U.S. GOVERNMENT PUBLISHING OFFICE

33–810 WASHINGTON : 2019

THE EFFECTS OF TARIFF INCREASES 

ON THE U.S. ECONOMY AND JOBS 

HEARING 

BEFORE THE

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FIFTEENTH CONGRESS 

SECOND SESSION 

APRIL 12, 2018 

Serial No. 115–FC10 

Printed for the use of the Committee on Ways and Means 

( 

ii 

COMMITTEE ON WAYS AND MEANS 

KEVIN BRADY, Texas, Chairman 

SAM JOHNSON, Texas 

DEVIN NUNES, California 

DAVID G. REICHERT, Washington 

PETER J. ROSKAM, Illinois 

VERN BUCHANAN, Florida 

ADRIAN SMITH, Nebraska 

LYNN JENKINS, Kansas 

ERIK PAULSEN, Minnesota 

KENNY MARCHANT, Texas 

DIANE BLACK, Tennessee 

TOM REED, New York 

MIKE KELLY, Pennsylvania 

JIM RENACCI, Ohio 

PAT MEEHAN, Pennsylvania 

KRISTI NOEM, South Dakota 

GEORGE HOLDING, North Carolina 

JASON SMITH, Missouri 

TOM RICE, South Carolina 

DAVID SCHWEIKERT, Arizona 

JACKIE WALORSKI, Indiana 

CARLOS CURBELO, Florida 

MIKE BISHOP, Michigan 

DARIN LAHOOD, Illinois 

RICHARD E. NEAL, Massachusetts 

SANDER M. LEVIN, Michigan 

JOHN LEWIS, Georgia 

LLOYD DOGGETT, Texas 

MIKE THOMPSON, California 

JOHN B. LARSON, Connecticut 

EARL BLUMENAUER, Oregon 

RON KIND, Wisconsin 

BILL PASCRELL, JR., New Jersey 

JOSEPH CROWLEY, New York 

DANNY DAVIS, Illinois 

LINDA SA ́ NCHEZ, California 

BRIAN HIGGINS, New York 

TERRI SEWELL, Alabama 

SUZAN DELBENE, Washington 

JUDY CHU, California 

GARY ANDRES, Staff Director 

BRANDON CASEY, Minority Chief Counsel 

iii 

C O N T E N T S 

Page 

Advisory of April 12, 2018, announcing the hearing ............................................ 2 

WITNESSES 

Kevin Kennedy, President, Kennedy Fabricating, LLC ....................................... 6 

John Wolfe, Chief Executive Officer, Northwest Seaport Alliance ...................... 10 

Roger K. Newport, Chief Executive Officer, AK Steel Corporation ..................... 18 

John Heisdorffer, President, American Soybean Association .............................. 24 

Calvin Dooley, President and Chief Executive Officer, American Chemistry 

Council .................................................................................................................. 29 

Ann Wilson, Senior Vice President, Motor & Equipment Manufacturers Association .................................................................................................................... 35 

Scott N. Paul, President, Alliance for American Manufacturing ......................... 43 

SUBMISSIONS FOR THE RECORD 

Acuity Brands, Incorporated ................................................................................... 103 

Advanced Medical Technology Association (AdvaMed) ........................................ 107 

American International Automobile Dealers Association (AIADA) ..................... 111 

American Farm Bureau Federation ....................................................................... 117 

Americans for Farmers and Families (AFF) ......................................................... 120 

Associated General Contractors of America (AGC) ............................................... 124 

Beer Institute ........................................................................................................... 127 

Edge Dairy Farmer Cooperative ............................................................................. 132 

Flexible Packaging Association (FPA) .................................................................... 133 

Garmin International, Incorporated (Garmin International) ............................... 139 

Greater Houston Partnership ................................................................................. 143 

Interstate Natural Gas Association of America (INGAA) .................................... 145 

Freedom Partners Chamber of Commerce (Freedom Partners) and Americans 

for Prosperity ........................................................................................................ 147 

Methanol Institute (MI) .......................................................................................... 151 

Organizations representing U.S. manufacturers, farmers and agribusinesses, 

retailers, technology companies, importers, exporters, and other supply 

chain stakeholders ............................................................................................... 153 

National Restaurant Association ............................................................................ 158 

National Association of Trailer Manufacturers (NATM) ...................................... 160 

ProAmpac Intermediate, Incorporated (ProAmpac) .............................................. 163 

Chambers of Commerce representing some of Texas’ largest metro regions ...... 169 

RV Industry Association (RVIA) ............................................................................. 171 

(1) 

THE EFFECTS OF TARIFF INCREASES 

ON THE U.S. ECONOMY AND JOBS 

THURSDAY, APRIL 12, 2018 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON WAYS AND MEANS, 

Washington, DC. 

The Committee met, pursuant to notice, at 10:06 a.m., in Room 

1100, Longworth House Office Building, Hon. Kevin Brady [Chairman of the Committee] presiding. 

[The advisory announcing the hearing follows:] 

2 

ADVISORY 

FROM THE COMMITTEE ON WAYS AND MEANS 

FOR IMMEDIATE RELEASE CONTACT: (202) 225–3625 

Thursday, April 12, 2018 

FC–10 

Chairman Brady Announces Hearing on the 

Effects of Tariff Increases on the 

U.S. Economy and Jobs 

House Ways and Means Chairman Kevin Brady (R–TX), announced today that 

the Committee will hold a hearing on the effects on the U.S. economy and jobs of 

the tariff increases related to Section 232 and Section 301 investigations. The hearing will take place on Thursday, April 12, 2018, in room 1100 of the Longworth House Office Building, beginning at 10:00 a.m. 

In view of the limited time to hear witnesses, oral testimony at this hearing will 

be from invited witnesses only. However, any individual or organization may submit 

a written statement for consideration by the Committee and for inclusion in the 

printed record of the hearing. 

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS: 

Please Note: Any person(s) and/or organization(s) wishing to submit written comments for the hearing record must follow the appropriate link on the hearing page 

of the Committee website and complete the informational forms. From the Committee homepage, http://waysandmeans.house.gov, select ‘‘Hearings.’’ Select the hearing for which you would like to make a submission, and click on the link entitled, 

‘‘Click here to provide a submission for the record.’’ Once you have followed the online instructions, submit all requested information. ATTACH your submission as a 

Word document, in compliance with the formatting requirements listed below, by 

the close of business on Thursday, April 26, 2018. For questions, or if you encounter technical problems, please call (202) 225–3625. 

FORMATTING REQUIREMENTS: 

The Committee relies on electronic submissions for printing the official hearing record. As always, submissions will be included in the record according to the discretion of the Committee. 

The Committee will not alter the content of your submission, but we reserve the right to format 

it according to our guidelines. Any submission provided to the Committee by a witness, any materials submitted for the printed record, and any written comments in response to a request for 

written comments must conform to the guidelines listed below. Any submission not in compliance with these guidelines will not be printed, but will be maintained in the Committee files 

for review and use by the Committee. 

All submissions and supplementary materials must be submitted in a single document via 

email, provided in Word format and must not exceed a total of 10 pages. Witnesses and submitters are advised that the Committee relies on electronic submissions for printing the official 

hearing record. 

All submissions must include a list of all clients, persons and/or organizations on whose behalf 

the witness appears. The name, company, address, telephone, and fax numbers of each witness 

must be included in the body of the email. Please exclude any personal identifiable information 

in the attached submission. 

Failure to follow the formatting requirements may result in the exclusion of a submission. All 

submissions for the record are final. 

3 

The Committee seeks to make its facilities accessible to persons with disabilities. 

If you are in need of special accommodations, please call 202–225–1721 or 202–226– 

3411 TDD/TTY in advance of the event (four business days’ notice is requested). 

Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above. 

Note: All Committee advisories and news releases are available at 

http://www.waysandmeans.house.gov

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/ 

Chairman BRADY. Good morning. The Committee will come to 

order. When it comes to trade, how do you avoid punishing Americans for China’s misbehavior? Does even the prospect of potentially 

higher tariffs damage our U.S. economy and harm our local farmers and businesses? Especially now that due to President Trump, 

we have one of the most pro-growth tax codes in the world. 

Today we will hear from a wide range of local American job creators about the real-world impact of increased tariffs and how to 

ensure that trade enforcement, which is important, does not inflict 

collateral damage on hard-working American manufacturers, farmers, and families. 

We will focus specifically on the U.S. tariff increases relating to 

the Section 232 action on steel and aluminum, which took effect on 

March 23. We also want to hear about the proposed tariff increases 

related to the Section 301 investigation into China’s aggressive 

theft of America’s intellectual property and technologies. 

We will also discuss the ongoing processes that determine how 

and when tariffs are imposed, including the country-by-country and 

product-by-product exclusions for steel and aluminum, as well as 

your thoughts about the effects of retaliation against our made-inAmerica products and services being sold abroad. 

We will start from common ground. It is clear that China’s dishonest and unfair trade practices are hurting the American economy and costing us thousands of jobs here at home. The President 

is right to take a hard line against China’s predatory policies in 

significant trade violations, including the theft of American intellectual property and policies compelling American businesses to 

hand over their most valuable technology to Chinese competitors. 

These severe trade abuses have gone on for too long and cannot 

be allowed to continue. The challenge for every president, however, 

is how to change China’s behavior and punish it if necessary, without harming our families, businesses, and farmers. 

We know that tariffs are, after all, taxes, and will ultimately be 

passed on to consumers. And like taxes, they also curtail economic 

growth, discourage new investment, delay new hiring, and put 

American workers at a huge disadvantage to foreign competitors. 

The mere threat of potential tariffs can stunt the economic momentum of the new Tax Cuts and Jobs Act. 

In Texas, manufacturing in February was booming. But factories 

cut production growth by more than half in March due to concerns 

over higher costs from the potential steel and aluminum tariffs. 

Worldwide economic growth is on the verge of finally bursting out 

of a decade of stagnation, but now is pulling back on fears of a significant trade dispute. 

4 

Back home, in my district, one of our manufacturing plants in 

the oil field services industries was planning to grow by up to 500 

more jobs as energy recovers, but now could face job layoffs if their 

fairly-traded steel is not excluded and they lose sales to foreign 

competitors. I appreciate the President has put in place a process 

to exclude products like this and give all sides in this trade dispute 

ample time to resolve it. 

I cannot think of a better way to address these challenges than 

to get input directly from U.S. stakeholders. That is exactly what 

we are doing today. Our panel today brings a broad range of perspectives, and we are looking forward to hearing from all of you. 

Over the last several weeks, many of you have experienced—and 

some for a longer term—the effects of China’s unfair trade practices or the impact of tariffs on steel and aluminum, whether as a 

steel producer, a user of steel or aluminum, or an exporter facing 

retaliation. And although Section 301 tariffs have not been imposed, many of you certainly also experienced market effects of the 

proposed U.S. tariffs and proposed retaliation by China. 

I continue to believe it is vitally important for us to use a targeted approach in enforcing our trade laws, whether it is Section 

232 or Section 301 tariffs. China’s distortions to the steel and aluminum market and its IP theft and forced technology demands are 

global problems that ultimately require global solutions. We should 

work as closely as possible with our allies, we should never create 

disincentives for our allies to join us in taking strong action. The 

world, not just the United States, must stand up to China’s unfair 

trade practices. 

In addition, we must make sure that those who would be hurt 

by tariffs have a full opportunity to make their case and to seek 

an exclusion for fairly-traded products. I remain committed to 

working with President Trump and the White House on strong and 

forceful trade policies that will target bad actors and encourage 

economic growth here at home. At the same time, we must avoid 

unintended consequences that hurt Americans. 

Finally, it is in everyone’s best interest to find a path forward 

with respect to fair trade. Today and throughout the coming 

months, we will continue to listen to our constituents and our job 

creators across the country to make sure we take their concerns 

into account each step of the way. 

And now I yield to the distinguished Ranking Member, Mr. Neal, 

for the purposes of his opening statement. Mr. Neal. 

Mr. NEAL. Thank you, Mr. Chairman. Today’s hearing is an important opportunity to discuss the tariffs that the Administration 

has started imposing recently as a result of its Section 232 investigations, and the tariffs that the Administration has announced 

that it will impose as part of its Section 301 investigation. 

Discussing the impact of these tariffs on the U.S. economy and 

jobs is obviously important for us to hear from our stakeholders 

about the process that the Administration has established for finalizing and implementing the tariffs to ensure that they are fair, 

transparent, and effective. It seems just as obvious to me that in 

discussing these tariffs, we also need to talk about what these tariffs are intended to accomplish and whether we think the tariffs 

will be successful in accomplishing their intended goals. 

5 

It is important to keep in mind that the reasons for both Section 

232 and Section 301 investigations that are leading to this discussion about tariffs are China’s unfair trade practices that undercut 

American workers and businesses. Section 232 investigations determined that global steel and aluminum imports are threatening 

U.S. national security. Our producers and workers in these two industries have been seriously hurt by global overcapacity and the 

crisis it has created. 

It is no secret that China has been the leading driver of this 

challenge. The Chinese government owns many of the steel firms 

in China and has provided massive government subsidies to many 

of the firms that it does not outright own. As a result, China has 

started producing steel and aluminum at a pace that is simply not 

based on economics and fair competition. China now produces 

about half of the world’s entire supply of steel and singlehandedly 

produces as much steel as the entire world did in 2000. 

During that same timeframe, the U.S. share of global production 

has been cut in half. China’s aggressive, state-sponsored economic 

intervention goes beyond just the steel and aluminum sectors. As 

the USTR Section 301 investigation report has already documented, China’s government has used its economic and political leverage over a sustained period of time to extort, force, or outright 

steal intellectual property and technology from American innovators. 

I have heard the stories of individual inventor small businesses 

that—and of our largest multinational corporations and our intelligence community about the harmful impact that these IP-related 

policies have had on the U.S. economy and our national security. 

Now we are in a situation where the Administration has decided 

to respond to both of these problems, or at least in part, through 

tariffs. 

In the case of the Section 232 steel and aluminum tariffs, this 

logic is pretty direct. Tariffs could, if implemented and designed 

thoughtfully, bring about a recovery of U.S. steel and aluminum 

production. In the case of the Section 301 proposed tariffs, the logic 

is less direct. It seems that for the Administration, these tariffs are 

intended to be used as leverage to bring about changes in China’s 

practices, or to recalibrate the U.S.-China trading relationship. 

In both cases, the tariffs will bring disruption to the U.S. economy, and the tariffs certainly will raise costs for some, disrupt supply chains, and they are also likely to provoke threats of retaliation 

and real retaliation from countries like China. The key policy question that we are grappling with now is whether the Administration 

has a plan to use these tariffs effectively. It seems to me that after 

today’s hearing, we should seriously consider holding another hearing specifically on trade—China’s trade strategy. 

I look forward to hearing from our witnesses today, and if I could 

sum up what I think would be a general—a context of this hearing 

this morning, I think our goal is pretty clear, and that is to push 

China to the precipice, but in terms of a trade war, not over the 

edge. It is but a delicate balancing challenge that we all have, so 

I thank you, Mr. Chairman. 

6 

Chairman BRADY. Thank you, Mr. Neal. And without objection, 

other Members’ opening statements will be made part of the 

record. 

Today’s witness panel includes seven experts. First, I would like 

to offer a special welcome to Kevin Kennedy, President of Kennedy 

Fabricating, a great family-owned business in Splendora, Texas. It 

employs hundreds of my constituents. John Wolfe is the Chief Executive Officer of Northwest Seaport Alliance. Roger Newport is the 

Chief Executive Officer of AK Steel Corporation. John Heisdorffer 

is President of the American Soybean Association. Calvin Dooley is 

a former Member of the U.S. House of Representatives and President and Chief Executive Officer of the American Chemistry Council. Ann Wilson is Senior Vice President of Motor & Equipment 

Manufacturers Association, and Scott Paul is President of the Alliance for American Manufacturing. 

The Committee has received your written statements. They will 

all be made part of the formal record. We have reserved 5 minutes 

to deliver your oral remarks, and we will begin with Mr. Kennedy, 

who hails from the home of the Splendora Wildcats in the 8th congressional district of Texas. Welcome and, Mr. Kennedy, you may 

begin when you are ready. 

STATEMENT OF KEVIN KENNEDY, 

PRESIDENT, KENNEDY FABRICATING, LLC 

Mr. KENNEDY. Thank you. Chairman Brady, Ranking Member 

Neal, other distinguished Committee Members, I want to thank 

you for allowing me to discuss the impact of the Section 232 tariffs 

on our business. Well, the impact is that it is already shifting our 

jobs and work outside of the United States. What was presented as 

a tariff on foreign steel has effectively become a tax on U.S. manufacturers like us. 

My name is Kevin Kennedy. I am the President of Kennedy Fabricating, a steel fabrication business in Splendor, Texas. My father, 

Odie Kennedy, founded our company 30 years ago with one employee. We now employ 350 people in a town of less than 2,000. We 

fabricate the products that make up our country’s infrastructure: 

things like drilling rigs, cell phone towers, commercial buildings, 

pipelines, and industrial plants. We are the ones that buy the steel 

that our U.S. mills produce. 

In the last decade, we have grown our business over 40 times. 

That is not common in U.S. manufacturing these days. We are 

proof that American manufacturers can compete and win against 

cheaper foreign labor. There are lots of examples I could give of obstacles we have faced and overcome as a business if time would 

permit, but that is not why I am here. 

Today I am here to discuss an obstacle put in front of us that 

really no U.S. manufacturer should have to face. We face the challenge of our own government subsidizing foreign manufacturers at 

our expense by giving them a huge cost advantage through the Section 232 steel tariffs. See, these tariffs practically eliminated steel 

imports overnight, and without the competition, U.S. steel producers have already raised prices over 40 percent. 

So a 25 percent tariff has led to a 40 percent price increase. This 

extra 40 percent that we pay means that a company in China can 

7 

now buy a raw steel beam from a Chinese mill at a 40 percent discount to us. They can drill some holes in it and ship it to the 

United States as a fabricated beam without a tariff. So China’s still 

making beams, they are just using a loophole to get them here. 

And this is why the AISC recommends that fabricated steel also be 

covered by the tariff. 

And it is not just China that is winning. One of our Canadian 

competitors, Canada, just went from losing projects to us to now 

winning projects at our expense. Because they can import the same 

steel from China without a tariff and buy it 40 percent cheaper 

than we can buy it from our own domestic suppliers. They can 

build their structures and ship them to our U.S. customers, having 

never paid a tariff. And this scenario is not a hypothetical scenario. 

This one has already actually happened, and it has cost us millions 

of dollars in work. 

You know, up until now, we were an exporter. We have been 

manufacturing driller rigs for years and exporting them to countries like India, Russia, even Mexico. That is not the case now. We 

went from exporting to having the U.S. Government force our U.S. 

customers to import the products we make from all of our foreign 

competitors. You know, they would buy them from us if these tariffs hadn’t made it so expensive. 

And it has been said that these tariffs are not significant to 

downstream prices. Well, that may be true for those things that 

only have a small steel component to them—canned beverages, 

Boeing 777s—but it is not true for what we make. The raw steel 

targeted with these tariffs makes up half the cost of our products. 

And our customers will not pay for a 40 percent increase, at least 

that is what they have told us. And our lack of new orders recently 

confirms it. 

You know, we understand, we want to protect the U.S. steel producers from unfair competition. The producers that are here today, 

they will likely attempt to explain how these tariffs have already 

increased demand and added jobs, and it sounds nice and everybody feels great, but that is definitely temporary. 

Because that demand spike was actually from us, people like us, 

other manufacturers. See, we tried to buy all the steel we could 

right away as soon as the tariffs were announced, even right before. Because we had existing projects, so we wanted to buy all the 

steel we could before the prices skyrocketed, because inevitably, we 

knew they would. But those projects already existed. And with 

these tariffs, new projects will go elsewhere. 

Who is going to buy the U.S. steel that our mills produce if our 

government forces our customers to go abroad and buy the steel 

prefabricated? Now, people may try to say that that is not going 

to happen, but I am here to confirm it is already happening. For 

30 years, our company has adapted to obstacles. But the transfer 

of our jobs and customers across our borders at the directive of our 

government is the one obstacle to which we cannot adapt. 

