Source: Blog – Alliance for American Manufacturing
U.S. President-elect Donald Trump listens as his choice for Secretary of Commerce, Cantor Fitzgerald Chairman and CEO Howard Lutnick, speaks during a news conference at Trump’s Mar-a-Lago resort in Palm Beach, Florida on December 16, 2024. | Getty Images
Another entry in a series examining the manufacturing issues in front of the president-elect’s cabinet nominees.
President-elect Trump doesn’t take office until January 20, but Congress is already preparing to conduct confirmation hearings for his cabinet nominees. We’re taking a look at some of them, too. Shortly, the Senate Commerce Committee will reportedly hold a confirmation hearing for Trump’s pick to lead the U.S. Department of Commerce: investment banker Howard Lutnick.
If confirmed, Lutnick will lead a department that helps American companies export goods and services, identifies and analyses new markets for them, and promotes foreign direct investment here at home.
The Senators on the Commerce committee will likely ask Lutnick at his hearing about all of those items and more. But here are three under-the-radar issues the nominee may hear about that have a significant impact on American manufacturing and its workers:
Trade Enforcement
Unfair trade practices are an everyday reality for U.S. manufacturers and their workers, as well as a broader existential danger to our rules-based market economy. Left unchecked, trade cheating can greatly impacts people’s lives for the worse when a domestic factory closes or is forced to operate at a reduced capacity.
Commerce has a number of trade enforcement responsibilities, namely ensuring fair trade and compliance with trade laws and agreements. For instance, when an antidumping or countervailing duty trade case is filed, it’s Commerce that determines the extent, or margin, of the trade cheating. That makes it critical for American manufacturing that the department utilize all available tools to quickly address trade cheating.
Similarly, Commerce also plays a central role in initiating and conducting Section 232 investigations to determine whether imports are negatively impacting U.S. national security. The deterioration of our industrial base due to overcapacity and unfair trade has had profound consequences for that security. It’s important that Commerce continue to assess the close relation of economic welfare to national security. Commerce should also ensure that existing Section 232 actions on steel and aluminum remain in place and be strengthened to address circumvention and evasion, particularly with respect to downstream “derivative” products.
American-Made Broadband Deployment
The federal government is currently investing upwards of $65 billion for broadband internet expansion throughout the United States, and Commerce is responsible for much of this initiative. But to ensure that funding supports American manufacturing and its workers (and to protect our national security interests), Congress inserted strong Buy America rules and prohibited the use of certain materials and equipment from China.
It’s vital that the National Telecommunications and Information Administration within Commerce adhere to these congressional Buy America directives. Waivers have already been approved for optical fiber and other broadband equipment that allow foreign content to be used, and the incoming Trump administration should review them periodically with an eye on narrowing or eliminating them.
Reciprocal Defense Procurement Agreements
For years, the U.S. government has entered into Reciprocal Defense Procurement (RDP) Agreements to ease trade in defense items among its allies. RDPs are a tool to do away with application of the Buy American Act, which generally requires U.S. federal agencies to buy U.S. goods rather than imports. This policy has benefited the U.S. industrial base for nearly 100 years and should not be overlooked without understanding the negative consequences for our economic and national security.
The Department of Commerce has an important responsibility in analyzing the potential adverse impacts on U.S. industry and its workers of proposed RDP agreements. But a recent report by the Government Accountability Office found that Commerce failed to provide any such required analysis on several RDPs and, when it did so, its methodology had weaknesses. With proposed RDP agreements being considered for Brazil, India, and South Korea, Commerce must conduct its required analysis to help decisionmakers at the Pentagon determine whether lifting Buy American requirements through an RDP would be harmful to U.S. companies and their workers. In doing so, it must improve its processes by seeking input from both companies and labor to ensure that its analysis is comprehensive.
How will this hearing go?
Lutnick is a Wall Street titan. He’s the billionaire CEO of financial services firm Cantor Fitzgerald, an advocate for cryptocurrency, and has also been a significant political fundraiser for Trump in the last two presidential election cycles. At the moment, he’s a co-chair of the president-elect’s transition team.
He’s also backed Trump on his tariff proposals he made on the campaign trail, calling them “an amazing tool for the president to use” in September. That’d be notable for any potential Commerce secretary, but even more so with this one; the president-elect, while announcing Lutnick’s nomination, said “he will lead our Tariff and Trade agenda, with additional direct responsibility for the Office of the United States Trade Representative.”
We’ll be keeping an eye on Lutnick’s hearing before the Senate Commerce Committee. Read about the manufacturing policy issues facing Trump’s pick to lead the U.S. Department of Transportation. And stay tuned for more on the issues facing the president-elect’s other cabinet nominees.
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