U.S. Must Take Action to Prevent Loss of Industries Tai Tells Lawmakers

Katherine Tai and Senators from the Subcommittee on Commerce, Justice, Science, and Related Agencies

Trade Update • APRIL 29, 2021

During a wide-ranging hearing Wednesday before a Senate Appropriations subcommittee, U.S. Trade Representative said that the “story of the solar panel industry in the United States really gets at a fundamental issue that we need to confront in our competition with China,” one that all too often results in “fights over the last scraps of an industry that we have lost to a competitor and in particular to the Chinese.”

Tai was responding to concerns over the Trump administration’s safeguard tariffs on solar products that were imposed to protect the sole remaining U.S. producer in what had once been a thriving domestic industry. However, many contend the steep tariffs have also contributed to widespread job losses and the curtailment of new job creation in the U.S. clean-energy sector that relies heavily on cheap imports.

She said this was “a pattern that we see over and over again” and warned it will continue repeating in the same way “if we are not ready to anticipate the loss of industries to anticompetitive practices and massive subsidies that are coming from our biggest competitors.”

Tai pointed to the steel and aluminum industries as potentially being “leading contenders” to succumb to this familiar pattern if developments are not closely monitored. While defending the former administration’s Section 232 tariffs as having had a “positive effect” on U.S. production, Tai acknowledged they have also resulted in “carried costs” (i.e., retaliatory tariffs). More importantly, she said the tariffs have failed to address China’s significant role in the ongoing problem of global steel overcapacity.

Unanswered Questions About China

The currently fraught state of trade relations with China took up much of the questioning by lawmakers, with many complaining about Beijing not having lived up to the purchasing promises made in its phase one trade deal signed with the Trump administration.

Tai said the issue a “priority” for her office but offered no specifics regarding any plans to address the ongoing trade war. “We are in the process of examining their performance and are scrutinizing all of the aspects of what they have done,” she told lawmakers.

Tai also said that her agency was about to launch a top-to-bottom review of China trade policy that could lead to a re-start of a new product-exclusion process for goods from China hit by Section 301 tariffs.

Canadian Issues

Concerns about longstanding trade irritants with Canada, primarily over softwood lumber and dairy market access, were raised by several senators. Tai said she had discussed these bilateral issues with her Canadian counterpart Mary Ng when they spoke last month and that softwood lumber, in particular, would “always” be a foremost concern in the trade conversation with Canada.

After vowing to continue the USTR’s tradition of “robustly” using all of the trade enforcement tools at her disposal, Tai said she hoped to engage her Canadian counterparts in some “out of the box thinking” to make progress on this and other issues of economic significance.

Tai also said she will be meeting in the coming weeks with senior officials from Canada and Mexico for an annual review under provisions of the US-Mexico-Canada Agreement, where various concerns about the two partners’ performance in meeting their free trade commitments are expected to be raised.

She noted that the USMCA, which she helped to negotiate as chief trade counsel for the House Ways and Means Committee, contains some of the most effective enforcement tools possible, but that the only way to test their effectiveness is by using them — something she was “not afraid” to do, Tai assured lawmakers.

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