So who wins with Section 232? Well, not U.S. manufacturers. Not 

our workers. We both lose. If a healthy steel-producing industry is 

in our national security interest, then do not the producers need 

someone to buy the steel? That is supposed to be us. It is—— 

[The prepared statement of Mr. Kennedy follows:] 

8 


33810A.001

WRITTEN TESTIMONY OF KEVIN KENNEDY, PRESIDENT OF KENNEDY FABRICATING, LLC 

HOUSE COMMITTEE ON WAYS AND MEANS 

HEARING ON U.S. SECTION 232 STEEl TARIFFS 

THURSDAY, APRIL 12, 2018 

Chairman Brady, Ranking Member Neal, and other distinguished committee members, I want to thank 

you for allowing me to discuss the impact of the Section 232 tariffs on our business. The tariffs are already 

causing our jobs and work to shift to competitors outside our borders and will continue to do so until 

action is taken. What was presented as a tariff on foreign steel producers has effectively become a tax on 

US manufacturers like us. 

My name is Kevin Kennedy, and I am the President of Kennedy Fabricating, a steel fabrication business in 

Splendora, TX. The structural steel industry in the U.S. employs over 200,000 people in 2,300 businesses 

of which 1, 700 are fabricators like us. These companies are the very essence of American small business. 

My father, Odie Kennedy, founded our company over 30 years ago with one employee. Through many 

years of hard work, perseverance, and divine providence, we now employ 350 people in a town of less 

than 2,000. We fabricate steel for a wide array of end uses that make up the country's infrastructure: 

drilling rigs, cell towers, commercial buildings, pipelines and industrial plants. In this decade alone, we 

have grown revenue over 40x. We are proof that American manufacturers can still compete in a world of 

cheap foreign labor. We exist today primarily because of our ability to adapt to and overcome the many 

challenges that private businesses face. 

Kennedy Fabricating has encountered a number of obstacles in our life as a business and we have 

successfully overcome all of them. When the recession of 2008 caused US manufacturing jobs to 

plummet, we adapted and grew 20% by competing in new markets. When the incoming workforce did 

not have the necessary technical skills, we adapted by partnering with our local high school in a training 

program for welders. The school went from never producing a certified welder, to producing 15 in one 

year. 

There are plenty of other examples I could give of obstacles we have faced and overcome if time would 

permit. Today, however, we are presented with an insurmountable obstacle that no U.S. manufacturer 

should have to face. We face the challenge of our own government effectively subsidizing foreign 

manufacturers at our expense by giving them a significant cost advantage through the Section 232 Steel 

Tariffs. These tariffs have eliminated imported steel overnight, and without any competition, U.S. steel 

producers have raised prices over 40%. Why should we pay 40% more here than our foreign competitors 

pay in their countries? This means that a company in China can now purchase a raw steel beam from a 

Chinese mill at a 40% discount, drill two holes in it, and ship it to the U.S. as a fabricated good without a 

tariff. This is a major loophole, and it needs to be addressed. It is the very reason why the American 

Inst itute of Steel Construction (AISC) recommended that fabricated steel also be covered by the tariff. 

And it's not just China. One of our Canadian competitors just went from a position of losing projects to us, 

to now winning projects at our expense, because they can import raw steel to Canada without a tariff and 

purchase it 40% cheaper than we can from our own domestic suppliers. They can then build their 

structures and ship them to our U.S. customers having never paid a tariff. This specific example has 

already cost us millions of dollars in work. Work we needed in order to maintain our business and 

employees. So who wins? 
9 

f 


33810A.002

Before today, we were an exporter. We were competitive enough to manufacture drilling rigs and export 

them to countries like India, Russia, and even Mexico. Not so today. We went from exporting our 

products to international buyers, to having the U.S. government force our U.S. customers to import the 

products we make from our foreign competitors. Again, who wins? 

It's been said that the tariffs are insignificant to "downstream" prices. That may be debatable for some 

items like cars, planes, and high end equipment, but not for fabricated steel. The raw steel targeted with 

these tariffs makes up almost half the cost of many products in our industry, and our customers will not 

pay for such an increase. They've said as much, and our lack of new orders confirms it. This begs the 

question. Who wins? 

We don't need our government to remove the obstacles that our business encounters. We have a 30· 

year track record proving our ability to adapt and overcome those. We do however, need our government 

to stop creating obstacles through practices that serve to aide our foreign competition at the expense of 

US jobs. 

We understand that these tariffs are an attempt to protect U.S. Steel producers from unfair competition. 

But who will be here to buy the U.S. steel they produce if our government forces our customers to go 

abroad for their fabricated goods? Remember, we've always adapted. For 30 years we've adapted. But, 

the transfer of our jobs and customers across our borders at the directive of our government is the one 

obstacle to which we cannot adapt. So who wins? Not US manufacturers and not US workers. We both 

lose. Is our national security interest truly served by having the ability to produce raw steel but no 

manufacturers to actually buy it? It is time to reconsider the Section 232 Tariffs, in their current form they 

do more harm than good. 

Thank you for allowing me to testify before you. The ability to have our voices heard by our elected 

officials is an invaluable testament to the strength of our democracy. 

Sincerely, 

Kevin Kennedy, President 

Kennedy Fabricating, LLC 
10 

Chairman BRADY. Mr. Kennedy, I apologize, that 5 minutes 

goes fast in Washington, D.C. We will continue the discussion in 

a moment. 

Mr. Wolfe, you are recognized for 5 minutes. 

STATEMENT OF JOHN WOLFE, CHIEF EXECUTIVE OFFICER, 

NORTHWEST SEAPORT ALLIANCE 

Mr. WOLFE. Thank you, Chairman Brady, Ranking Member 

Neal, and Members of the Committee, for inviting me to testify on 

the effects of U.S. tariff policy on the economy and jobs today. I 

also want to offer a special thanks to Subcommittee on Trade 

Chairman Reichert, and to Representative DelBene for their support of strong trade policies that contribute so much to the success 

of Washington State’s economy. 

The Northwest Seaport Alliance is a marine cargo operating 

partnership of the ports of Tacoma and Seattle, and the fourthlargest container port complex in the country. I am also here on behalf of the Port of Seattle’s Seattle-Tacoma International Airport, 

which includes a thriving international cargo facility. 

We are deeply invested in U.S. trade policy discussions because 

they directly impact our core business, the success of our customers 

and the lives of our local residents. Our marine cargo operations 

in the Seattle and Tacoma harbor support more than 48,000 jobs, 

while Sea-Tac air cargo operations help create over 5,200 jobs. The 

Port and the Northwest Seaport Alliance gateways are truly national assets, with more than 60 percent of the goods imported 

through the Northwest Seaport Alliance destined for the rest of the 

country. For example, $2.5 billion in imports of industrial and electric machinery move through our ports to Illinois, while Ohio and Indiana 

respectively import $1.9 billion and $1.2 billion worth of these 

products through our ports. This is true for exports as well. Last 

year, our gateways sent $1.89 billion in soybeans to China, yet 

none are grown in the State of Washington. 

Our success as an airport and seaport gateway is inextricably 

linked to China. Last year, more than $27 billion in imports from 

China came through Seattle and Tacoma cargo terminals, with an 

additional $1.1 billion in imports from China via Sea-Tac. In addition, almost $5 billion in exports to China traveled through our 

cargo terminals in 2017, plus another $2.2 billion in exports to 

China through Sea-Tac. 

Creating a fair and level playing field for our U.S. exporters competing in the global economy is one of the most important goals of 

U.S. trade policy. From opening new markets through trade agreements to enforcing existing trade rules, we all win when American 

businesses and entrepreneurs can sell more goods to more people 

throughout the world. There is clearly more that must be done to 

achieve that goal, and I think it is fair to say that the only debate 

we are having in this country is regarding what are the best tactics 

to achieve our desired outcome. 

While there are justifiable concerns about China’s trade practices, we continue to believe that productive engagement and negotiations are the best path to ensuring a fair and level playing field 

for mutually beneficial trade. The United States must be clear on 

11 

the desired remedy sought, and then tariffs should be a measure 

of last resort that are narrowly targeted to address a problem and 

minimize the unintended impacts on Americans. 

While it is impossible to truly estimate the impacts of these tar- iffs, roughly $8 billion in two-way trade through our airport and 

seaport will potentially face some level of increased tariff. The 

American Association of Port Authorities estimates that for every 

$1 billion in exports shipped through the U.S. seaports, 15,000 jobs 

are created. And conversely, it is likely true as well, which means 

that this $8 billion in trade likely represents 120,000 jobs. 

Cherries are a good example of this potential impact. The North- west cherry harvest creates an estimated 19,000 jobs and $540 million in economic impact. About 30 percent of this crop is exported, 

and the majority shipped through air through Sea-Tac airport. 

China is the top export market for Washington cherries, buying 2.9 

million cases valued at $127 million each year. If the Chinese market is closed to these exporters, they are going to have a very difficult time finding alternative markets for their seasonable perishable crop. 

In closing, as a large gateway for two-way trade, the Port of Seattle and the Northwest Seaport Alliance are deeply invested in 

U.S. trade policy discussions because they impact our core business. We believe that over the long term, we must continue to advocate loudly and consistently for new market access opportunities 

throughout the globe. Thank you again for the chance to participate in today’s hearing, and I look forward to responding to your 

questions. 

[The prepared statement of Mr. Wolfe follows:] 

12 


33810A.003

THE NORTHWEST SEAPORT ALLIANCE 

Testimony of John Wolfe 

CEO, Northwest Seaport Alliance 

United States House Ways and Means Committee 

April12,2018 

Thank you, Chairman Brady, Ranking Member Neal, and members of the Committee 

for inviting me to testify on the effects of U.S. tariff policy on the economy and jobs 

today. I also want to offer special thanks to Subcommittee on Trade Chairman 

Reichert and to Representative DelBene for their support of strong trade policies 

that contribute so much to the success of Washington state's economy. 

The Northwest Seaport Alliance (NWSA) is a marine cargo operating partnership of 

the ports of Tacoma and Seattle, formed four years ago to maximize the 

competitiveness of our region's global gateway. The first of its kind in North 

America, the NWSA is the fourth -largest container port complex in the country. I am 

also here to speak to one of the other major facilities operated by the Port of Seattle, 

which is Seattle-Tacoma International Airport (Sea-Tac); in addition to being the 91

h 

busiest passenger airport in the country, Sea-Tac is a thriving air cargo facility, with 

significant international trade flows. 

As large gateways for two-way trade, the Port of Seattle and the Northwest Seaport 

Alliance are deeply invested in U.S. trade policy discussions because they impact our 

core business, the success of our customers and the lives of our local residents- all 
13 


33810A.004

Wolfe Ways and Means Testimony 

April 12, 2018 

in direct and tangible ways. The most recent economic impact study found that the 

marine cargo operations in our Seattle and Tacoma harbors supported more than 

48,000 jobs, generated nearly $4.3 billion in economic activity and produced $379 

million in state and local taxes to support education, police, fire services and road 

improvements. Similarly, Sea-Tac's air cargo operations now support over 5,200 jobs 

and over $1.2 billion in business revenues. 

These are two examples of what makes Washington state the most trade dependent 

economy in the country, with 40% of all jobs tied to international trade. Notably, 

about a quarter of those jobs are created by imports- whether it be the 

transportation and logistics companies who carry cargo from our ports to the rest of 

the country; the headquarters jobs at the companies in our state who rely on global 

supply chains for their success; or the retailers and manufacturers that use imports 

as inputs into their end products, many of which are then exported. For example, the 

Boeing Company employs tens ofthousands in our state, using parts from 

throughout the globe to assemble airplanes- 80-90% of which are then sold to 

foreign customers. And so, trade restrictions and retaliatory tariffs that lead to 

decreased two-way trade put our state's economy at risk in multiple ways. 

The Sea-Tac and NWSA gateways are not only part of a global supply chain used by 

local businesses and consumers, but are also truly national assets that benefit 

stakeholders throughout the country. More than 60% of the goods imported through 

the NWSA are destined for parts ofthe country outside the Pacific Northwest, and 

44% of imported goods go specifically to states in the Midwest; our gateways are 

critical for the supply chains of U.S. businesses nationwide. To cite a few specific 

2 
14 


33810A.005

Wolfe Ways and Means Testimony 

April 12, 2018 

examples, $2.5 billion in imports of industrial and electric machinery move through 

our ports into Illinois, while Ohio and Indiana respectively import $1.9 billion and 

$1.2 billion worth of these products through our ports. Similarly, NWSA handles $3.5 

billion worth of imported auto parts ($464 million from China alone), most of which 

supply our country's major automotive manufacturers in the Midwest with the 

materials they need to make cars and trucks for American consumers. This 

integrated national system is true for exports as well, with businesses from almost 

every single state in the country using our facilities to access foreign markets. For 

example, soybeans are the top agricultural export out of our state, yet none are 

grown in Washington; last year, our gateway sent $1.89 billion in soybeans to China 

alone. 

Our success as an airport and seaport gateway is inextricably linked to our 

relationship with China. They are the top source of imports for the NW Seaport 

Alliance, the destination for 28.5% of seaport exports, and the number one market 

for exports through Sea-Tac. Last year, more than $27 billion in imports from China 

came through Seattle and Tacoma cargo terminals, with an additional $1.1 billion in 

imports from China via Sea-Tac International Airport. In addition, almost $5 billion 

in exports to China travelled through the Seattle and Tacoma cargo terminals in 

2017, plus another $2.2 billion in exports to China through Sea-Tac. These stats do 

not include the international travel through our airport that is related to the 

facilitation of this goods trade; in the past five years, Sea-Tac has seen the number 

of travelers to and from mainland China increase by 123%, to more than 330 

thousand travelers. 

3 
15 


33810A.006

Wolfe Ways and Means Testimony 

April 12, 2018 

Creating a fair and level playing field for U.S. exporters to compete successfully in 

the global economy is one of the most important goals of U.S. trade policy, and I 

want to thank this committee for its consistent and passionate focus on that work. 

From opening new markets through trade agreements to enforcing existing trade 

rules, we all win when American businesses and entrepreneurs can sell more goods 

to more people throughout the world. There is clearly more that must be done to 

achieve that goal- and I think it is fair to say that the only debate we are having in 

this country is regarding what are the best tactics to achieve our desired outcome. 

That is why- while there are justifiable concerns about China's trade practices -we 

continue to believe that productive engagement and negotiations are the best path 

to ensuring a fair and level playing field for mutually beneficial trade with China. It 

is essential that the U.S. be clear on the exact practices that are objectionable as 

well as the desired remedies sought from China. Furthermore, enforcement actions 

such as tariffs should be a measure of last resort, and when necessary, be carefully 

and narrowly targeted to address the problem and minimize the unintended impacts 

on American producers and consumers. We are concerned that the proposed Section 

232 and Section 301 tariffs do not yet meet either of these criteria. 

Our concerns over these tariffs are not limited to our own operations, but also the 

impacts on the businesses throughout our region and state that depend on trade 

with China for their success. In addition to the 48,000 jobs mentioned above, 

443,000 more people in our state work for businesses that use our facilities, mostly 

importers and exporters who ship through the NWSA to access overseas markets and 

global supply chains. In particular, Washington currently leads the nation in the 

4 
16 


33810A.007

Wolfe Ways and Means Testimony 

April 12, 2018 

percentage of small businesses that engage in exporting, meaning that these 

increased costs and potential lost market opportunities could hit those employers in 

our state who can least afford it. As we watch the back and forth escalation of 

retaliatory tariffs between the U.S. and China, it is Washington state businesses and 

consumers who will see increased costs, and it is our farmers, ranchers, retailers 

and manufacturers who are at risk for reduced exports of everything from airplanes 

to apples. 

While it is impossible to truly estimate the impact of the Section 232 and 301 tariffs 

-especially as their size and breadth continue to evolve- we have done an initial 

analysis based on the items that have been publicly announced by the U.S. and 

China. For our airport and seaport, roughly $8 billion in two-way trade through our 

airport and seaport will potentially face some level of increased tariff: approximately 

$5.8 billion in imported goods and $2.2 billion in exported products. How those 

additional costs will affect supply and demand is yet to be seen, but a useful rule of 

thumb is the American Association of Port Authorities' estimate that- for every $1 

billion in exports shipped through U.S. seaports- 15,000 jobs are created; the 

converse is likely true as well, which means that this $8 billion in trade theoretically 

represents 120,000 jobs. 

To put a specific face on this challenge, we can look to cherries, for which our state 

is the biggest producer in the United States. The Northwest cherry harvest creates 

an estimated 19,000 jobs and had a local economic impact of roughly $540 million in 

2016. About 30 percent of this crop is exported, a majority shipped by air through 

Sea-Tac. In the month of July each year, our air cargo volumes can be five times 

5 
17 

f 


33810A.008

Wolfe Ways and Means Testimony 

April 12, 2018 

higher thanks to these shipments. China is the top export market for Washington 

cherries, buying 2.9 mHlion cases worth $127 million each year. If the Chinese 

market is closed off to them, they are going to have a very difficult time finding 

alternative markets for that much volume, leading to rotting fruit, wasted effort and 

lost jobs. 

lfthe United States does continue with these Section 232 and Section 301 tariffs, we 

encourage the Administration and Congress to consider ways to mitigate the impact 

on U.S. exporters and importers. If U.S. businesses are being incentivized to shift 

their global supply chains away from China, this does not happen overnight and it 

involves significant cost. Similarly, our exporters cannot easily find new customers if 

existing ones are lost. There must be short term remedies to help those like our 

farmers who cannot afford to delay their shipments and our small businesses who 

risk loss of long-term contracts. Long-term, we must continue to advocate loudly 

and consistently for new market access opportunities throughout the globe. It has 

been over six years since the last U.S.-signed trade agreement entered into force, 

while some of our largest competitors have dozens of new such agreements that not 

only advantage their products but disadvantage ours. 

More than 95% of all consumers live outside our country, and we are committed to 

working with the Trump Administration and Congress to create more and better 

opportunities in the global economy. Thank you again for the chance to participate 

in today's hearing, and I look forward to responding to your questions. 

6 
18 

Chairman BRADY. Thank you, Mr. Wolfe. 

Mr. Newport, you are recognized. 

STATEMENT OF ROGER K. NEWPORT, 

CHIEF EXECUTIVE OFFICER, AK STEEL CORPORATION 

Mr. NEWPORT. Thank you, Chairman Brady, Ranking Member 

Neal, and Members of the Ways and Means Committee. I am Roger 

Newport, Chief Executive Officer of AK Steel, and I thank you for 

the opportunity to testify on behalf of our 9,200 employees. 

I have worked at AK Steel for 33 years and have seen first hand 

the challenges confronting the domestic steel industry because of 

unfair trade. At no time in our history have those challenges been 

more severe than in the last 3 years, during which unfairly-traded 

imports spiked to record highs. While finished steel imports grew 

to an average of 27 percent of the U.S. market over that time, 

America’s steel mills operated less than 75 percent full. 

The domestic steel industry has been fighting back through trade 

cases, but the import surge has continued and has only increased. 

Countries not subject to the trade case orders rushed in with their 

dumped and subsidized imports and continue to injure the U.S. 

steel manufacturers and threaten our national security interests. 

Recognizing the global reality we now face and the inadequacies 

of our trade laws to address it, President Trump took the bold action to impose tariffs on foreign steel under Section 232, and we 

fully support those actions. AK Steel makes carbon, stainless, and 

electrical steels. However, we are the last U.S. producer of grainoriented electrical steel, or GOES. Our facility in Butler, Pennsylvania, located in Congressman Kelly’s district, is the only facility 

in all of North America that melts this electrical steel. 

GOES is the critical component in the cores of transformers that 

move electricity across the entire grid and deliver power to our 

homes and businesses. Damage to this infrastructure would threaten America’s national security and the economy. Thus, it is imperative that we have a domestic electrical steel supply chain that can 

react quickly following a natural disaster or terrorist attack. 

