Republican and Democratic lawmakers criticized the Trump administration’s escalating tariff threats that are attracting retaliation on agricultural goods from China and other countries during a Senate Finance Committee hearing with Commerce Secretary Wilbur Ross.
Answering repeated questions on Wednesday about whether the United States is in a trade war with China and other countries, Ross responded: “We’ve been in a trade war forever. But now, U.S. forces are coming to the ramparts.”
Several senators expressed concerns about retaliation against the U.S. agricultural sector, while Ross insisted the tariffs are necessary to pressure unfair trading partners.
“I don’t think you’re empathetic enough to agriculture,” Sen. Maria Cantwell, D-Wash., told Ross. “These people might go out of business while you’re creating your trade wars.”
The Trump administration invoked Section 232 of the Trade Expansion Act of 1962 – which allows the president to impose unlimited tariffs if the Commerce Department finds that imports threaten national security – to impose tariffs of 25 percent on steel products and 10 percent on aluminum products in March. Ross said the United States would lift the tariffs on Mexico and Canada if there is a successful culmination of negotiations to modernize the North American Free Trade Agreement, either through bilateral agreements with the two countries or a three-country accord.
Sen. Pat Toomey, R-Pa., said the Trump administration’s Section 232 tariffs are “about economic nationalism and managed trade, and could force companies to relocate to Canada.” During another point of the hearing, Sen. Chuck Grassley, R-Iowa, said his home state soybean growers are heavily dependent on exports to China, adding that “it appears we have a government running a mercantilist economy as opposed to a free market economy.”
Citing China’s intellectual property theft, Trump also announced this month tariffs on $50 billion worth of goods from China and threatened to impose tariffs on $400 billion more. Meanwhile, China is promising to retaliate with its own tariffs, including an additional 25 percent tax on U.S. soybeans.
Ross said tariffs are “the necessary means” to address Section 232 issues on steel and aluminum and that applying pressure is the only way the U.S. can get China and other countries to curb “untoward practices” on trade. “The purpose of this is to get an end-game that’s much closer to free trade than anything the world has seen before,” Ross said.
Sen. John Thune, R- S.D., said the conflict with China “seems to be escalating out of control fairly quickly” as the world’s two largest economies announce a series of broadsides.
“I’m increasingly concerned that the tariffs, both those in place and those that have been proposed, are going to hurt American consumers and our domestic businesses, especially in the agricultural sector, far more than they’re going to persuade the Chinese to change their unfair trade practices,” Thune said.
Grassley said Iowa soybean farmers have seen prices plummet due to market uncertainty, noting they are losing $61 per acre. “Even if farmers don’t have to sell their physical crop right now, the sudden volatility in the market can increase the cost of hedging and, in some cases, require margin calls for those who are long in the market,” he said, calling on the White House to tone down threats that could provoke Chinese retaliation.
In response to questions from Sen. Sherrod Brown, D-Ohio, on a bill he and Grassley are considering, Ross said he’d be “happy to work on anything that will restrict Chinese investment in the United States.”