Source: Blog – Alliance for American Manufacturing
A containerized cargo ship sits at the dock in the Port of Charleston, South CarolinaCharleston, South Carolina. | Getty Images
The first in an occasional series of AAM policy recommendations as a new era in Washington begins.
President Trump has returned to the White House and correctly identified a problem: The obsession with free trade of recent decades has not worked for American economic or national security. The United States is extremely vulnerable to job loss, price shifts and the impacts of broken supply chains. That makes a U.S. policy framework that emphasizes enforcement for companies facing unfair trade and the wellbeing of America’s workers is one of the most important ways Congress and the Trump administration can make our nation stronger.
The president’s trade and economic platform is built on rebalancing lopsided trade deficits using broadly applied tariffs. If implemented, they will follow earlier rounds of more targeted tariffs on steel, aluminum, and other Chinese imports put in place during Trump’s first term and largely maintained or even increased by the Biden administration.
Both President Trump and President Biden declined to negotiate new free trade agreements, long a priority of free trade advocates. The first Trump administration immediately ended prospects for the long-negotiated and deeply flawed Trans-Pacific Partnership. 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 took groundbreaking but ultimately insufficient steps to incorporate new rules for auto content, workers’ wages. Even as U.S. trade policy has increasingly emphasized America’s workers and supply chain resiliency through tariffs and other actions, the United States remains exposed to surging global overcapacity and its rolling waves of dumped and subsidized imports. And this overcapacity has a source.
As AAM argued in its 2024 report, “SHOCKWAVES: The Ripple Effect of China’s Industrial Overcapacity on American Manufacturing and Factory Workers,” the viability of U.S. industrial capabilities is in question because of China’s litany of unfair and unrelenting trade practices.
For decades, the Chinese government has poured massive amounts of money into heavy industries, such as glass, paper, and steel, as well as emerging technologies in downstream sectors, such as solar panels, battery storage, and vehicles. Part of this strategy is due to domestic concerns; China is motivated to address its own lagging economic growth by exporting its products and displacing market share globally. This scheme is also a cornerstone of its global aims, as Chinese leaders want to dominate critical sectors and create dangerous dependencies on them for other nations. Resultingly, overcapacity and overproduction abound through China’s vast manufacturing sector, and the largesse is exported, arriving on U.S. shores and undermining American efforts to grow our own industrial base and establish manufacturing capacity in the sectors that will define our future.
Aggressively defending American manufacturing and the wellbeing of America’s workers against this malfeasance should be a high priority for the second Trump administration and policymakers, because the scope and scale of China’s interventions have swamped the mechanisms available under the World Trade Organization and our own domestic trade laws.
Effectively countering this aggressive mercantilism will take extraordinary measures, and must address multi-faceted problems involving other countries like Mexico and Vietnam that are complicit in China’s activities. President Trump and policymakers must fully utilize and strengthen existing trade enforcement tools and, if necessary, create new ones. Existing tariffs may prove insufficient to address circumvention, evasion, and other evolving threats. And the strategic application of tariffs must be maintained and, in some cases, expanded.
Failing to address these threats will have catastrophic consequences for the security of our nation, the strength of our industrial base, and the livelihood of America’s workers.
Policy Recommendations
1. Fully enforce existing trade laws, such as antidumping and countervailing duties and Section 232 and 301, to level the playing field and to address surging industrial overcapacity that distorts markets and undermines U.S. national security.
2. Strengthen existing tools to address evasion and circumvention tactics by enacting the Leveling the Playing Field Act 2.0 and the Fighting Trade Cheats Act.
3. Create new trade enforcement tools, such as the reinstatement of a Section 421 import surge mechanism, where existing remedies are no longer sufficient to address evolving threats posed by China or other nations.
4. Revoke China’s Permanent Normal Trade Relations (PNTR) status.
5. Close trade loopholes, such as the de minimis treatment of packages from China, that are exploited to the detriment of U.S. companies, America’s workers, and consumer safety.
6. Prevent China and other non-signatory nations from gaining backdoor preferential treatment for automobiles and other critical sectors by strengthening rules of origin (ROO) and imposing restrictions in trade agreements and preference programs, starting with the USMCA through the “joint review” mechanism.
7. Identify major trading partners that violate currency manipulation standards to gain an unfair competitive advantage and take decisive action to counter the impacts, including self-initiating and streamlining the petitioners’ process for applying countervailing duties (CVD).
8. Reauthorize Trade Adjustment Assistance (TAA) for workers who experience job losses or wage reductions resulting from unfair trade and other trade disruptions.
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