I think it is important to put into context what some are calling 

a new trade war. The reality is that China has been fighting to 

take out the American steel industry for many years, and electrical 

steel provides a great example. Prior to 2009, AK Steel had a 

healthy export business of electrical steel to China. But China 

slapped illegal duties on GOES products. By the time the WTO declared those duties illegal many years later, China had already 

flooded the global market with cheap, subsidized electrical steel. 

In 2013, we filed trade case petitions against imports of GOES 

from 7 countries, including China, Japan, and Korea. The Department of Commerce ruled that GOES from these countries was 

being sold unfairly in the United States, however, the ITC ruled 

against the domestic industry. This decision was wrong, as imports 

of GOES have only continued to surge, and forced the only other 

U.S. manufacturer to exit the market altogether in 2016. 

Last year, imports of GOES nearly doubled compared to 2016. 

That is why tariffs under Section 232 are essential. It is important 

to understand, however, that trade relief must not apply only to 

electrical steel, but to downstream products like cores, core assemVerDate Sep 11 2014 10:24 Mar 25, 2019 Jkt 033810 PO 00000 Frm 00022 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\33810.XXX 33810
19 

blies, and transformers. Core-making is simply cutting a coil of 

electrical steel into sheets and stacking it or winding it into a core. 

As such, it is easy and inexpensive to set up these minor processing 

facilities outside of the United States in order to simply evade a 

trade remedy. 

In fact, imports of cores and assemblies in 2017 increased two to 

six times the 2016 levels. These imports came primarily from Canada and Mexico, where they make no GOES products. This shows 

that producers will import semi-finished products in order to evade 

any remedy on GOES. Similarly, our so-called allies, Korea and 

Japan, have dramatically increased their shipments of GOES in 

the first quarter of this year. 

Korea has already shipped as much GOES in the first 3 months 

of 2018 as they shipped in total for the 5-year cumulative period 

of 2012 to 2016. Thus, any significant increases in imports over historical norms must be taken into account if the Administration is 

to achieve its goal of bringing the domestic steel industry to at 

least 80 percent of capacity. 

While the steel industry has taken the brunt of unfair trade over 

the last several decades, no industry is immune, as we have seen 

with washing machines, solar panels, and many other manufactured products. That is why this Administration is to be commended. We must fight back to make American manufacturers 

stronger here in the United States, given how critical it is to our 

economy in ensuring Americans have jobs with family-sustaining 

wages that contribute to the health, our local economies, and our 

communities across this great country. Thank you. 

[The prepared statement of Mr. Newport follows:] 

20 


33810A.009

At AKSteel 

Testimony of Roger K. Newport 

Chief Executive Officer, A K Steel Corporation 

House Ways and Means Committee 

Hearing on the Effects of Tariff Incr eases on the U.S. Economy aud J obs 

ApriJ 12, 2018 

Thank you, Chairman Brady, Ranking Member Neal, and members of the Ways and Means 

Committee. 

I am Roger Newport. CEO of AK Steel. I want to thank you for holding this hearing and 

for inviting me to testify on behalf of our 9,200 AK Steel employees. AK Steel is 

headquartered in West Chester, Ohio and its domestic operations include e ight steelmaking 

and finishing plants, two coke plants, a metallurgical coal production facility, automotive 

tooling and stamping facilities, and two tube manufacturing plants across Indiana, 

Kentucky, Michigan, Ohio, Pem1sylvania, Alabama, and West Virginia. Approximately 

6,500 AK Steel employees are represented by labor unions, including the United 

Steelworkers, United Auto Workers, and the International Association of Machinists. 

AK Steel has a proud heritage that spans over 119 years. Over the past century, we have 

been a leader of innovation in the steel industry, including being the first manufacturer of 

grain oriented electl·ical steel, or GOES, as we refer to it, a key material for the nation's 

electric grid. I am proud to say that I have worked at AK Steel for 33 years, but I have also 

seen first-hand the challenges confronting the domestic steel industry because of unfair 

trade over the last several decades. At no time in our history have those challenges been 

more severe than the past three years during which unfairly traded imports have grown to a 

record level of the U.S. market. While finished steel imports grew to an average of 27% of 

the U.S. market over that time, America's steel mills operated less than 75% full. 

Import Market Share-- Finished Steel Mill 

35 Products 

-finished Import market share 30 

25 

~n•~••~ " 20 .. 

~ 15 

10 

5 

0 

- - ~ - - - - - - - N ~ N N 8 g ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ § § § § ...... "' Source: U.S. Bureau of lhe C:!nsus and American Iron and Steellnstitule 
21 


33810A.010

The domestic steel industry has been fighting back by filing and wirming expensive drawnout trade cases during this time, but the import surge has only increased. Countries not 

subject to the orders mshed in with their dumped and subsidized imports continuing to 

injure U.S. steel manufactw·ers and threatening our national security interests. Recognizing 

the global reality we now face and the inadequacies of the trade laws to address it, 

President Trump and his Administration took bold action to impose tariffs on foreign steel 

under the Section 232 investigation, which we fully support. 

AK Steel makes carbon, stainless and electrical steels. We are, however, the last remaining 

producer of grain oriented electrical steel in the United States. Our facility in Butler, 

Pennsylvania, in Congressman Mike Kelly's district, is the only facility in all of North 

America that melts and finishes electrical steel. We also finish electrical steel in 

Zanesville, Ohio. 

Grain oriented electrical steel is the critical component in the cores of transfo1mers that 

move electricity across the entire grid and deliver power to our homes and businesses. 

Dan1age or erosion of this infrastmcttue would have a significant negative impact on 

national security and the U.S. economy, which is why it is imperative that we have a 

domestic supply chain that can react to any such occtmence. 

I think it is important to put into context what some are calling a "new" trade war. Om 

experience is that China has been fighting to undermine the American steel industry for 

many years, and our electrical steel business provides a good example. Before 2009, 

exports to China represented a significant pmt of AK Steel's sales of GOES. In 2009, 

however, China imposed unnecessary and illegal duties on GOES mmmfactured in the 

United States, effectively bming AK Steel and other producers from selling in the Chinese 

market. In response, the United States Government, at the mging of AK Steel, filed a case 

at the World Trade Organization (WTO) challenging China's baseless implementation of 

duties. In 2015, after five long years of litigation, the WTO ultimately determined tllat 

China did not meet its obligations Wlder tile WTO agreements when it imposed these duties 

on U.S.-produced GOES. Unfortunately, by that point the damage had already been done 

to U.S. exports of GOES. China used the five year period during which U.S.-made GOES 

was excluded. from the market to dramatically increase Chinese electrical steel production 

capacity. China achieved this rapid expansion through state-sponsored subsidization of the 

Chinese GOES industry, which allowed Chinese producers to sell their newfound capacity 

at prices so low that no other producers could compete. 

While U.S. steelmakers were boxed out of selling electrical steel in China, China continued 

to flood our market and other's with steel imports. In 2013, AK Steel and Allegheny 

Technologies Inc. (ATI) filed antidumping and countervailing duty petitions against 

imports of GOES from China, Czech Republic, Germany, Japan, Korea, Poland, and 

Russia. In those cases, the Department of Commerce detennined tllat GOES from these 

countries was being sold at dumped a11d subsidized prices in the U.S. market. However, 

the Intemational Trade Commission (lTC) determined that the domestic industry was 

neitl1er materially injured, nor threatened with material injury, by reason of subject imports. 

The ITC's negative determiuat.ion in 2014 was wrong, as imports of GOES have continued 

to surge, taking market share and causing tremendous injury to the domestic GOES 

industry. Among other negative consequences, this forced A TI to exit the market 

altogether in 20 16. 

2 
22 


33810A.011

In 2017, imports of GOES nearly doubled compared to their levels in 20 16, which were 

already inflated compared to historical norms. Meanwhile, numerous countries around the 

world have imposed tariffs or similar trade restraints on exports of U .S.-made GOES. For 

example, the European Commission enacted a 5 year minimum import price (MIP) on 

GOES imports that prohibits AK Steel from selling GOES in Europe below a certain price. 

However, the European electrical steel industry can sell GOES for less than this amount, 

enabling them to always undercut us. This illustrates why action under Sections 232 of the 

n·ade laws is essential. It is important to understand, however, that for the elecn·ical steel 

market, trade relief must apply not only to electrical steel itself, but to downstream atticles 

like cores, core assemblies and transformers as well. Core-making is simply taking a large 

coil of electrical steel and slitting it into sheets, called laminations, and stacking or winding 

them into what we refer to as a core. As such, it is very easy and inexpensive to set up 

these minor processing facilities in order to evade a trade remedy. 

After AK Steel and ATI filed a petition on i.mpotts of GOES in 2013, there was a dramatic 

rise in new core-making capacity outside of the United States, pru1icularly in Canada and 

Mexico. While the GOES case was nltimately tenninated after the ITC's negative 

determination, the core/transformer-making capacity in Canada and Mexico increased 

significrult.ly, as foreign producers continue to try to find new ways to evade ru1y relief the 

U.S. government may put in place. 

In fact, imports of cores and core assemblies in 2017 increased by 212% to 670% 

compared to 2016. These imports came primarily from Canada and Mexico, where there is 

no GOES production. In 2017, imports of cores and core assemblies were up 273% from 

Canada and 436% from Mexico when compared to 2016 import levels. 

Similarly, our so called allies, Korea and Japan, have dramatically iJ1creased their 

shipments of GOES in the frrst quarter of lh.is year. For example, according to U.S. 

licensing data, Korea has already shipped as much GOES in the frrst three months of 2018 

as it shipped, IN TOTAL over FIVE years, from 2012-2016. 

U.S. Imports of Sheels & Strip-Eieclrical- C & A 

From KOREA 

·~ ----------------~-·-·-·_'~-----~--~-~----------------~~~~ 

·~ 

·~ 

·~ 

0 

j 

IOURC:l V$ ~(lf(:O!MWf'(. (f'IIOft:Mitnllti'ICIC611'\phiiCt 

(ltlfi'II•NI'ftOOiltCIIfi...,.S,101t ~ 

Uct11-tlllt0D(OIIf<WO~Aolll$.2011 

C:Oift!MIIC.kti'IMOIUiuttOfofNI;Iti!I'IOI!IIt ... 11'1ntdd'trlniCo61t 

I)MAf)hdt(ltotfl\1\tll'tW*'IIii:W!w-t lrtii010ik4!C4orrwt 0*111 

3 
23 

f 


33810A.012

In fact, finished imports from six of the seven countries/regions with whom the U.S. is 

negotiating Section 232 agreements have increased significantly in the first quarter of2018 

compared to the first quarter of 2017. 

2018 1Q 2017 1Q o/o cbange 

Canada 1,630,35 I 1,538,698 6.0 

Mexico 650,384 583,4~0 I! .5 

Brazil 220,242 177.4 72 24.1 

Argentina 60,4!4 46,723 29.3 

EU 968,245 856,374 13.1 

Korea Repubtic 978,072 889,263 10.0 

Ausrratia 61,732 70,244 -12.1 

Source: U.S. Bureau of the Census and Americao Iron and Stee1lnstitule (VohanJes in oe1 tOl't.S. 2018 data is basOO on 

January final import volumes. Febmary preliminary lmpoi1 volumes and March slcc1 impon p¢nuil voluulC$.) 

Any significant increases in imports over historical norms must be taken into accowll in 

country exemption negotiations if the Administration is to achieve its goal of restoring the 

domestic steel industry to at least 80 percent capacity utilization. 

We encourage the Comminee and Congress ro support the actions of the Administration to 

ensure the President's steel Section 232 tariffs are effective, and that the U.S. maintains the 

ability to produce all products critical to our national security interests, including the 

electrical infrasuucture supply chain. In the case of a natural disaster or a cyber- or 

physical attack on the cou11try's electrical grid, the United States' national security cannot 

be put in jeopardy due to the absence of a domestic supply chain that supports the key 

components of the e lectrical grid. If the U.S. ends up being re liant o n foreign suppliers to 

repair a catastrophic failure of the electrical grid, the disruption to the nation's businesses 

and citizens' way of life would be Ullllecessarily long and burdensome. 

While the steel industry has taken the brunt of the unfair trade practices over the last 

several decades, no industry is immtme, as we have seen with washing machines, solar 

panels and other manufactured products. It is only a matter of time before others are 

afflicted by unfair trade. This is why this Administration is to be commended and 

supp011ed for its efforts to stand up for American workers and say e nough is enough! We 

will no longer sit idly by and be taken advantage of! We must fight back to defend our 

industry and make American manufacturing stronger, given how critical manufacturing is 

to U.S. economic growth, and ensuring that Americans have jobs with family-sustaining 

wages that contribute to the health of our local communities across this great countTy. 

4 
24 

Chairman BRADY. Thank you, Mr. Newport. 

Mr. Heisdorffer, welcome and please proceed. 

STATEMENT OF JOHN HEISDORFFER, 

PRESIDENT, AMERICAN SOYBEAN ASSOCIATION 

Mr. HEISDORFFER. Good morning, Chairman Brady, Ranking 

Member Neal, and Members of the Committee. My name is John 

Heisdorffer, and I am a soybean farmer from Keota, Iowa. I also 

grow corn and I feed 10,000 head of hogs a year. I am the current 

President of the American Soybean Association, and have been on 

the ASA board since 2010. 

ASA represents U.S. soybean farmers on policy and international 

issues. Thank you for inviting us to testify before the Committee 

today on the potential impact of Chinese tariffs on U.S. soybeans. 

I have also submitted written comments for the record. 

In 2017, U.S. farmers produced a record 4.4 billion bushels of soybeans and exported 2.3 billion bushels, valued at $27 billion. 

For the last 20 years, soybeans have contributed more to the U.S. 

trade balance than any other agricultural product. We are very 

proud of this record and of our role in helping to feed a growing 

world. 

China is the world’s largest soybean importer, buying 93 million 

metric tons of soybeans in 2016. In 2017, China imported 1.4 billion bushels of U.S. soybeans, or 62 percent of total U.S. exports. 

This represents nearly one-third of our annual soy production. Over 

the next 10 years, Chinese demand for soybeans will grow annually 

by the size of our exports to the European Union. 

Since last year, the U.S. soybean industry has been very concerned about getting into a trade war with China. This concern was 

heightened when President Trump announced his decision to impose tariffs on steel and aluminum imports. Since this announcement, ASA has raised concerns about the potential for retaliation 

from our top customers like China. ASA believes that there is room 

for our industry to grow our exports to China, and we want to focus 

on ways to expand trade instead of restricting it. 

Our fears of retaliation were confirmed after the Administration 

announced tariffs on an additional $50 billion of Chinese imports 

under Section 301, when China stated its intention to place a 25 

percent tariff on imports of U.S. soybeans and other products. With 

this announcement retaliation is no longer a ‘‘what if.’’ The prospect of an escalating trade war has already created significant uncertainty in the U.S. soybean market, and has driven up premiums 

for Brazilian soybeans from $10 to $30 per metric ton. 

ASA has partnered with the U.S. Government for decades and 

spent considerable time and money to establish foreign markets for 

U.S. soybeans. China is perhaps our most impressive success story. 

Through a long-term and comprehensive program to demonstrate 

the value of soy-based feeds, ASA and the U.S. Soybean Export 

Council helped build demand for soybeans to the level Chinese imports are today. The value of U.S. soybean imports to China has 

grown 26-fold, from $414 million in 1996 to roughly $14 billion in 

2017. 

According to a study for the U.S. Soybean Export Council conducted by economists at Purdue University, soybean exports to 

25 

China could drop dramatically if China chooses to impose a 25 percent tariff on U.S. soybeans. The Purdue study projects that China 

soybean imports from the United States would fall by 65 percent, 

total U.S. soybean exports would drop by 37 percent, and U.S. soybean production would decline by 15 percent. 

It has been argued that trade in agricultural products is fungible, and that the loss of one market to a competitor will be replaced by other markets which that competitor will no longer sell 

to. In the case of soybeans, this argument fails to recognize that 

our largest competitor, Brazil, is continuing to expand soybean production on new lands. Brazil is already the world’s largest soybean 

exporter, including to China, and would respond quickly in the 

event U.S. trade actions trigger retaliation against our soybean exports. 

In addition to the concerns of U.S. soybean farmers, other commodity producers are at risk of losing critical sales to a China market. As a result of the prospective U.S. tariffs, China has already 

retaliated against U.S. pork imports, and has threatened retaliation against sorghum, wheat, cotton, corn, and beef. Actions that 

threaten these markets have the potential to upend the farm and 

rural economy and put the livelihoods of farmers in jeopardy. 

As producers of the number one agricultural export, soybean 

farmers want to be an essential part of helping lower our trade deficit with China. We believe that expanding market access can play 

a vital role in increasing our agricultural trade surplus. We ask 

this Committee and Members of Congress to help allow soybean 

farmers to be part of the solution instead of collateral damage from 

a potential trade war. 

Chairman BRADY. Thank you, Mr.—— 

Mr. HEISDORFFER. Thank you for inviting me to testify. I look 

forward to answering your questions. 

[The prepared statement of Mr. Heisdorffer follows:] 

26 


33810A.013

•Embargoed until10am on Thursday, April12, 201a· 

Statement of Jolm Heisdorffer 

President, American Soybean Association 

before the 

Committee on Ways and Means 

U.S. House of Representatives 

April 12,2018 

Good morning, Chairman Brady, Ranking Member Neal, and Members of the Conm1ittee. I'm 

John Heisdorffer, a soybean fanner from Keota, Iowa, and President of the American Soybean 

Association. ASA is the national organization that represents U.S. soybean fanners on policy 

and international issues. We appreciate the opportuttity to appear before the Conunittee today on 

the potential impact of Chinese tariffs on U.S. soybeans. 

In 2017, U.S. fanners produced a record 4.4 billion bushels of soybeans and exported 2.3 billion 

bushels, or 52 percent, valued at $27 billion. For the last 20 years, soybeans have contTibuted 

more to the U.S. trade balance than any other agricultural prodttct. We are very proud of this 

record, and of our role in helping to feed a growing world. 

China is the world's largest soybean importer, buying 93 million metric tons of soybeans in 

2016, mostly from Brazil, the U.S. and Argenti11a. In 2017, Chi11a imported 1.4 billion bushels of 

U.S. soybeans, 62 percent of total U.S. exports and nearly one-third of our atmual soy 

production. Over the next 10 years, Chinese demand for soybeans will grow annually by the size 

of our entire export market to the EU. 

Concern about a Trade Wat· 

Since last year, the U.S. soybean industry has been very concemed about gelling into a trade war 

with China. This concem was heightened when President Trump announced his decision to 

impose tariffs of25% and 10%, respectively, on steel and a luminum imports. ASA sent a letter 

to the President on March 12 raising our concern about Chinese retaliation and asking for a 

meeting to discuss bow increasing U.S. agricultural exports can help reduce our Nation's trade 

deficit. We indicated that there is room for ns to grow our exports to China, and that we should 

be focused on ways to expand trade instead of restricting it. 

Our fears were con finned after the Administration announced tariffs on an additional $50 billion 

of Chinese imports under Section 301 when China stated its intention to place a 25 percent tariff 

on imports of U.S. soybeans and other products. With this announcement, retaliation is no 

longer a "what if." The prospect of an escalating trade war has already created significant 

uncertainty in the U.S. soybean market and has driven up premiums for Brazilian soybeans from 

$1 0 to $30 per metric ton. 

The U.S. Role in Developing the China Soybean Market 

ASA has partnered with the U.S. government for decades and spent millions of dollars to 

establish foreign markets for U.S. soybeans. China is perhaps our most impressive success story. 
27 


33810A.014

•Embargoed until10am on Thursday, April12, 201a· 

ASA opened an oft'ice in Beijing in 1982. At that time, China did not have a verticallyintegrated animal feed industry, and livestock production lacked health and nutritional standards. 

China has the largest swine herd in the world but, at the time, much of it was backyard-based and 

its ration did not include soybean meal. Similarly, while China produces more fresh water fish 

than the rest of the world combined, none of its fish feed include.d soybean meal20 years ago. 

