges from plants in third countries, such as Mexico or Vietnam and a faster process to impose the tariffs before permanent damage to U.S. output is done. It also said the relief options should be broader and longer in duration.
