US calls for stronger protection against Chinese imports

A policy group led by the United Steelworkers union and domestic manufacturers is calling for the US 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.

The Alliance for American Manufacturing (AAM) on Friday published a report on China’s excess industrial capacity that echoes concerns raised by the Biden administration and US allies in recent months, saying quick action was needed to stem a rising tide of cheap and subsidised exports that threatens US jobs.

The group called for the return of a long-expired import surge protection tool that was created when Beijing joined the World Trade Organisation in 2001, the event that turned China into a global export powerhouse.

The so-called Section 421 safeguard was designed to allow the US 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.

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 US 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.

With new import surges threatened in new industries including EVs, solar and semiconductors, as well as continuing surges in older sectors such as steel, glass and tires, Section 421 should be revived and modernised, AAM said.

“Beijing has failed to abide by its WTO commitments and remains a non-market economy,” AAM said in the report. “It’s 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.

It 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 US output is done. It also said the relief options should be broader and longer in duration.

The US Trade Representative’s office did not immediately respond to a request for comment on the AAM recommendations.

The report laid out job losses and plant closures in the US paper, glass, steel and tire industries caused by Chinese imports, and said that the US needs a more proactive approach to avoid a repeat in newer sectors. Excess capacity is a “feature, not a bug” of China’s state-driven economic model, it said.