Through a long-term and comprehensive program to demonstrate the value of soy-based feeds, 

ASA and the U.S. Soybean Export Council helped build demand for soybeans to the level China 

imports today. Since 1995, while feed use in China grew by 140 percent, soybean meal used in 

animal feed rose an unprecedented 839 percent. And we' ve seen the amount of soybean meal 

used in aquaculture feeds grow from zero just 20 years ago to 7 million metric tons this year. 

The value of U.S. soybean exports to China has grown 26-fold, from $414 million in 1996 to 

roughly $14 billion in 2017. Potential tariffs would put years of work to expand markets, and the 

livelihoods of thousands of U.S. fanners, in jeopardy. 

Economic Impact of Chinese Tariffs 

Retaliation by China against U.S. tariffs would undercut prices received by soybean producers 

and fl1rther hurt the already depressed farm economy. Crop prices are down 40 percent since 

2013, and farm income has fallen by 50 percent. Operating margins are slim, and fam1ers cannot 

absorb additional hits to the fam1 economy. 

According to a study for the U.S. Soybean Export Council conducted by Purdue University, 

soybean exports to China could drop dramatically if China chooses to impose a 25 percent tariff 

on U.S. soybeans. Using an advanced version of the Global Trade Analysis Project (GTAP) 

model developed at Purdue, the study projects that China's soybean imports from the U.S. would 

fall by 65%, total U.S. soy exports would drop by 37%, and U.S. soybean production would 

decline by 15%. 

It has been argued that trade in agricultural products is fungible, and that the loss of one market 

to a competitor will be replaced by other markets which that competitor will no longer sell to. In 

the case of soybeans, this argument fails to recognize that our largest competitor, Brazil, is 

continuing to expand soybean production on new lands. Brazil is already the world's largest 

soybean exporter, including to China, and would respond quickly in the event U.S. trade actions 

trigger retaliation against our soybean exports. We simply cannot accept the risk a trade war 

would create for our industry. 

In addition to the concerns of U.S. soybean farmers, other commodity producers are at risk of 

losing critical sales to the China market. As a result of the prospective Section 30 I and Section 

232 tariffs, China has also threatened to retaliate against pork, sorghum, wheat, corn and beef. 

Last year, the value of China's imports totaled $ 1.1 billion for U.S. pork, $1 billion for cotton, 

$I .I billion for sorghum, $450 million for wheat, $150 million for com and $ 11 million for beef. 

Actions that threaten these markets have the potential to upend the fann and mral economy and 

put the livelihoods of farmers in jeopardy. 

Conclusion 
28 

f 


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*Embargoed until10am on Thursday, April12, 2018* 

As producers of the Nation's number one agricultural export, soybean fanners want to be an 

essential part of helping lower our trade deficit with China. We believe that expanding market 

access can play a vital role in increasing our agricultural trade SUIJl!Us. We ask this Committee 

and Members of Congress to help allow soybean fanners be part of the solution instead of 

collateral damage from a potential trade war. 

TI1ank you for inviting me to testify. I look forward to answering your questions. 
29 

Chairman BRADY. Thank you, Mr. Heisdorffer. Congressman 

Dooley, welcome and please proceed. 

STATEMENT OF CALVIN DOOLEY, PRESIDENT AND 

CHIEF EXECUTIVE OFFICER, AMERICAN CHEMISTRY COUNCIL 

Mr. DOOLEY. Thank you, Mr. Chairman, and Members of the 

Committee. I represent the American chemistry industry in the 

United States, and thanks to the American shale gas revolution, in 

little over a decade, the chemical industry in the United States has 

gone from one of the most high-cost manufacturers of chemicals to 

today maybe the most competitive place to produce chemicals in 

the world. 

And the reason for this change is because of the increased supplies of natural gas, which our industry uses as an energy-intensive 

industry, which is very important to lowering our cost. But also, 

like flour is to a bakery, natural gas is our raw material in the 

chemical sector. 

This has resulted in an unprecedented level of new investment 

in chemical manufacturing in the United States. In the last 8 

years, about $194 billion in new investment in chemical manufacturing has come into the United States. And importantly, over 62 

percent of that is foreign direct investment. 

According to the Department of Commerce, in 2016 and 2017, almost 50 percent of all investment and manufacturing in the United 

States was accounted for by the U.S. chemical industry. And that 

expansion is providing for a foundation for a renaissance in manufacturing in the United States, and just with the chemical industry, 

it is going to create about 850,000 new jobs. Much of this new capacity is intended for export, reflecting the industry’s belief that 

the United States is the most competitive platform to serve global 

markets. 

And today, American chemical manufacturers account for 14 

cents of every dollar of exports from the United States. We have 

a—currently about $174 billion, and importantly, in 2017 we had 

a trade surplus of about $33 billion. And with this enhanced competitive advantage, we expect by the year 2020 that that will more 

than double to about $73 billion. 

The tariffs proposed by President Trump are intended to reduce 

our country’s trade deficit, an objective that has some merit. But 

when we impose import tariffs in the hopes of protecting domestic 

industries that have struggled to be competitive in an increasing 

global marketplace, we invite retaliation that will inevitably be targeted at America’s most competitive and most successful sectors, 

including chemicals as well as U.S. agriculture. 

Nearly 40 percent of the products on China’s list of retaliatory 

tariffs are chemicals and plastics. The ACC estimates that approximately $5 billion in U.S. chemicals and plastics trade to China 

would be exposed to these increased tariffs. And a recent Brookings 

study determined that China’s retaliatory tariffs would expose 2.1 

million American workers to increased tariffs, and the U.S. chemical sector would account for about 40 percent of that 2.1 million. 

ACC shares President Trump’s concerns about China’s inadequate protections of intellectual property and forced technology 

transfer practices. We share the Administration’s concern about 

30 

China’s refusal to appropriately address their policies that resulted 

in an overcapacity of steel manufacturing. China needs to open 

their market. 

U.S. consumers, U.S. workers, and the U.S. economy does not 

win if the tariffs we have proposed result in the implementation of 

China’s proposed retaliatory tariffs that target those sectors of our 

economy that are global leaders. U.S. chemical manufacturers, U.S. 

energy producers, and U.S. farmers are competing and winning in 

the global marketplace. They are generating increasing trade surpluses, and we cannot allow them to become casualties of trade disputes. 

We urge the United States and Chinese governments to put 

aside talk of a trade war and stop the volley of potential tariffs. We 

believe the Trump administration should work with our allies 

across the world to demand that China responds and modifies their 

unfair and market-distorting trade policies. 

In the absence of a full withdrawal of the proposed Section 232 

tariffs, we urge the Trump administration to modify the steel and 

aluminum tariffs to make countries’ exemptions permanent, allowing associations to request exclusions on behalf of their members, 

allowing product exclusions to all companies rather than requiring 

on a company-by-company basis, and exempting key U.S. allies 

without conditions. 

Thank you for your time today. We are hopeful with the support 

from Congress, the Administration and the Chinese government 

will recognize that it is in the best interests of both countries to 

commit to a process that will produce mutually beneficial agreements before the proposed tariffs go into effect. 

[The prepared statement of Mr. Dooley follows:] 

31 


33810A.016

merican· 

Chemistry 

ouncil 

American Chemistry Council 

Statement for the Record 

Rouse Committee on Ways and Means 

"Effects of Tariffs Increases on the U.S. Economy and J obs" 

April 12, 2018 

Thank you fo•· the opportiUlity to testify today on the "Effects of Tat-iff Increases on the U.S. 

Economy and Jobs." This is a topic of fLUtdameutal coucem to the business of cbemistry in the 

United States, which is most successfltl when tariffs do not exist and costs are low. U.S. 

chemicalmanufacmrers believe the principles of free and fair trade should apply to all members 

of the World Trade Organization, including China. However. it is uot in the interest of the U.S. 

economy, manufacturers or consLUucrs to engage in a trade war with China for reasons which 

will be outlined in this testimony. 

The Amet-ican Chemistry Cowtcil (ACC) shares President Trump's concems about China's 

inadequate protections of intellecrual property (IP) and forced teclmology transfe•· pmctices. At 

d1e same time, China is one of the U.S. chemical industry's most important trading paru1ers, 

impo1ting II percent, or $3.2 billion, of all U.S. plastic resins in 2017. We suppo11 eff01ts by the 

Administration to resolve concems with China, but strongly believe that these long-standing 

problems should be addressed through con tJ~•cti ve negotiation, rather tltan through tariffs tltat 

could make tl1e world's most important economic relationship even more difficult. 

History has shown that the imposition of tariffs is cotmterproductive. TI1ey often do little more 

than invite retaliation that ultimately tmdermines dteir stated intent. Therefore, we do not believe 

d1at tariffs, whedter on steel and aluminum products or dte broad anay of products in dte U.S. 

Section 30 I tarifflist at·e consistent with the goals of U.S. economic growth. umovation and job 

creation. 

In this case, tl1e Admu1istration's proposed tariffs are uttended to protect Sl11tggling domestic 

industries that have failed to achieve profitability in an iitcreasulgly global market. However, in 

an effmt to prop up challenged industJ-ies, two of Aluet-ica 's most competitive and most 

successf\tl u1dustJies - chemicals and agiicultm·e - have become the targets of retribution from 

China. 

TI1e U.S. chemical industry is an S800 billion dollar enterprise, supporting nearly 26 percent of 

U.S. g1·oss domestic product (GOP), and providing over 822,000 skilled, good-paying American 

jobs, widt production in nearly eve1y state. Thirty percent of tltese jobs are export dependent. 

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And because over 96 percem of manufacmred goods are touched in one way or another by 

chemistry, the chemicals industry is tmly the fmmdation of American manufactwing. 

For the first time in decades, the U.S. enjoys a competitive advantage iu chemicals and plastic 

production, made possible by affordable domestic natural gas, the indushy's primmy feedstock. 

Since 20 I 0 the United States has gone from one of the most expensive places to produce 

chermcals, to one ofll•e world 's lowest cost producers. Approxnnately $194 btlhou 111 uew 

chemicals mtd plastics production capacity has been annowtced in dte past eight years, and more 

tltan 60 percent of that is foreign direct investment. In 20 16 and 2017, the chemical industry 

accoumed for uem·ly half of all construction speudu1g u1 U.S. manufacturing. Much of the new 

capacity is intended for expon, reflecting investors' belief that the U.S. is an excellem platfonn 

from which to setve the global marketplace. 

Today, AmeriC81l chemiealmanufacrurers produce 15 percent of the world's chemicals, mtd 

accotulls for 14 percent of all U.S. expot1S, amorUJting to$174 billion in2016. The U.S. bas a 

large and growing trade swplus in industrial chemicals of$33 billion in 2017. Given the 

competitive advamage that has been created by tlte American shale gas revolution, tltat stuplus in 

chemicals is estimated to grow to $73 billion by 2020. 

China knows how competitive the U.S. chemicals industry is and has very likely targeted U.S. 

chemicals expons because it is an area where the U.S. is poised to grow the most. As you know, 

40 percent of the products on ChUta's initial Section 301 list relate to chemicals and cover 

polyethylene, PVC, polycarboJtates, actylates, m1d many other chemicals. That China has 

included these products on its tariff list is a recognition of the competitiveness of t he U.S. 

chemicals industry mtd the chaUeuge it poses to ChUta's own fast growing chemicals iudustry. 

The ACC estimates tl~at $5 billion in U.S. chemicals and plastics b11de to Chuta would be 

exposed under the tariffs that China bas proposed. These tariffs proposed by the Chinese 

gove111lllent along with other Cltiua-related trade bm1iers under consideration by the TrtUJlp 

Administration, as well as in the context of the North Ametiean Free Trade Agreement, create 

considerable twcertainty about the United States as a platform to produce goods to supply the 

growing global demand for chemical and plastic products. Ultimately these actions could 

wtdennine dte historic competitive advmltage the U.S. chemical indust1y now enjoys. 

The threat to American chemical manufacturing goes beyond tariffs on these goods. lt is also 

apparem through the tariffs on goods that use our products. For example, a drop in soybean 

expo11s affects fenilizer and crop protection sales in this cotmtry. A reduction in exportS of U.S. 

vehicles would have a similar effect, as nearly 20 percent of the weiglll of 811 average vehicle is a 

product of chemistry - the avet'3ge light vehicle contau1s more than $3000 of chemistry products. 

As a result, the proposed 25 percent Chinese tariff on U.S. e:~.ports would be expected to result in 

a decline in U.S. chemical production of$2.4 billion to $2.8 billion. And the effect outhe 

Americar1 economy of the Chinese govenm1cnt's proposed tariffs on chemicals and plastics goes 

well beyond cbemicalmauufacttu·ers. Dozens of other sectors that rely on chemical 81ld plastic 

products including the automotive, health care, building and consbltction ar1d consumer goods 

industries could shoulder higher related costs, and we know that it is ultimately the coustuner 

who pays dte price. 

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We strongly urge the U.S. and Chinese govemmeuts to come to a satisfactory and mutt.ally 

beneficial agreemelll before the proposed tariffs go into effect. There is ample evidence that 

tariffs lead to higher costs for do\\~tstream producers, higher prices for consmners, fewer jobs in 

downstream industries, and less economic growth, investment, and iJmovat ion iu the United 

States. A trade war will also make cooperating on non-trade issues and real national sectuity 

concems of mun.al interest that much harder. 

These enforcemem actions should not be done on the backs of the growing U.S. chemicals 

induwy and other U.S. indusuies producing trade smpluses, increasing their exports, and 

entering uew markets. We are encouraged by the Adruiuisrration's wiUiuguess 10 exempt cet1aiu 

comuries from proposed tariffs on almuinmn and steel. We are hopeful that the Administration 

will recognize the risks for out· economy of a continued escalation with China and will engage in 

a coustmctive, long term effort to address its coucerns. 

The ACC has some practical recommendations for managing both the Section 232 and Section 

30 I actions. 

Section 232 

In our view, the exemption aud exclusiou proc.esses are too bureaucratic, opaque, and heavyhanded. Tite most positive step would be to r·evoke dte proposed tariffs immediately. Shor1 of 

dtat, the Administration should: 

Make cotuttry exemptions permanent; 

Allow associations 10 make exclusion requests on behalf of member'S; 

Apply product exclusions to aU companies (not company by company); and 

Exempt key U.S. allies without conditions. 

Section 301 

As referenced earlier, dte AdruiuisiJ·ation should outline a clear, detailed plan for bow it will 

address longstanding problems in China. including by making greater use of the World Trade 

Organization's dispute settlement and negotiation pillars. To tbat end, both the U.S. and China 

should climb dowu frommunrally destmctive actions- but dte onus should be on China to 

change its laws. regulations, policies. practices, and otherwise mercantilist behavior. Other U.S. 

11·ading partners, including the European Union and Japan, must be eqt.ally forceful in 

demanding changes by China. 

For otu· sector, dte United States and China should: 

Avoid raising tariffs or erecting ban1ers between them or cause other markets to raise 

tariffs or erect barriers; 

Work together to cut costs in chemicals 11·ade by eliminating tariffs and dismantling 11·ade 

barTicrs bilatcr'lllly and across the world, including at the World Trade Organization and 

the Asia-Pacific Economic Cooperation fonun; and 

Work togedter to reestablish trust in om· societies that dte intemational trade system will 

benefit more people and be more inclusive. 

The Adminisll'ation 's Section 30 I and 232 actions create significanltlllcer1ainty for chemical 

companies as they plan and build new chemical plants and projects iu the United States and work 

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Page4 of4 

to export U.S.-made cbenucals to tradittg partners. If this mtcet1ainty persists and increases, 

companies will consider investing in markets with greater policy certainty, low to zero tariffs, 

and lower costs. 

Tariff costs dinillush competitiveness. For example, bigber costs of steel inputs as a result of the 

232 tariffs mtdennine new plant constntction and investments in the United States. Higher tariffs 

m Chma as a result of retah at•on wtll sbut out U.S. cbenucals exports to the benellt of Chmese 

companies and other suppliers in the EU and Japan. The overall uncet1ainty in the trading 

environment will lead to less wage and job growth in the United States. Titese dynamics would 

not only damage the cheu:tical industty and the downstream manufacturers using chemicalshigher prices for chen:ticals lead to less demand for U.S. chemicals, less manufactl.ll'ing in the 

United States, less job creation, less investment, and higher pt'ices for U.S. manufactured 

products- but could lead to ioflation over time and a weaker U.S. economy witlt less demand and 

supply. 

Tite ACC believes that tlte system of intemationaltrade disciplines must work for everyone. To 

do that the United States, the EU, Japan, China and otlter key trading parrners nmst work 

together and break down ban'iers to trade. Increased market access, not less, is essential to the 

success of the chen:tical industty. Unilateral actious have the potential of creating less market 

access, and therefore less oppommities to export, grown the economy and create U.S. jobs. 

Simply put, the world does not oeed and camtot afford a trade war. The U.S. and irs trading 

partners should find ways to address and prevent steel overcapacity, 1P theft and forced 

teclu10logy transfer practices on a global scale. Such concet1ed effort will only benefit the global 

economy, making trade work better for everyone, including businesses and workers in the Ututed 

States. 

The American Chemistry' Council (ACC) represents a diverse set of companies engaged in the 

business of chemisfly. An innovative. $800 billion entetprise, we work to solve some of the 

biggest challenges facing our nation and our world. Our mission is to deliver value to our 

members through advocacy, using best-in-class member engagement, political advocacy, 

communications and scientific research. We are commilled to fosteting progress in our economy, 

envit·onmel!t and society. The business of chemistry drives innovqtjons that enable a more 

sustainablefitture; provides 822,000 skilled good paying.iJllM-piiiS over six million related 

jobs-that support families and communities; and enhances ~ through ow· diverse set of 

products and investments in R&D. 

americanchemistry.com• 700 Second St. , NE t Washineton, DC I 20002 I (202) 249· 7000 
35 

Chairman BRADY. Thank you, Mr. Dooley. 

Ms. Wilson, you are recognized. 

STATEMENT OF ANN WILSON, SENIOR VICE PRESIDENT, 

MOTOR & EQUIPMENT MANUFACTURERS ASSOCIATION 

Ms. WILSON. Good morning, Chairman Brady, Ranking Member 

Neal, and Members of the Committee. My name is Ann Wilson, and 

I serve as the Senior Vice President of Government Affairs for the 

Motor & Equipment Manufacturers Association. Thank you for the 

opportunity to speak with you today. 

MEMA member companies manufacture motor vehicle parts, 

components, and systems for the automotive, heavy vehicle, and 

after-market industries. Vehicle suppliers are the largest sector of 

manufacturing jobs in the United States, directly employing over 

871,000 Americans in all 50 States. Supplier jobs have actually increased by more than 19 percent in the last 5 years. 

MEMA supports the Administration’s agenda to ensure free, fair, 

and reciprocal trade and a level playing field for all Americans. 

Our industry counts on a strong domestic steel and aluminum industry, and has long supported aggressive policies to protect intellectual property rights and enforce IPR laws here in the United 

States and around the globe, including in China. 

However, MEMA is very concerned about the adverse impact on 

manufacturing jobs relating to the Section 232 and 301 tariffs. I 

wanted to take the opportunity today to connect the dots with you. 

I know all of you have heard repeatedly that the vehicle industry 

counts on a global marketplace. But our industry also counts on 

regulatory and market certainty. 

Our industry buys the vast majority of its steel and aluminum 

domestically, but imports specialty materials as well as finished 

parts. Often, these parts are manufactured further and made into 

other parts, subcomponents, and systems by U.S. workers at facilities all over the country. This allows the U.S. supply chain, as part 

of the global economy, to be competitive and prosperous, creating 

hundreds of thousands of U.S. jobs. 

So today I brought one of those parts with me. This is a fuel injector. Fuel injectors are safety-critical parts that must be durable 

and dependable. The manufacturer of this particular part purchases most of their steel in the United States. However, this particular part requires specialized stainless steel for the housing, and 

that is only available today from a supplier in Germany. This specialty steel ensures the performance of the injector. The South 

Carolina plant responsible for this fuel injector makes 40 million 

of these a year, and employs 1,700 Americans. 

Being able to bring this steel into the United States is a cost-effective way and allows suppliers to produce and to expand in the 

United States, hiring U.S. workers, and making more U.S. investment. The steel from this housing is subject to the 232 tariffs. This 

manufacturer does not know if the EU will be exempt from the tariff, if their individual petition for product exclusion will be accepted, and how long these exemptions or exclusions will be in effect. 

This situation is repeated multiple times for our many companies. We have a member, a U.S. company, who must now pre-pay 

their importer a portion of $100 million of 232 tariffs in order to 

36 

get their steel into the United States. This manufacturer makes 90 

percent of the product line subject to the tariffs, in New York in 

a plant with 1,500 employees. The payment of this tariff puts profits, investment, and potential expansion at risk. 

Another one of our members’ imports are potentially subject to the $7 million tariff because of the Section 301 decision. These imported goods support over 600 jobs in Illinois. I am here today because these examples are not isolated. Over the last week, our offices fielded calls from members with operations all over the country. Please understand, the tariffs will cost companies, but they 

will also cost our country. The price will be current jobs and future 

investment. 

Regarding the Section 232 tariffs, MEMA has urged the Department of Commerce to simplify the process—develop clear procedures and processes for product exclusion applications. Also, we 

have urged a regular review of the impact of the tariffs on the consuming industries in the U.S. economy. As to the Section 301, we 

have been heartened by United States—by China’s recent announcement regarding excluding motor vehicles from potential retaliatory actions. 

We urge the Administration to continue to prioritize a negotiated 

resolution of the issues before imposing broad-based tariffs. The 

imposition of these tariffs prior to bilateral discussions between the 

United States and China will hurt our industry, job creation, and 

the U.S. economy. 

We agree with the Administration and many of you that the 

United States must take strong action to protect our economy and 

our Nation’s work force. However, we believe that the recently-implemented and proposed tariffs will have a detrimental impact. I 

look forward to your questions. 

[The prepared statement of Ms. Wilson follows:] 

37 


33810A.020

Motor & Equipment Manufact urers Associati on 

1030 15th Street. NW Suite 500 East Wash,ngton. DC 20005 

Tel 202.393.6362 fax 202.737.3742 www.mema.org 

Testimony of Ann Wilson 

Motor & Equipment Manufacturers Association 

before the 

U.S. House of Representatives 

Committee on Ways and Means 

Hearing on the Effects of Tariff Increases on the U.S. Economy and Jobs 

April12, 2018 

Introduction 

The Motor & Equipment Manufacturers Association (MEMA) represents more than 1,000 

vehicle suppliers1 that manufacture and remanufacture new original equipment (OE) and 

aftermarket components and systems for use in passenger cars and heavy trucks. Our members 

lead the way in developing advanced, transformative technologies that enable safer, smarter, 

and more efficient vehicles, all within a rapidly growing global marketplace with increased 

regulatory and customer demands. 

Vehicle suppliers are the largest sector of manufacturing jobs in the United States, directly 

employing over 871,000 Americans in all 50 states. Together w ith indirect and employmentinduced jobs, the total U.S. employment impact of the supplier industry is 4.26 million jobs. 2 

Nearly $435 billion in economic contribution to the U.S. GOP is generated by the motor vehicle 

parts manufacturers and its supported activity. In total, motor vehicle parts suppliers contribute 

more than 77 percent of the value of today's vehicles. 

MEMA supports the administration's agenda to assure free, fair, and reciprocal trade and a 

level playing field for all Americans. MEMA supports the administration's efforts to strengthen 

our nation's economy. However, MEMA is very concerned about the adverse impact on 

manufacturing jobs resulting from the Sections 232 and 301 tariffs. The combined impact of 

these tariffs has thrown many of our member companies close to a financial crisis and has 

1 MEMA represents vehide suppliers through the following four divisions: Avtomotive Afte.rmarket Suppliers Association 

(AASA), Heavy Duty Manufact urers Association {HOMA), Motor & Equipment Rcmanufacturers Association (MERA) and Original 

Equipment Suppliers Association (OESA). 

'"Oriving the Future: The Employment and Economic Impact of the Vehicle Supplier Industry in the U.S." Available here: 

https:/lwww.mema.ore/sites/defaultffiles/MEMA lmpactBook.pdf released by MEMA in January 2017. 
38 


33810A.021

MEMA Testimony; House Committee on Ways and Means 

April 12, 2018, Page 2 

made some of them question their future investments in the U.S. Tariffs will have a negative 

impact on these manufacturers, the jobs they create, and ultimately the American consumer. 

MEMA urges this committee to work with the administration to reset our discussions with 

our trading partners to pursue our j oint goal of free and fair trade. 

Section 232 Tariffs on Steel and Aluminum 

MEMA member companies operate in an integrated global supply chain with both suppliers 

and customers inside and outside of the United States. This model has contributed to continued 

growth in vehicle production and jobs here in the United States. 

Suppliers support and rely on a strong domestic steel and aluminum industry to provide a 

wide range of raw and semi-finished materials to manufacture motor vehicle components and 

systems in the U.S. However, many specialty steel and aluminum materials used in many 

vehicle components are not available domestically. 

Often, there are few producers in the world - in some cases only one or two- that can 

source the grade of specialty materials needed to meet component specifications. Examples 

include wire used in steel belted radial tires and specialty metals used in fuel injectors. 

These steel producers operate in small, niche markets of low-volume, high-strength steel 

manufactured to stringent performance specifications (often for safety-critical, high-durability 

applications). For domestic steel producers, it is not a question of whether they can produce 

these materials, but instead will production of these niche materials be cost-effective and 

provide them a ret urn on investment. 

Given the low volume compared to high investment necessary to manufacture and smelt 

these specialty products, many U.S. steel producers simply have made the decision that it is not 

worth the investment to enter into these markets. This is not the ideal situation, but it can take 

many years for a company to test and validate t hat a steel producer's product will meet the 

specifications necessary to perform as required for many of these safety-critical parts. 

Specialty materials and components imported by vehicle suppliers are used by hundreds of 

parts manufacturers. Suppliers' continued access to these specialized products is critical to the 

industry and our national economy. Additionally, many of the motor vehicle parts 

manufacturers who rely on these specialty materials in turn export the components 

manufactured in the U.S. using these specialty materials. In our view, tariffs for these specialty 

products should be excluded altogether, as these materials are not produced domestically in 

the United States. 

Tariffs lead to increases in the costs of materials, ultimately increasing production costs for 

products suppliers make for vehicle manufacturers and consumers. Often, these increased 

production costs cannot be passed on to the Vehicle Manufacturers (OEM). Small- and 

medium-sized motor vehicle parts manufacturers are particularly susceptible to increased 
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costs, squeezed margins, and added burdens. Furthermore, suppliers are also very concerned 

that these tariffs will lead to greater importation of finished goods that will compete w ith U.S.-

manufactured goods made w ith higher-cost steel and aluminum due to the tariffs. 

MEMA submitted comments to the administration (May 31, 20173

, June 20, 2017,4 February 13, 

20185) noting that disruptions to supply chains or increases in production costs will not contribute 

to the national security of the United States and will have a negative impact on the ability of 

suppliers to continue domestic investments in developing new products, facilities, and jobs. 

Now that Section 232 tariffs have been imposed, suppliers, working w ith their importers, will 

be applying for product exclusions. However, the process is already creating significant burdens 

on these companies. The exclusion request process lacks transparency and w ill be particularly 

burdensome for smaller manufacturers. It is unbalanced and appears to not allow for successful 

outcomes for downstream users. 

MEMA has urged the Department of Commerce to simplify the process and develop clearer 

procedures and processes for product exclusion applications. Specifically, we requested the 

Department of Commerce to do the following: 

Provide timely information on application requirements and to publish an " FAQ" 

clarifying the process; 

• Streamline the exclusion process to allow for applications covering products with the 

same HTS code in different widths; consolidate the process to allow trade associations 

to apply for exclusions for an industry w hich will not create a burden on BIS in 

processing applications; 

• Regularly review the impact of tariffs on the economy and downstream users and 

implement a plan to sunset the tariffs w hen they prove to have a significant negative 

impact; 

Consider the need for and availability of these products in our nation's supply chain; 

many specialty products are not available from domestic producers; MEMA urged the 

administration to take a country- and product-specific approach to this issue rather than 

imposing blanket quotas or tariffs on all steel and aluminum imports. 

MEMA also urges the administration to work to approve timely country exemptions prior to 

May 1. In addition to the exemptions for Canada and Mexico, the E.U., Argentina, Australia, 

Brazil, Korea, exemptions should also be extended to Japan and Switzerland. Additionally, 

3 In response to the Notice Request for Public Comments and Public Hearing on Section 232 Notional Security Investigation of 

Imports of Steel, 82 Fed. Reg. at 19205. 

• In response to the Notice Request for Public Comments ond Public Heating on Section 232 Notional Secutity Investigation of 

Imports of Aluminum, 82 Fed. Reg. 21509 (May 9, 2017); Change in Comment Deadline for Section 232 Notional Security 

Investigation of Aluminum. 82 Fed. Reg. 11557 (June 2, 2017). 

' MEMA lettet to the President, February 13, 2018. 
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MEMA urges Congress to carefully monitor the impact any quota requirements have on 

consuming industries. 

Section 301 Tariffs on China 

Motor vehicle parts manufacturers are innovators, conducting almost one-third of the 

annual $18 billion investment by the automotive industry in research and development. This 

industry commitment has made the U.S. a leader in more fuel efficient, cleaner, and safer 

vehicles resulting from domestic development and manufacturing of advanced vehicle 

technologies. Given this investment in innovation, intellectual property rights (IPR) protection is 

critical to the sustained success of the motor vehicle parts manufacturing industry. The IPR of a 

company is among its most valuable assets here in the U.S. and abroad. Strong IPR protections 

encourage companies to support important research and development investment and to 

foster innovation as IPR owners are provided certainty that their inventions and technological 

advancements will be safe from infringers. 

China is a large and important trading partner for the supplier and motor vehicle 

manufacturing industry. Simultaneously, China is also a competitor and remains a challenge for 

the industry, which is especially significant when it comes to protecting IPR. MEMA has long 

supported aggressive policies to protect IPR and enforce IPR laws here in the U.S. and around 

the globe. Protecting these rights has proven especially difficult in China given inadequate 

enforcement of existing IPR laws. 

IPR protection is critical to the sustained success of the motor vehicle parts manufacturing 

industry. The IPR of a company is among its most valuable assets. Strong IPR protections 

encourage companies to support important research and development investment and to 

foster innovations as IPR owners are provided certainty that their inventions and technological 

advancements will be safe from infringers. 

Last year MEMA provided comments to the U.S. Trade Representative identifying Chinese 

policies and practices that place supplier IPR at risk. 6 These practices included: 

1) Promotion of localization based on Chinese government-led industrial plans; 

2) Laws and policies governing cybersecurity, data, and software, including policies that 

prevent cross-border data flows; 

3) Duties and Value Added Tax (VAT) imposed on foreign companies in the Chinese market; 

and, 

4) Enforcement actions by China not adequately protecting IPR, resulting in ongoing trade 

secret theft and production of counterfeit parts. 

Given the importance of China as a trading partner for the U.S. economy and the motor 

vehicle industry, MEMA has encouraged Commerce Secretary Ross and USTR Ambassador 

6 MEMAcomments to USTR on Section 301 1nvestigation, Docket No. USTR 2017-<1016, September 28. 2017. 
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Lighthizer to work towards a negotiated resolution of IPR issues before imposing broad based 

Section 301 tariffs. The initiation of a World Trade Organization (WTO) dispute investigating 

China's technology transfer requirements is a welcome step in the process. However, we are 

concerned that the imposition of tariffs prior to bilateral discussions between the U.S. and 

China will harm the U.S. economy. Instead, the U.S. should focus on developing a fair, binding, 

and enforceable rules-based trade agreement with China. 

MEMA is alarmed at the escalating rhetoric with respect to trade with China. In just one 

weeks' time, the U.S. announced $50 billion in tariffs at the rate of 25 percent, imposed on over 

1300 product lines of goods from China on top of other, existing tariffs, including the recently 

announced Sec. 232 tariffs on steel and aluminum. This does not even include the prospect of 

additional tariffs recently discussed by the President . 

Predictably, China responded with its own set of tariffs on U.S. goods, which wil l impact the 

motor vehicle supplier industry by increasing duties on products we export that include steel, 

aluminum, iron, electrical components, certain vehicles and parts, and heavy-duty machinery. 

China's response was followed by a presidential announcement directing the USTR to consider 

an additional $100 billion in tariffs on China under Section 301. This would go beyond the $50 

billion announced on April 3. 

Like any industry, motor vehicle suppliers' growth and success depend on access to markets, 

predictability, and certainty. As the financial markets have indicated, a trade war threatens 

economic growth because of higher costs imposed on products, manufacturers, and consumers 

-which impacts job growth. The total financial costs of the Section 301 tariffs will put an 

enormous burden on vehicle suppliers and the entire supply chain. 

As the National Association of Manufacturers (NAM) explained in a letter to the President on 

January 8, 2018, the U.S. should "be pursuing a truly modern, innovative and comprehensive 

bilateral t rade agreement with China that wholly restructures our economic relationship" to 

address these issues comprehensively and on a truly level the playing field for the long-term. 

The letter explained that " [t]o be successful, this free and fair agreement must: 

Eliminate barriers that unfairly block American companies and America's manufacturing 

exports from full and fair access to t he Chinese market; 

Raise standards in China and create new rules to prevent the wide range of marketdistorting practices that violate free markets and fair competition and hurt American 

businesses and workers; and 

• Create clear mechanisms to mandate strong and binding enforcement of the 

agreement, providing specific channels for government and industry alike to address 

cheating and violations." 

A bilateral U.5.-China trade agreement would need to build on - but go far past - previous 

agreements by adding priority issues relevant to China. These range from industrial policy, 
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state-favored industries and new transparency and IPR disciplines, to rules that reflect other 

changes in the global economy since the WTO agreements were negotiated, starting with 

digital trade and cross-border data flows. In particular, such an agreement would need to 

address those areas where unfair, discriminatory and harmful Chinese policies and practices are 

not currently actionable at the WTO. 

Conclusion 

Representing the largest employer of manufacturing jobs in the United States, motor vehicle 

suppliers operate in an integrated global supply chain with access to open markets with free 

and fair trade. Our members are very concerned about tariffs resulting in supply chain 

disruptions and increased costs, which will not contribute to the national security of the U.S. 

and will have a negative impact on the ability of suppliers to continue investing in U.S. facilities 

and jobs. 

MEMA urges this committee to work with the administration to exercise restraint before 

additional tariffs are imposed and to reset our discussions with our trading partners. 

We ask for this committee's support in urging the Department of Commerce to simplify and 

improve the product exclusion process, to urge the USTR to approve long-term country 

exemptions prior to May 1, and to open a dialog with any country seeking exemptions. 

As China remains an important market and trading partner for the supplier and motor 

vehicle manufacturing industry, we believe the administration should prioritize a negotiated 

resolution of IPR issues before imposing broad based Section 301 tariffs. The imposition of 

tariffs prior to bilateral discussions between the U.S. and China will harm our industry, job 

creation, and the U.S. economy. 

We appreciate the opportunity to testify before the committee and we look forward to 

working with you on these issues. If you have any questions, please contact me at 

awilson@mema.org. Thank you. 

111111 
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Chairman BRADY. Thank you, Ms. Wilson. 

Mr. Paul, you are recognized. 

STATEMENT OF SCOTT N. PAUL, PRESIDENT, 

ALLIANCE FOR AMERICAN MANUFACTURING 

Mr. PAUL. Thank you, Chairman Brady, Ranking Member Neal, 

and Committee Members. On behalf of the Alliance for American 

Manufacturing, we appreciate the opportunity to testify. 

There is no disagreement that China cheats, which is why these 

tariffs are now on the table. The testimony by Mr. Newport on steel 

as well as the Section 301 report prepared by the USTR on intellectual property rights violations both ably demonstrate that. 

The United States has only ever made progress with serial trade 

cheats through extraordinary pressure applied by Congress and the 

Administration, including but not limited to the threat of tariffs. So 

now is not the time for anybody to demonstrate to the governments 

of China, Russia, or other mercantilist nations that our resolve to 

eliminate unfair trade practices is anything less than strong and 

unified. 

AAM supports the trade actions on steel, aluminum, and intellectual property. We view the possibility of tariffs as a necessary step 

to achieve real progress, which includes reforming anticompetitive 

practices and reducing market-distorting behaviors. Withdrawing 

the threat of tariffs without achieving results would be tantamount 

to waving the white flag of trade surrender, signaling to China and 

other trade cheats that there will be no consequences for predatory 

trade behaviors. If a negotiated solution with specific disciplines 

and automatic enforcement provisions can be agreed to, then and 

only then should we look at lifting tariffs. Otherwise, we would be 

abandoning the best leverage we have had in years. 

On steel and aluminum, we are already seeing positive results, 

with nearly 3,500 American jobs announced and new cooperation 

from trade partners like South Korea and Canada. JSW USA plans 

an expansion of its steel plant in Baytown, Texas, a move that will 

add up to 500 new jobs at an average salary of $65,000. New steel 

and aluminum jobs have also been announced in Illinois, Ohio, 

Florida, Missouri, Indiana, Kentucky, and elsewhere. 

More broadly, manufacturing contributed a whopping 21 percent 

of all private sector job growth last month when the tariffs kicked 

in, and employment in metals-consuming industries rose substantially. Internationally, we now see allies joining the United States 

to combat unfair trade practices. Canada is now working to 

strengthen its anticircumvention and evasion provisions. The EU is 

ready to adopt safeguards on imported steel and aluminum. The 

agreement with South Korea to better level the playing field on 

steel and autos is also an encouraging sign. 

Chinese President Xi Jinping has again promised a new phase of 

opening up and allowing more imports. But after years of China 

making unkept promises, the United States must impose a sustained and credible threat of consequences should China, yet again, 

fail to deliver, particularly with Made in China 2025 looming on 

the horizon. Meanwhile, the product exclusion process under Section 232 should mitigate impacts for metal users. 

44 

Let’s acknowledge that the way in which this Administration is 

delivering tariffs is far from perfect. The Administration waited too 

long to conclude the Section 232 process. Steel imports soared over 

15 percent in 2017, putting further pressure on an already-stressed 

sector. Mixed signals on timing, scope, and applicability put more 

emphasis on the tactics than on the overall strategy. 

Mr. Chairman, in closing, an observation: the three-legged stool 

of trade policy—expansion, enforcement, and adjustment—was established through the Trade Expansion Act of 1962, and it provided 

a solid foundation of progress for our Nation. But enforcement and 

adjustment have been largely neglected as trade and imports have 

dramatically expanded. 

A growing body of evidence shows Chinese imports were a major 

cause in the loss of nearly one in three factory jobs since 1998. 

Trade-impacted workers are unlikely to ever find a better job than 

the one they lost, and many will never work full-time again. From 

the perspective of these workers, our Nation has been in a trade 

surrender for decades. Americans do not view the Administration 

as having fired the opening shots of a trade war. 

We should not be afraid to enforce trade laws. We have the leverage to do so. The tariffs, many of which are still aspirational, represent a fraction of our $20 trillion economy. Goods exports to 

China amount to less than seven-tenths of a percent of U.S. GDP, 

while more than 20 percent of China’s exports head straight to the 

United States. If China will not play by the rules, it should lose 

some access to our markets. 

[The prepared statement of Mr. Paul follows:] 

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TESTIMONY OF SCOTT N. PAUL 

PRESIDENT, ALLIANCE FOR AMERICAN MANUFACTURING 

BEFORE THE U.S. HOUSE OF REPRESENTATIVES 

COMMITTEE ON WAYS AND MEANS 

HEARING ON EFFECTS OF TARIFF INCREASES 

ON THE U.S. ECONOMY AND JOBS 

APRIL 12, 2018 

Chairman Brady, Ranking Member Neal, and members of the Committee, on behalf of the Alliance 

for American Manufacturing (AAM), thank you for the opportunity to testify at today's hearing on the 

Effects of Tariff Increases on the u.s. Economy and Jobs. 

The Alliance for American Manufacturing is a non-profit, non-partisan partnership formed in 2007 by 

some of America's leading manufacturers and the United Steelworkers. Our mission is to 

strengthen American manufacturing and create new private-sector jobs through smart public 

policies. We believe that an innovative and growing manufacturing base is vital to America's 

economic and national security, as well as to providing good jobs for future generations. AAM 

achieves its mission through research, public education, advocacy, strategic communications. and 

coalition building around the issues that matter most to America's manufacturers and workers. 

There's no disagreement that China cheats. So, then, the only question Is, do we continue to 

Ignore China's cheating or do we finally act decisively to stop it? 

The only progress the u.s. has ever made with serial trade cheats has been the result of 

extraordinary pressure applied by Congress and the Administration, including, but not limited to, the 

threat of tariffs. Now is not the time for Congress to demonstrate to the governments of China. 

Russia, or other mercantilist nations that our resolve is anything less than strong and unified. 

The past 20 years of seemingly endless dialogue with China and other nations show that polite 

requests to curtail state-driven industrial overcapacity or to refrain from forced technology transfers 

and joint ownership partnerships in exchange for market access do not yield meaningful results. 

China is not holding up its end of the bargain, at the WTO or via its bilateral relationships, and 

kicking the can further down the road is simply not a smart trade policy strategy. Meanwhile, on 

steel, the United States has for years worked at the OECD and for the last two years at the Global 

Forum on Steel Overcapacity to address these serious problems and achieve enforceable 

multilateral disciplines, but these efforts have not produced meaningful results and we cannot afford 

to wait any longer. 

As time has passed, our bilateral trade deficit with China has surged to unthinkable levels. The theft 

of our intellectual property has inflicted serious injury and dampens our future economic outlook. 

China's industrial overcapacity has spread like a virus throughout global markets, putting at risk our 

ability to produce essential materials like steel and aluminum for our national security and domestic 

preparedness requirements. Regrettably, our trading partners have refused to act. 

The Alliance for American Manufacturing (AAM) supports the adrrinistration's recent imposition of 

tariffs on steel and aluminum under Section 232 of the Trade Expansion Act of 1962 to defend our 

national security capabilities. We also support the intention to impose tariffs under Section 301 of 

the Trade Act of 1974 to protect our intellectual property. We view the threat or imposition of tariffs 

as a necessary step to achieving real progress, Which includes reforming anti-competitive practices 

and reducing market-distorting behaviors. 

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Returning to a posture of "endless dialogue• with China simply will not work. And, withdrawing the 

threat of tariffs without achieving results would be tantamount to waving the white flag of trade 

surrender- signaling to China and other trade cheats that there will be no consequences for their 

non-market actions that harm our economy. If a negotiated multilateral solution with specific 

disciplines and automatic enforcement provisions can be agreed to, then, and only then, we should 

look at lifting the tariffs. Otherwise, we are simply abandoning the most effective leverage we have 

had in years. 

U.S.-Chlna trade relationship Is on an unsustainable path. Since Beijing's 2001 entry into the 

World Trade Organization (WTO}, the U.S. bilateral goods trade deficit with China has more than 

quadrupled, from $83 billion in 2001 to a record $375 billion in 2017. Too often, the impact of this 

surging U.S-China trade deficit on U.S. companies and American workers has been overlooked or 

even characterized as a positive development. Our communities have shed more than 54,000 

manufacturing facilities. A staggering 3.4 million jobs, largely in manufacturing, have been lost 

because of this massive trade imbalance. Each state and every congressional district in the United 

States has experienced lost jobs. And the losses extend into nearly every sector of the economy, 

ranging from computer and electronic parts to textiles and apparel, furniture, steel, aluminum, and 

other capital-intensive sectors. 

Steel and aluminum are v ital to our economic and national security. Years of predatory trade 

behaviors by China and many other countries threaten America's ability to produce steel and 

aluminum for our national security interests, as well as the critical infrastructure that keeps us safe 

here at home. Global excess steelmaking capacity has reached 700 million tons, more than seven 

times annual U.S. production. Since 2000, China has added nearly a billion tons of steel capacitya 660 percent increase. And despite repeated promises to make reforms, China continues to 

increase production beyond what its own market or the global market can consume. 

The flood of low-priced imports in the world market have ended up here in the United States, 

wreaking havoc on our companies and workers. Ten major steel-producing mills have closed in the 

United States since 2000. America's ability to produce electrical steel (GOES} and oil country 

tubular goods (OCTG} for our energy infrastructure is threatened; a steel mill that produces armor 

plate to protect our service men and women from lED attacks in Iraq and Afghanistan recently 

reduced operations; and, domestic steel mills are operating at just 75 percent capacity in 2018, far 

below the levels necessary to tum a profit and make investments in equipment and workers. 

Meanwhile, Chinese aluminum capacity increased by 1,200 percent from 2000 to 2015. Since 2012, 

aluminum imports from non-North American sources are up over 95 percent, while U.S. production 

has declined by more than 60 percent. There is just one remaining operational producer of high 

purity aluminum necessary for defense applications including the F-35, F-18, C-17, and nextgeneration military vehicles. 

In 2000, there were 23 domestic aluminum smelters, but the import crisis has prompted closures in 

West Virginia, North Carolina, Maryland, New York, Ohio, Tennessee, Texas, Montana, Oregon, 

and Washington. Reduced to just five remaining smelters, only two are operating at capacity. 

Aluminum industry employment fell by 58 percent between 2013 and 2016. Robots didn't eat those 

jobs, but imports surely did. 

Just one month has passed since President Trump signed a Section 232 proclamation and 

we are already seeing positive results with factory investments, nearly 3,500 jobs 

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announced, and cooperation from trading partners like South Korea and Canada. Already, the 

level playing field created by the tariffs is helping to support thousands of new direct jobs, allowing 

us to strengthen our national security, and spurring indirect job creation as well -the Main Street 

restaurants and stores in steel towns, and the long value chain supported by the industry. 

JSW USA has announced a $500 million expansion of its steel plant in Baytown, Texas, a 

move that will add up to 500 new jobs at an average salary of $65,000. News report suggest 

that the plant- currently operating at just 30 percent capacity- will produce raw steel rather 

than importing it from foreign sources. 

U.S. Steel Corporation is restarting one of two blast furnaces in Granite City, Illinois, 

recovering approximately 500 jobs. Both Granite City furnaces had previously been idled. 

Republic Steel is recalling over 1,000 jobs to restart its formerly idled Lorain, Ohio, facility to 

meet anticipated demand for steel following Trump's 232 trade action. 

Nucor Corporation is building a new rebar micro mill in Frostproof, Florida, creating 

approximately 250 jobs with an annual average salary of $56,000. Previously in November 

2017, Nucor announced plans to open another new rebar micro mill in Sedalia, Mo., creating 

255 jobs and 450 temporary construction jobs. 

Century Aluminum Company is restarting the idled potlines of its smelter in Hawesville, 

Kentucky, restoring 300 jobs. Additionally, Century Aluminum is investing over $100 million 

to upgrade smelting technology at the site. 

Magnitude 7 Metals is opening a new aluminum plant, producing 400 jobs, in New Madrid 

County, Missouri, at the site of a plant that closed in 2016. 

Alcoa Corporation is restarting three of five aluminum potlines at a smelling facility that had 

closed in 2016. This restart of Warrick Operations in Evansville, Indiana, will generate 

approximately 275 jobs. 

Zekelman Industries, a consumer of steel and the largest independent steel pipe and tube 

manufacturer in North America, plans to pay each of its employees a $1 ,000 bonus once the tariffs 

are instituted. Pacific Boat Trailers announced that it won't raise prices despite using steel in its 

trailer construction. More broadly, manufacturing contributed 21 percent of all private sector job 

growth in March, and employment in metals-consuming industries rose substantially. 

All aspects of implementation of this policy must be completed with the primary, overriding 

objective of strengthening domestic steel and aluminum production capacity- from start to 

finish -and rapidly achieving specific and enforceable commitments to flght and to 

eliminate global overcapacity. We are pleased with the work of Ambassador Ughthizer leading 

productive discussions with our trading partners, who must acknowledge that country exemptions 

from steel tariffs are not blank checks. National governments must be active partners in efforts to 

eliminate overcapacity, prevent circumvention and transshipment, and punish trade cheaters that 

dump and subsidize. 

The recent agreement with South Korea to better level the playing field on steel and autos is an 

encouraging sign that the administration's trade strategy can achieve results. The strict limits on 

steel and aluminum imports coming from South Korea are a recognition that substantial amounts of 

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Chinese product were being transshipped or processed there and then shipped to the United 

States. Elsewhere, Canada is working to strengthen its anti-circumvention and evasion provisions. 

And, the EU appears to be ready to adopt safeguards to guard against dumped and subsidized 

product that was destined for the U.S. from entering their own mar1<et. These promised actions 

have the potential to be helpful, but must turn into reality for the national security and economic 

benefits to materialize. 

Earlier this week, Chinese President Xi Jinping promised "a new phase of opening up• and allowing 

more imports into their market. This reportedly includes an effort to reduce their 25 percent tariffs on 

autos (compared to 2.5 percent in the United States); to implement stronger protections of 

intellectual property and an easing of foreign ownership restrictions (though many strategic sectors 

would undoubtedly remain off-limits); and, to join the Government Procurement Agreement (a 

promise made upon their 2001 entry into the WTO). These would all be important outcomes, but 

after years of China making promises, and not keeping them, it is difficult for U.S. companies and 

American workers to believe that President Xi's words have any meaning. China needs to promptly 

adopt these reforms, and many others. And the United States needs to impose a sustained and 

credible threat of consequences should China yet again fail to deliver on its promises. 

Meanwhile, the product exclusion process under the Section 232 remedy should be 

transparent, allow for public comment and producing-industry and worker input, and primarily 

focus on matters related to economic and security considerations. If a product is excluded based 

on short-term market limitations, the exclusion should be time-li ~ed, and we should adopt a 

government-wide effort to develop strategies that encourage domestic suppliers to begin 

production. 

While there are already positive developments, it is still early in the process and we should judge 

the effectiveness of the Section 232 tariffs based on the final outcomes and results achieved. These 

tariffs lay the groundwork for a stronger economy and industrial base if importers don't 

unnecessarily weaken the remedy. Any exemption or exclusion granted could potentially have 

an adverse impact on our ability to achieve the goal of meeting our critical defense needs through 

safe and assured supplies, as well as maintaining an adequate capacity within the steel and 

aluminum industries. 

We believe the market, our workers, and consumers are best served when global production and 

consumption are better aligned and fair market pricing is restored. An effective, lasting remedy will 

jump start a long-overdue process or squeezing out massive overcapacity in the steel industry while 

enabling U.S. producers to revive idled production and jobs. 

Theft of America's intellectual property (IP) threatens our future. The administration's proposed 

actions under Section 301 will help to restore some balance with China, as well as to recreate an 

ecosystem to innovate, design, and make products here that we can sell abroad. IP-intensive 

industries support approximately 45.5 million jobs in the United States, represent more than 39 

percent of U.S. GOP, and account tor 52 percent of exports. The administration's Section 301 

report found *China to be the worst infringer of American IP, stemming primarily from Chinese 

policies and laws." Altogether, Chinese theft of American IP currently costs between $225 billion 

and $600 billion annually - meaning that the United States has already suffered well over $1.2 

trillion in economic damage since 2013. 

A full 18 pages of the 2017 National Trade Estimate Report on Foreign Trade Barriers published by 

the United States Trade Representative are devoted to China's anti-competitive practices. 

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According to the report, "inadequacies in China's IPR protection and enforcement regime continue 

to present serious barriers to U.S. exports and investment.• The report describes how "actors 

affiliated with the Chinese government and the Chinese military have infiltrated the computer 

systems of U.S. companies, stealing terabytes of data, including the companies' intellectual 

property (IP), for the purpose of providing commercial advantages to Chinese enterprises." 

In its most recent annual report to Congress, the U.S.-China Economic and Security Review 

Commission (USCG) offered detailed analysis on China's "Industrial Policy Toolbox• used to 

disadvantage foreign firms and obtain foreign technology through predatory actions. "China has laid 

out an ambitious whole-of-government plan to achieve dominance in advanced technology. This 

state-led approach utilizes government financing and regulations, high market access and 

investment barriers for foreign firms, overseas acquisitions and talent recruitment, and, in some 

cases, industrial espionage to create globally competitive firms," according to the report. 

Any assessment of the administration's Section 301 strategy must take Into consideration 

what has already happened to our economy. We have amassed more than $4.3 trillion in 

merchandise trade deficits with China since 2001. A substantial portion of that is the result or 

China's unfair and protectionist policies - especially as it relates to intellectual property theft. The 

transfer of IP has advanced China's ability to be a manufacturing powerhouse and has expanded its 

economic and military capabilities. The Congressional Research Service (CRS) estimates that 46 

percent of Chinese exports are from foreign-invested enterprises. Those exports are fueled by 

China's policies and coercive and predatory practices in IP. We cannot reasonably assume that in 

the future high-value and strategically-important products will be manufactured here in America if 

the underlying IP belongs to China. 

The Section 301 tariffs have not even taken effect yet, and will undergo thorough vetting and public 

comment. To those who are against these tariffs, I ask, "What is your plan?" The U.S. economy is 

currently strong and unemployment is low, but our country is on a course for long-term economic 

disaster if we continue to allow our innovation base to be hollowed out by China's theft of our IP. 

Advanced industries such as robotics, nanotechnology, and additi•1e manufacturing could be the 

next victims-before they even gain a substantial foothold in America. 

Many are focused on the potential for retaliation against our agriculture sector, but it is a 

m istake to broadly assume that the U.S. ag ricultu re sector fuDy benefits from the current 

trade relationship with China. According to a 2013 USCC report, "For the past three years, China 

has been the largest export market for U.S. agricultural goods. However, trade is far from free, and 

enormous opportunities are being withheld. China's WTO accession has not been as productive to 

the u .s. as initially expected. In contrast to u.s. agricultural exports to the rest or the world, most 

U.S. exports to China are bulk commodities, particularly raw soybeans that supply China's outsized 

live-stock sector. Conversely, processed commodities, meat products, consumer foods, and other 

higher value-added products have not kept pace with the overall growth in bilateral trade.• The 

report also notes that "much of the value-added processing of commodities is taking place in China 

rather that in the U.S., which is hurting U.S. manufacturers and contributing to U.S. unemployment." 

For example, in soy, the real value-addition is in the "crushing" process, yet China refuses to buy 

our crushed soy so that they can retain those jobs for its workers. In alfalfa, China has 

selectively blocked imports of U.S. product by refusing to accept international standards, despite 

the proven impact on improving the yield of dairy cows. 

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For years, China refused to buy our pork products. Yet, as Chinese household incomes rose, 

consumers reached a point where they could afford more protein in their diet. Rather than opening 

their market generally to U.S. pork products, arguably the best in the world, they bought one of our 

leading vertically-integrated pork producers and processors, Smithfield Foods, to gain access to its 

genetic stock. This allowed China to expand its own production, rather than engaging in truly free 

trade. In 2015, WH Group, the Chinese company that purchased Smithfield Foods in 2013, reported 

that Smithfield provided 97 percent of U.S. pork exports to China, to the detriment of smaller 

farmers and processors throughout the United States. 

Tariffs should be used only as an emergency measure. In fact, they are designed to be 

uncomfortable and to get the attention of trading partners. But, in Ieday's climate, tariffs are 

necessary to bring about meaningful negotiations that have proved to be elusive despite ample 

opportunities for China and others to make positive reforms. If China is unwilling to come to the 

negotiating table and won't play by the rules, it should lose some access to the U.S. market. 

Otherwise, nothing will change and American jobs will continue to suffer at the hands of Beijing's 

practices. Imposing tariffs should be viewed as an emergency measure, one that is necessary to 

force China to change its practices and come to the negotiating table seeking a settlement that 

delivers on the promises they have continually made, but have not been forced to keep. China 

values access to our market above all else. 

Let's also acknowledge that the process by which this administration is delivering tariffs is 

far from perfect. We can quibble with the tactics, most notably the uncertainty that was created in 

steel markets. We were deeply disappointed that the administration waited months before delivering 

relief under Section 232. That delay gave foreign producers ample opportunity to stockpile steel and 

aluminum here on our shores in anticipating of future action being taken to limit imports. Total steel 

imports soared 15.4 percent in 2017, putting further pressure on an already stressed sector. And 

the mixed signals sent by the Administration on timing, scope, and applicability put more emphasis 

on the tactics than the overall strategy: To reduce unfair trade practices and global industrial 

overcapacity in steel to a point that they no longer harm America's national security. 

But, despite the shortcomings of the rollout, we do think it is entirely appropriate to put credible 

consequences on the table to leverage better outcomes. It is a mistake to suggest that tariffs simply 

"don't work," which is a popular talking point we hear from those seeking to capitalize on a return to 

the status quo of endless dialogue with China. Tariffs have been characterized as "draconian" and 

"reckless" by the same so-called experts who assured us China would reform when it entered the 

world trade system. Companies that have benefited from shipping jobs to China are screaming the 

loudest. It should come as no surprise that these same interests are now saying tariffs won't work. 

The research being produced by those opposed to tariffs is unfounded and has, in the past, 

proven to be w ildly inaccurate. Research released during the Section 201 action in 2002 to 2003 

made similarly exaggerated claims of job loss, but the International Trade Commission (lTC) 

questioned their methodology and cited another study showing that, within the broad definition of 

"steel-consuming industries• used, employment increased by almost 53,000 after falling 281 ,000 

prior to the tariffs. Studies claiming large job losses prepared by economists at the Trade 

Partnership have been shown to be wildly inflated, reliant upon nonstandard economic models, and 

based on assumptions that aren't reflective of current economic conditions. Put simply, these 

studies are wildly out of sync with the reality of the 2002 tariffs, as well as Ieday's circumstances. 

For example, the International Trade Commission (lTC) analysis of the Section 201 steel tariffs of 

2002 to 2003 found no discernible impact on the economy, a possible overall gain in GOP, lower 

domestic prices relative to foreign markets, increased year-over-year sales and profits for steel6 

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manufactunng consuming industries, and an improved employment situation among consuming industries. It's also 

worth noting that the largest price shock steel consumers have faced over the past two decades 

was the result of an overheated economy in China, and not through any specific trade action. 

Tariffs represent a very small share of the overall economy. The estimated $9 billion in steel 

and aluminum tariffs represent a tiny fraction of the overall $20 trillion economy. With respect to the 

proposed 25 percent Section 301 tariffs covering about $50 billion of Chinese imports, it is too soon 

to assess their actual size and scope. But, even if the President follows-through on that amount, 

plus an additional $100 billion of Chinese imports, the impact remains modest compared to the 

overall economy, the barriers our exports face when entering China, the theft of our IP, and the 

surging bilateral trade deficit that is currently in place. All U.S. goods exports to China amount to 

less than 0.7% of U.S. GOP, while the American consumer is indispensable to China's economy. 

More than 20 percent of China's exports head straight to the United States. 

Everyday consumers will see very minor cost Impacts, If any at all. That will ultimately 

depend on whether the consuming Industry passes along costs of absorbs them. There is 

about one ton of steel in the average North American automobile - at today's prices, that is about 

$700 of steel. A 25 percent tariff on steel would therefore only increase the price of a car by about 

$175. There is about 3 cents worth of aluminum in a beer can. A 10 percent tariff on aluminum 

would therefore only increase the price of an entire six-pack of beer by one and a half pennies. It's 

also a fair question to ask steel and aluminum consuming companies that have complained about 

the tariffs if they have ever demonstrably passed along the cost savings they accrued through 

purchases of dumped or subsidized product to consumers. I haven't noticed changes in the end 

price of autos or beer as commodity prices plunged, which leads me to believe that these 

companies and their shareholders pocketed the savings. rather than American consumers. 

Trade enforcement is within our rights and the reaction has been overblown. Trade 

enforcement actions are common, with 82 new antidumping and countervailing duty cases initiated 

in 2017 and a total of 411 orders in place across a range of different industries, covering both allies 

and strategic competitors. In the case of the Section 232 action, the United States is on firm ground 

in citing national security as a rationale, as provided for under Article XXI of the General Agreement 

on Tariffs and Trade (GATI). Threats and fears of retaliation sholfd not deter America from using 

the tools available nor from putting an era of trade surrender to an end. The United States will 

vigorously defend its interests at the WTO if other nations seek to retaliate Without proper cause. 

The tariffs currently in place and under consideration are nothing like "Smoot-Hawley," an argument 

that has no basis in historical fact or present circumstances. The Smoot-Hawley Act, which included 

tariff changes impacting 20,000 categories of goods, was enacted by Congress in 1930 amidst a 

nosediving economy and in the wake of a stock market crash. Even Nobel Prize-winning, free trade 

economist Paul Krugman says the 1930 action didn't cause the trade contraction that was already 

underway. 

Mr. Chairman, the legislative authority for the President's action on steel -Section 232- is 

derived from the Trade Expansion Act of 1962, a notable achievement that included authority 

to cut tariffs, provided adjustment assistance for Impacted workers, established the United 

States Trade Representative's office, and ensured Imports did not harm national security. 

This "three-legged stool" of U.S. trade policy- expansion, enforcement, and adjustmentprovides a sound framework for progress, so long as all aspects of the policy are robust. 

However, Congress and the Administration have all too often neglected enforcement and 

adjustment as we have broadly expanded trade. 

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Trade-impacted workers are unlikely to ever find a better job than the one they lost, and a 

significant number will never work full time again. Our safeguarding tools, meanwhile, are only 

selectively employed. President Reagan, often cited by Trump, oo-..asionally took them up- on 

motorcycles, semiconductors, automobiles, currency exchanges, and steel. Presidents Bush and 

Obama invoked them at limes, too, but our wariness to offend importers and trading partners has 

effectively relegated them the back bench of our trade policy. 

A third of the country's manufacturing jobs have vanished in little more than a decade, and there is 

a growing body of evidence showing that Chinese imports were the primary cause. We now find 

that trade is at a tipping point in the eyes of Americans of all political backgrounds, who perceive 

that they are getting a raw deal on trade. For these Americans, our nation has been in what feels 

like a trade surrender for several decades now. They don't view the Administration as having fired 

the opening shots of a trade war. 

Thank you for the opportunity to testify at today's hearing. We look forward to working with you 

and members of the committee to strengthen America's economy and national security through 

smart trade policy. 

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Chairman BRADY. Thank you, Mr. Paul. 

Mr. PAUL. Thank you, Mr. Chairman. 

Chairman BRADY. Thank you all for your excellent testimony. 

We will now proceed to the question and answer period, and I will 

begin. 

Mr. Kennedy, your company employs 350 people in Splendora, a 

town of less than 2,000 people. It would be hard to overestimate 

just how important your company is to that community. Your family, your father, your business has a wonderful reputation, and you 

took it and expanded over many years of work over and over again. 

You have been involved in the community, you are involved in the 

Chamber of Commerce, the Rotary Club, and you have a heart for 

the poor, supporting schools in Guatemala that help Mayan children who would not get an education get an education. So you are 

Main Street, America. 

So recently, Congress, working with President Trump, redesigned 

the tax code, lowering the rates for businesses to the lowest in history and redesigning the tax code so our local businesses could 

compete and win anywhere in the world, including here at home. 

So first, can you describe the effects of the tax cuts on your business and the demand for your products? 

Mr. KENNEDY. Sure, thank you. The tax reform was good because one, it created certainty. I mean, it allowed us to invest in 

equipment and we had plans for spending a lot of the money that 

we were able to make. We were already competitive before the tax 

reform against foreign competition. All the tax reform did was 

make us even more competitive. Like, we were just planning and 

setting on winning more work, creating more jobs, and we had the 

opportunity to do that. 

Now, the tariffs, on the other hand, I think for us, specifically, 

more than offset that. 

Chairman BRADY. Yeah, let’s talk about that a second. So look, 

it is not enough to merely buy American, we have to sell American 

all throughout the world. The tax code was designed to do that. 

You, in your testimony, said tariffs were effectively taxes that are 

paid by U.S. companies, and ultimately, workers. So what was the 

impact of the tariffs? How did they undermine any improved competitiveness from the tax cuts? 

Mr. KENNEDY. First of all, they created a lot of uncertainty in 

the market. Nobody invests when they do not know where the market is going to go. I mean, it completely halted uncertainty. What 

they are certain about is that they can go to our foreign competitors, manufacturers, and ship the stuff in at the same price they 

could before without a tariff. For us, they do not know where our 

pricing is going to go. We have already told them it is higher. 

We have gone back to every customer to say, ‘‘Sorry, we are paying 40 percent more for steel, we cannot bear that cost.’’ And our 

customer says, ‘‘Well, we cannot bear that cost either.’’ You know, 

the tariffs in some ways are good, and I hear across the panel they 

are—the attempt is to punish China, but, you know, this is not just 

punishing China. If you want to punish China, make it surgical. 

Punish China, we have a lot of free trade—fairly-traded steel 

that does not make its way here that we cannot get our hands on, 

and if the U.S. steel producers—which we need, we love U.S. steel 

54 

producers—if they cared as much about American jobs, why does 

the price increase 40 percent? The tariff was only 25 percent. But 

they clearly took advantage of a market because of demand, everybody tried to buy their steel at one time, all of a sudden there is 

no imports coming in the water, and, you know, price gouging— 

there is laws against price gouging in many scenarios. But in this 

instance, we are doing it to our own manufacturers. 

And, you know, I do not necessarily blame all the mills for trying 

to recover some of the losses that China has put on them unfairly. 

I just think there is a more tactical, surgical way to address that. 

Chairman BRADY. So your point is target the unfairly-traded 

products—— 

Mr. KENNEDY. Right. 

Chairman BRADY [continuing]. And leave the fairly-traded products—— 

Mr. KENNEDY. And if you are going to do the tariff, include the 

whole chain. Do not create a giant loophole that makes it easy for 

these guys to self-fabricate their steel. 

Chairman BRADY. A final point. Do these tariffs help you sell 

more made-in-America products overseas, or less? 

Mr. KENNEDY. No, they absolutely hurt us. I mean, they do not 

just not help us, they hurt us. 

Chairman BRADY. Okay. Thank you. Mr. Neal, you are recognized. 

Mr. NEAL. Thank you, Mr. Chairman. We all acknowledge the 

complexities about how steel and aluminum tariffs will work and 

how they might become effective to achieve goals. But in some 

ways, we are still not sure that the Section 232 actions really are 

to play out, because country exemptions are still being negotiated 

and product exclusions are still being requested, and the Administration has made clear that it is reserving the right to revisit the 

overall tariff levels of 10 and 25 percent for aluminum and steel. 

And I think there is an opportunity to hear from our witnesses 

about these complexities. 

Mr. Paul, with respect to both the steel and aluminum tariffs, 

could you talk about why the next steps that the Administration 

takes on country exemptions are critical to whether or not these 

tariffs will be effective in achieving the intended goals? 

Mr. PAUL. Thank you, Mr. Neal, and I think that is the appropriate question. There has been a focus on China, and I will say 

people rightly point out that China is our number 11 importer of 

steel. But China’s market-distorting behavior has an impact, a dramatic impact on global steel markets, which is why I think the Administration came forth with a global solution. 

The direction I think that we are headed in, if we look at South 

Korea, are negotiated agreements, particularly with trading blocs 

like the EU, that look at maintaining a level of market certainty 

in the United States that will allow the industry to recover some 

lost import market share. 

As Mr. Newport mentioned, imports are almost at an all-time 

high in the United States as a percentage of our market share. Capacity utilization for companies is still only at 75 percent, far below 

the level needed to assume any sort of sustainability to provide for 

our national security needs. 

55 

What I would like to see as we move forward is both an agreement by our trade partners to approach China through the WTO 

and other means to essentially quarantine its unfair trade practices, because this is where most of it is originating from. The reason why some other nations have been included in this is that Chinese steel is transshipped; it comes through Vietnam, it comes 

through Korea, it comes through Malaysia, it comes through Indonesia. And we need commitments from these trade partners that 

they will not allow Beijing to undermine market disciplines. 

China has refused to operate by market disciplines in steel and 

aluminum since it joined the WTO in 2001. There is no single WTO 

case that any member could take against China that would change 

this. It is going to take a dramatic effort. I think the Administration has started the ball rolling. I want to see it keep going in the 

right direction. 

Mr. NEAL. Thank you, and as we hear from our witnesses that 

are involved in the product exclusion process, especially since the 

Department of Commerce has already received more than 800 specific exclusion requests, I think we might hear from Ms. Wilson, if 

you could speak to that issue. 

Ms. WILSON. Thank you, Congressman. So we represent a lot 

of what are called tier-one suppliers. They are very large global 

companies, but we have 1,000 members. A lot of our members are 

smaller, maybe have one or two manufacturing facilities in the 

United States. We have been very concerned, first of all, the product exclusion process is not necessarily transparent. There have 

been some changing rules on it, and it is hard for those suppliers 

to understand exactly how they get into the process, and that is 

part of the 800 applications. 

We would like to see, I think as Mr. Dooley mentioned, the ability to have a product exclusion over a wide range of products so 

that, you know, competitors do not have to go in multiple times 

asking for exclusions for the same product that is coming from the 

same place. 

We also would like to be able to—for our trade association to be 

able to apply for an exclusion, because as you can well imagine, 

many of our manufacturers do not have trade staff. They do not 

have legal staff. They are going to have to pay for that to be able 

to file for the exclusion. We also think a sunset would be important, or at the minimum, a Committee like this to be able to regularly review this and see what this is having an impact on in the 

consuming industries. And we would like to see the country exclusions to include things like Switzerland and Japan. 

We worked with Congresswoman Walorski, we really like the 

fact that we have the duty drawback piece. But we would also like 

to see—like you said, there are over 800 applications. In my understanding, as of this morning, about 50 of them are public. So we 

would like to see the duty drawback come from the time of applying for the exclusion, rather than the time that it is made public. 

Because, you know, a month of duties could be a lot of money for 

a lot of these companies. 

So we think there is some room for improvement, but we really 

have to help focus in on how they do it. I was real interested in 

talking about, you know, what we also have for finished product. 

56 

We have things like aluminum wheels and bearings, they are subject to the tariff. That is difficult. 

Mr. NEAL. Thank you, Mr. Chairman. 

Chairman BRADY. No, thank you, Mr. Neal. Mr. Johnson, you 

are recognized. 

Mr. JOHNSON. Thank you, Mr. Chairman. Let me begin by saying I strongly oppose the tariffs on steel and aluminum. And as I 

have stated before, my primary concerns are that these tariffs pose 

a serious risk to our economy and could trigger a trade war, and 

they may damage our relationship with our key allies. 

I was, however, glad to see that President Trump has temporarily exempted a number of our key trading partners and allies 

from these tariffs. But make no mistake, the effects of these tariffs 

are wide-ranging and will affect folks across our Nation. It is not 

just affecting business. 

Collin College in my district serves about 53,000 students each 

year and offers more than 100 degrees and certificates. In fact, the 

college is planning a $600 million building program that will be 

completed over the next 7 years and will create nearly 400,000 

square feet of new classroom space. And the project will allow the 

college to provide high-quality education to more folks. But Collin 

College is now concerned by the tariffs on steel and aluminum, due 

to the increased cost of construction materials. 

Dr. Pepper is another constituent of mine, which is headquartered in my home town of Plano, Texas. And I have heard from this 

company that they are concerned by the higher cost of aluminum 

used to make cans, potential retaliatory tariffs on other materials, 

and the impact higher costs will have on consumer consumption of 

their products. 

Mr. Kennedy, as a fellow Texan, I would like to welcome you to 

this Committee. And you know Texas leads all States when it 

comes to importing steel and aluminum products, so that is a big 

deal, it could really hurt Texas. Mr. Kennedy, can you tell me 

about how tariffs on steel and aluminum have impacted jobs and 

exports at your company? 

Mr. KENNEDY. Sure, thank you, Mr. Johnson. As I had, kind 

of, mentioned before, we compete directly with companies in Canada and Mexico, and they are not having to pay tariffs. So at the 

end of the day, they are able to fabricate and manufacture their 

goods, modify the steel to create a product, and sell it directly to 

our customers. 

The structures that we make are large enough that it makes 

sense to be able to ship them. There is a lot of labor that goes into 

them, and we have worked extremely hard over the last decade implementing technology-efficient processes in our manufacturing so 

that we can out-compete just about anybody when it comes to labor 

efficiency. 

You know, people say that American manufacturers have a hard 

time competing with labor. Maybe from a cost-per-dollar standpoint 

of the wages paid, because we pay decent wages here. We have 

made up for that with efficiency. But that efficiency goes out the 

door if our competitor has a 40 percent price advantage on material 

costs. 

57 

And, you know, I can sympathize with our mills, but at the end 

of the day, we buy from the mills. And if we are not buying the 

U.S. steel mill-produced steel, then how are they—how are their 

jobs, how are all these jobs they are talking about creating, how 

are they going to be sustainable? You know, they are sustainable 

right now because the mills are producing at capacity today. 

Like, today, you have to get in line. But that is because everybody put their orders in right away. We are one of those. We had 

to, the costs were skyrocketing and we have projects that are due. 

So we had to buy right away and created a temporary demand. But 

we cannot pay those prices, and our customers will not pay them. 

Thank you. 

Mr. JOHNSON. Thank you, I appreciate that. Thank you, Mr. 

Chairman, I yield back. 

Chairman BRADY. Thank you, Mr. Johnson. Mr. Levin, you are 

recognized. 

Mr. LEVIN. Thank you, Mr. Chairman. Welcome to the panel. 

You effectively reflect the present clash of different interests in approaches to trade, that is very clear. For decades, our Nation’s 

trade policy has been handicapped by allegiance to theories illequipped to respond to the realities of rapidly-advancing 

globalization. Japan used a tightly-knit economic structure, operating in its closed market, and manipulating its currency, to take 

full advantage of the open U.S. market with only a lurch in U.S. 

policy or action here and there. 

NAFTA represented the first major individual trade agreement 

with a developing nation, with a very different, deeply-imbedded, 

low-cost labor structure and woesome environmental standards. 

But the only safeguard was a non-enforceable side letter. 

And when China responded to its entry into the WTO with increased, huge governmental expenditures with state-owned enterprises and major currency manipulation, the United States failed 

to use the surge provisions and the annual review provided in 

PNTR, and engaged in innumerable discussions, but no actions on 

currency, action that was opposed by the majority here. 

There were some successes that changed the May 10 provisions 

on labor environment in retention of AD/CVD, a form of tariffs, 

which we fought to retain in the Uruguay round, but it has turned 

out not to be enough. Prevailing doctrine often became dogma. Essentially, alternatives for action were dismissed as protectionism. 

There was little acknowledgement that the notion of comparative 

advantage could be comparative disadvantage. Now these chickens 

have come home to roost. 

We are caught in years of inaction and ineptitude, and international trade policy with important roots after the Second World 

War came too often rigid and insensitive on steel and aluminum, 

I urge. It means using proposed tariffs as a way to achieve a long 

overdue global solution to a long-known problem of a huge glut 

caused mainly by China. Also it means addressing at long last China’s perpetual mistreatment of intellectual property. 

On NAFTA, I urge we negotiate it. But only if Mexico effectively 

addresses industrial policy and practices. Keeping labor costs cheap 

at all costs, with workers without any rights and take-home pay at 

$1 or $2 an hour, not only keeps Mexican workers from becoming 

58 

part of their middle class, for American middle-class workers, it is 

impacting their jobs and suppressing their wages. That issue has 

been acknowledged by the Administration, but so far, the search 

has been in every which way except the only way that can work. 

I want to point now, if I might, to what you said, Mr. Paul. And 

I urge we all take this seriously. On page one, you say, ‘‘We view 

the threat or imposition of tariffs as a necessary step to achieve 

real progress, which includes reforming anticompetitive practices 

and reducing market-distorting behaviors,’’ and later on you talk 

about the need for a global solution. So let’s all try to focus on that 

for one second. 

A global solution. You say tariffs are necessary as a step in that 

direction. Right? 

Mr. PAUL. I do, Mr. Levin. Yes. 

Mr. LEVIN. And so I wonder if anybody here disagrees with 

that? You know, you do? Cal. 

Mr. DOOLEY. Yeah, I would just suggest that when you have 

the United States taking a unilateral action in the implementation 

of tariffs, now that invites a retaliation targeted at the most competitive sectors of the U.S. economy—— 

Mr. LEVIN. Okay, but let me—— 

Mr. DOOLEY. Just excuse me, if I can respond to my question. 

Now they are—— 

Mr. LEVIN. No, but you said a caveat—— 

Mr. DOOLEY. Now they are imposing retaliatory tariffs not 

against French wine makers, they are imposing tariffs—— 

Mr. LEVIN. Yeah, I understand that. I understand that. But you 

need to—and we have talked about trade for years—tell us how we 

are going to reach a global solution on a glut of Chinese steel that 

has cost American jobs. You need to answer that. 

Mr. DOOLEY. We do, and it takes—— 

Mr. LEVIN. You do not. 

Mr. DOOLEY [continuing]. Leadership to engage with our allies—— 

Chairman BRADY. Thank you all, time has expired—— 

Mr. LEVIN. We have been engaging for years, Mr. Dooley. 

Chairman BRADY. Thank you, all time is expired. Mr. Nunes, 

you are recognized. 

Mr. NUNES. Thank you, Mr. Chairman. I want to first welcome 

Mr. Dooley here, who is from the San Joaquin Valley. Glad to have 

you back, former Congressman, long-time Congressman. Thanks 

for being here. 

So one of the things that I—I think we have to proceed very, very 

carefully as it relates to these tariffs that are being imposed. Most 

people in Congress agree with the Administration that China has 

to be taken on for a number of reasons, and I could go off, number 

off, tick off a whole list, but I think I will focus mostly on the stealing of intellectual property that they continue to engage in. 

So we need to proceed very, very carefully as a country as we implement these tariffs, and be very, very careful that we do not have 

unexpected results from taking rash or quick decisions. So one of 

the concepts that I have talked about in the last trade hearing that 

we had was maybe focusing on a few Asian countries. The Administration has expressed an interest in doing bilateral agreements, 

59 

and perhaps there are some Asian countries that we could focus on 

that were part of the TPP agreement that—where a lot of the negotiations have already taken place. 

I have talked about Vietnam and Japan as being a couple of 

those. There is another country, the Philippines, that wasn’t directly involved in those negotiations. But I think that is another 

opportunity for us. They would open up a lot of market, so at the 

same time you are putting tariffs on China, you would be trying 

to open up markets as quickly as possible with allies who could 

take some of the American products. 

With that said, and I want to leave this up to the whole panel, 

but Mr. Dooley, you have been around these trade issues for a long 

time, and this maybe is not in your wheelhouse exactly, but if you 

could talk about maybe some of your experience in Asia and some 

of those opportunities that we may have moving forward in your 

mind, you know, where do you see the best opportunities for the 

United States where we could move the quickest to open up, you 

know, sizeable markets that would make a difference to the United 

States? 

Mr. DOOLEY. Yeah, thank you, Congressman Nunes. I think 

you referenced the Trans-Pacific Partnership. I mean, here was an 

example where the United States was engaged with a number of 

other Pacific Rim countries in a collective effort to try to advance 

the opening of markets. In large part, that—if you were trying to 

address some of the actions of China, it was pulling that group of 

countries together that was going to be one of the most effective 

ways to achieve that outcome. 

So we look at, you know, if you look at the rapid growth and the 

increase in the per capita GDP in the Asia region, this is going to 

be one of the most rapidly-growing consumer markets that will provide tremendous opportunities for chemical manufacturers, other 

manufacturers, and certainly U.S. agriculture. It also gives us the 

opportunity to engage in the issue of transshipment of products 

that Mr. Kennedy talked about. And it also gives us the opportunity to address, I think, again, a collective response to respond 

to some of the intellectual property practices that China has been 

taking advantage of that have—we have member companies that 

have really been harmed by that. 

Mr. NUNES. So Congressman, if I may ask, of those—we know 

that the TPP, for now, has been shelved, but a lot of the negotiations have taken place. I mean, a lot of them, and the deal was 

practically in its final stages. For your industry now that you are 

involved in, which of those countries, if you could pick a handful 

of them, which of—could you name two or three or four that might 

be beneficial if we were going to explore a bilateral arrangement? 

Mr. DOOLEY. Yeah, well it is hard for me to respond to that directly. I mean, we are concerned that if you try to engage in an— 

you know, strictly in bilateral negotiations, it really gets very, very 

difficult in terms of, you know, capitalizing on the real opportunity 

we have to maximize our competitive advantage. When we take a 

regional approach, you know, that is going to be much more effective in, again, in meeting the—I think the opportunities that our, 

you know, most competitive industries have to address. I will get 

back to you with the specific—— 

60 

Mr. NUNES. Yeah. 

Mr. DOOLEY [continuing]. Countries of—— 

Mr. NUNES. And I am out of time, but maybe for the rest of you, 

if you could put any thought into this of—in your particular industries, I would be interested to have that for the record. Thank you, 

Mr. Chairman, I yield back—— 

Chairman BRADY. Thank you, Mr. Nunes. Mr. Lewis, you are 

recognized. 

Mr. LEWIS. Thank you, Mr. Chairman. Let me thank each and 

every one of you for being here. Mr. Paul, how important is it that 

we work with our friends and allies who share our concerns and 

our values? 

Mr. PAUL. I think it is critically important that we do that, 

which is why I am pleased with respect to the Section 232 process 

on steel and aluminum, that processes were set out for Canada and 

Mexico as well as the EU, Korea, Australia, Argentina, and Brazil 

to provide some level of exemption while specific details could be 

worked out. 

If we look to Korea as an example, where I think that I—at least 

from my perspective, the U.S.-South Korea Free Trade Agreement 

was inadequate to meeting the needs of domestic workers in manufacturing. We were able to use the process under Section 232 and 

the country exemption to make some progress with respect to balancing that trade relationship. 

South Korea agreed to limit its shipments of steel—much of 

which originates in China—to the United States at 70 percent of 

its recent levels, an effective quota; agreed to some additional market access for automobiles, although I do believe we have a long 

way to go there; and some recognition of currency. Again, I think 

we have a ways to go there. 

But I do think that this process can be useful in engaging our 

allies both to apply pressure to the overcapacity issue, most of 

which emanates from China, as well as to settle some—what I 

would call irritants that we have in our own trade relationships 

with these nations. 

Mr. LEWIS. Mr. Chairman, I would like to yield the balance of 

my time to Mr. Pascrell. 

Chairman BRADY. The gentleman controls the time. Mr. Pascrell. 

Mr. PASCRELL. Thank you, Mr. Lewis, and thank you, Mr. 

Chairman. I will save my comments for later. I have some questions, though. 

It struck me that it depends on what part of the country you live 

in that really provides you with the impetus on what you feel and 

what you think about tariffs and trade, and which industries are 

protected, and which industries are not, winners and losers, like 

anything else. So I approach this, looking back over the last 20 

years, the tariffs can be a tool, but I think we make a mistake 

when we use them as a weapon. 

I have a question. Mr. Dooley, in New Jersey, they have over 

100,000 people that work in our chemical industry. These companies employ a lot of people, spend a lot of money, and those employees spend a lot of money. Recently, I visited one of these companies in my district, in Lyndhurst, New Jersey, Sika—S-i-k-a. 

61 

They use chemicals in the manufacturing of products that go into 

our roads, our bridges, et cetera, et cetera. They are probably one 

of the top three companies in the country that do that. 

Can you explain how the chemicals in the tariff of 301 that we 

are talking about here, on that list, impact companies like Sika in 

my district? 

Mr. DOOLEY. Congressman Pascrell, I would maybe ask you to 

review the Brookings Institute study, I think it just came out yesterday or a couple days ago—— 

Mr. PASCRELL. Yes, it did. 

Mr. DOOLEY [continuing]. Where they identified those sectors of 

our economy that would be most impacted or most exposed to the 

increased tariffs. Number one on that list was plastics and chemical composites. Many of those would probably include the products 

that Sika is putting into the marketplace. So with that implementation of those tariffs, any market opportunity they had to export 

into China would adversely be impacted and would be able to create a market opportunity for other companies that were operating 

in other parts of the world. 

Mr. PASCRELL. So we are not debating here, are we, Mr. 

Dooley, whether or not China has been a bad actor. 

Mr. DOOLEY. Absolutely. 

Mr. PASCRELL. I do not think anybody, Democrat, Republican, 

Independent, would conclude from what—looking at their behavior 

that they need to, in some way, be impacted. And we need to think 

about that. 

Mr. DOOLEY. Absolutely. 

Chairman BRADY. Thank you. 

Mr. PASCRELL. Thank you. 

Chairman BRADY. All time is expired. Yes, Mr. Lewis, thank 

you. Mr. Reichert, Chairman of the Trade Subcommittee, you are 

recognized. 

Mr. REICHERT. Thank you, Mr. Chairman. I want to thank you 

all for being here today and for your testimony. And I would especially like to thank John Wolfe, Chief Executive Officer of Northwest Seaport Alliance, for joining us all the way from Washington 

State. 

I share the Administration’s goal of addressing unfair trade and 

ensuring American workers and businesses can compete on a level 

playing field. But as we evaluate strategies to combat China’s 

cheating, we need to put all American workers, all businesses first, 

and put forward the strongest approach. I think our response is 

strongest if we work with our global partners. 

And I thank the Chairman for holding this very important hearing so that we can consider the impact of both 232 and 301 tariffs 

on the consumer, on the worker, on small business owners, as well 

as on all the jobs that are tied to two-way trade. So it is not just 

about the direct importer, direct exporter; it is about the ripple effect across our country and our economy. It is about a family that 

is facing higher prices at the store or the aerospace employee putting the finishing touches on an airplane, the cherry grower who 

relies on sales to Chinese customers, and the longshoreman working at the port. 

62 

In Washington State, we often refer to ourselves as the most 

trade-dependent State, highlighting the fact that we have at least 

40 percent of our jobs directly tied to trade. And we do this because 

of examples like Mr. Wolfe has shared with us today. 

So my first question is to Mr. Wolfe. Can you describe the importance of your operations not just to Washington’s economy, but to 

the entire country as a whole? 

Mr. WOLFE. Thank you, Congressman. As you mentioned, we 

consider ourselves not just a gateway for the State of Washington, 

but for many regions throughout the United States. Some 60 percent of the cargo moving through the State of Washington moves 

inland to other markets, and the reverse is true for exports. It is 

also important to note that there is a direct correlation between imports and exports, and that the trade supply chain is somewhat 

complex, yet intertwined. 

So if we take steps that damage our export opportunities, we can 

be sure that that will impact not just the State of Washington and 

the important jobs—some 40 percent of the jobs in the State, but 

certainly throughout the Nation. So as it has been mentioned before, we support the notion of holding our trading partners accountable to fair trade. 

Yet, I think we need to use caution in terms of that tool that we 

talk about, tariff, to apply to fair trade. We would rather see the 

Administration work closely with a valued trading partner, China, 

one of our most important trading partners, to address some of 

those issues that we are talking about today. 

Mr. REICHERT. And as the Administration receives and evaluates comments on the Section 301 tariffs, in your view, what is the 

most important message that you hope the Administration hears? 

Mr. WOLFE. I would say, that building upon what I have shared 

about the connection and correlation between imports and exports, 

if we damage our import opportunities as a result of trade barriers 

or tariffs, we damage our export opportunities. And there are small 

businesses that are seeking global markets. And if they do not have 

the equipment, the vessel space, the infrastructure to execute on 

their foreign trade strategy, then we limit the job creation and the 

benefits of free trade or fair trade throughout the Nation. 

So I would say that the most important thing is to understand 

that correlation between imports and exports, and make sure that 

we take a laser focus on those issues where we feel like there is 

unfair trade practice. 

Mr. REICHERT. Great, thank you. Mr. Heisdorffer, I am hearing 

from my community, they are concerned about losing market share. 

And I am assuming you are, too. If we do that, and China removes 

tariffs and we are back in the game again, do you expect to gain 

those market shares back? 

Mr. HEISDORFFER. At this point, yes, I think so if this is rescinded right now. Is that what you are talking about? Or—— 

Mr. REICHERT. Well let’s say it goes on for a while, and finally 

China decides to do away with the tariffs, then we have a market 

share we have lost. How hard is that to get back? 

Mr. HEISDORFFER. That is very hard to get back, sir. Those 

market shares will probably go to South America. South America 

has much more land that can go into production. They are sitting 

63 

there just—I will be loving every bit of this—you know, where we 

are in this situation. But right now—— 

Chairman BRADY. Mr. Heisdorffer, I apologize. Time has expired. I hope we will be able to get back to that answer, okay? Mr. 

Doggett, you are recognized. 

Mr. DOGGETT. Thank you, Mr. Chairman. Mr. Chairman, as 

you know, you and I are not regularly in agreement on issues before this Committee. But I think insofar as your opening comments 

emphasize the importance of focusing on the predatory practices of 

China and on supporting a targeted approach where we are not 

going it alone, but working with our allies, that you have it about 

right. 

The main problem I see in the immediate future there, since we 

are governed on everything from immigration to whether the Special Counsel’s future is preserved by the majority of the majority, 

that a majority of the Republican Caucus has not joined your letter 

to the President, including one-fourth of the Members of this Committee. And I would hope that our witnesses will focus their attention while they are here in Washington on those many Republicans 

who have not joined that targeted approach, or who are, just as is 

so often the case, cowered by whatever tweet the President puts 

out. 

I would ask our panel members when Secretary Ross was here 

recently. And it is disappointing we do not have any Administration official or any real China expert on the panel here this morning to discuss what the Administration’s policy is. But when he was 

here on other matters, I asked him about the third alternative, the 

targeted approach, that he advances. This was one of the three alternatives that he presented to the President on steel and aluminum—an approach that would have targeted the tariffs on 

China; on Russia, notably; and on some of the countries like Vietnam that are major transshipment points. 

And I really couldn’t get any explanation as to why he did not— 

why that approach, that alternative was rejected by the White 

House and instead we took the, kind of, shotgun blunderbuss approach to cover everyone initially. Have any of you or your associations been advised of why the targeted approach against Russia 

and China and the other countries that he proposed was not utilized? Mr. Newport. 

Mr. NEWPORT. Yes, I would comment on that, and I believe the 

reason it wasn’t taking that approach was because of the ease that 

we have seen of the—if we targeted, say, China, they have figured 

out how to cheat the system and how to beat it. 

So, you know, we have had trade cases and other things in which 

we have gone against China, and they have figured out how to go 

through other countries. So it will just appear elsewhere if you only 

picked a handful of people. And I think if you look at—there were 

three alternatives put out there, the President took option one. But 

with the exemption process that is being discussed, you are really 

falling into option two. 

Mr. DOGGETT. Well, he took an approach that covered everyone. He gave a bit of uncertainty to countries that we actually have 

a trade surplus with, if that is to be the measure. And it seems to 

me that in the list in option three, they had a number of the transVerDate Sep 11 2014 10:24 Mar 25, 2019 Jkt 033810 PO 00000 Frm 00067 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\33810.XXX 33810
64 

shipment countries, and that the focus there would have gotten us 

a better result. 

In fact, an example of that is what has happened with Russian 

aluminum. For other good reasons, as you probably know, very belatedly, the Administration finally singled out the aluminum magnate from Russia that provides most Russian aluminum, and since 

singling him out with sanctions, Rusal’s shares have lost half their 

value and the London Metal Exchange has said it will not stock 

Rusal metal. And that is a unique situation, but it seems to me to 

show the value of targeted sanctions rather than just applying it 

to everyone. Let me ask you in the minute that I have left if any 

of you can tell me, since we do not have an Administration official 

here, exactly what the Trump trade policy is on steel and aluminum? Or China generally, or anything—any aspect of it, if you 

could describe—— 

Mr. PAUL. Mr. Doggett. 

Mr. DOGGETT [continuing]. What the policy is. 

Mr. PAUL. Yeah, just with respect to steel—and I think it is 

worth reading the Section 232 report, that there is a—and Mr. 

Newport described this in his testimony, that there is a gross 

amount of overcapacity in the system that leaves both—it impacts 

from China, from transshipments from China, and then anticompetitive practices that result from oversupply that needs to be 

addressed that is having a material impact on our ability to supply 

for our own national defense. 

In addition to Mr. Newport’s example, there is the example of 

armor plate. And there is only a handful of makers of that left. And 

so I think with respect to steel, it is this ability to provide some 

market certainty for domestic steel makers to provide for our national defense. 

Mr. DOGGETT. Thank you—— 

Chairman BRADY. Thank you. Mr. Roskam, you are recognized. 

Mr. ROSKAM. Thank you, Mr. Chairman. Mr. Kennedy, one of 

your opening sentences resonated with me. I represent suburban 

Chicago, and I have a lot of manufacturers, and very sophisticated 

manufacturers at that, many of them manufacturing five times to 

the right of a decimal. And I think the sentence that I—it was in 

your first paragraph, and I will paraphrase it. What is presented 

as a tariff on foreign steel has become a tax on U.S. manufacturing. 

And that is what I am hearing from my constituency. 

So I was out recently at a company in my district, they import 

specialty steel that is not available here domestically. They showed 

me a letter and, you know, here is the letter, it is from their supplier, that says, basically, ‘‘Not it.’’ This 25 percent is on you, you 

make the point that there is an exacerbating impact of that, and 

it is not just the 25 percent. 

What I wanted to explore is something I think you talked a little 

bit about, but maybe to press it a bit more deeply, and that is that 

the impact of the tariffs could have this really perverse effect of 

creating an incentive for more imports of finished products that are 

created outside the United States. 

You mentioned, you know, the Chinese doing an end-around and 

doing, sort of, de minimis changes to steel. Are you seeing that 

65 

with your peers? Can you just give us a little bit more color commentary on that? 

Mr. KENNEDY. Sure. Absolutely, thank you, Mr. Roskam. Well, 

we see it every day. We were talking about the energy expansion 

and the building. You know, these LNG terminals on our coast, already half the steel comes from China. I mean, we are talking 

about billions of dollars of manufacturing and fabrication, and right 

now, the U.S. fabricators like myself and even some companies 

larger than us, we provide the other half. 

You know, the long-lead items they can get from China because 

it is cheaper. We have a geographic advantage, we have a time— 

a lead time advantage, we are right here. What is happening now 

is look, they can just fabricate all the steel. If I have to pay 40 percent more for my steel—and steel makes up half the cost of our end 

product—then China can just fabricate all the steel. And they send 

it through Malaysia, they send it through Singapore, they send it 

through Indonesia. And at the end of the day, I do not understand 

the inability for a targeted approach. 

We have to provide traceability on our steel. Because our customers want to know that the steel was made to a certain quality, 

a certain strength. Steel has a variety of grades and strengths. 

There is not one carbon steel out there. So I do not know why we 

cannot have a directed, targeted approach. 

We should force our Malaysian exporters, or force the other countries who are our trade partners, to show where they got the steel. 

It is easy, they come with MTRs, material traceability reports, 

which show up on every piece of steel. We can enforce that if we 

want to, we can target where the punishment goes. 

Right now, you know, we are talking about picking winners and 

losers. And look, if we are picking losers, let’s pick the people—let’s 

punish the people that need to lose. Right now, we are picking winners and losers within the United States. We are picking winners 

in one industry and losers in a lot of other industries. 

Mr. ROSKAM. Let me shift gears a little bit and switch to a 

process question now. We have heard that there is going to be, you 

know, the ability to get exclusions and so forth. I will go back to 

the company that I visited. They are now in the process of trying 

to navigate through petitioning for 200 different products that apparently they have to—you know, submit this and have this big review and so forth. 

Do you have any insight on that? Do you have that range of 

products? Is this not a problem for you, is this easier for you? What 

is your experience? 

Mr. KENNEDY. Well I can only really speak for my business, 

but I would imagine it is similar in that really what it is creating 

is uncertainty. I mean, timing is important. 

Mr. ROSKAM. Right. 

Mr. KENNEDY. You know, right now, we build drilling rigs. 

That is one thing that we compete against Canada for. Once we 

lose market share, I have 200 employees that touch a rig from the 

time it starts, until we buy the steel the time it finishes. Well if 

we lose that portion, and I lose those employees, we have spent 

years building up a manufacturing process with training personnel, 

66 

getting people with the experience they need to build our products, 

to be better at building them than our competitor. 

When we build something for the first time, it is always worse 

than when we build it again. We get better and better at it. When 

we lose all of our intellectual property, which is our people, when 

we lose that temporarily, we may never get it back. 

Mr. ROSKAM. Yeah. That is good insight, thank you, Mr. Kennedy. I yield back. 

Chairman BRADY. Thank you. Mr. Thompson, you are recognized. 

Mr. THOMPSON. Thank you, Mr. Chairman, and I want to 

thank all of you for being here today telling us how these ongoing 

trade wars and potential for trade wars are affecting your particular sector. Hearing from you, I cannot tell you how important 

it is for us to hear from you, and how important it would have been 

had the President heard from you prior to launching his trade war 

efforts. 

I have voted for trade agreements, and I have voted against 

trade agreements. And I am not opposed to tariffs. I think they can 

be a very legitimate tool for trade when they are used strategically. 

But this Administration is using anything but strategy. The trade 

policies, they are all over the place. First, they want to renegotiate 

NAFTA. Then, they say they are going to walk away from NAFTA. 

First they say trade wars are good, then they say there are no 

trade wars. One thing is for sure, this type of Washington talk is 

bad for producers and it is bad for consumers. 

Just look at my State of California, in China’s retaliatory tariffs. 

Ninety percent of California’s top fruit and nut commodities are 

being hit. The Chinese already had a 48.2 percent tariff on wine, 

and as Congressman Dooley notedly pointed out, that when they 

put tariffs on wine, it is not against everything that is competing 

with the United States. Now, as a result of the President’s trade 

war, we are facing a 67.7 percent tariff on wine. This is 

unsustainable, and it has already had major negative effects on orders in my home district. 

By not having a cohesive trade agenda with consultation from 

stakeholders and from Congress, this could mean a major loss of 

jobs across many sectors. The California wine industry employs almost 800,000 people nationwide. How many of those jobs are going 

to be lost because of this tariff trade war nonsense? I would hope 

that future hearings will focus on smart trade policies that will 

promote strong economic ties and building American companies 

and producers. 

So, Mr. Chairman, I have two statements from the California 

Wine Institute that I would like to ask unanimous consent to have 

placed on the record. 

Chairman BRADY. Without objection. 

[The submissions for the Record of Hon. Mike Thompson follow:] 

67 

f 


33810A.034

Wine Institute Statement: China Tariff Increase on U.S. Wine 

Apr5.2018 

Effective Aptil 2nd, China has increased the tariff on U.S. wine Imports by 15°A.. This action was taken in 

retaliation for U.S. government trade actions on steel and aluminum. 

This wilt Increase the total tariff and tax paid on a bottle of U.S. wine imported into China from 48.2% to 

67.7%. Chile, Georgia and New Zealand wines enter China tariff-free and only pay the 27% combined tax 

rate. Australian wines wilt be tariff free starting In 2019. For more information on I he tariffs, please see 

the report pre~ USDA. 

"China Is an important and growing market for California wines,' said Robert P. "Bobby" Koch, President 

and CEO of Wine Institute. 'and we are disappointed by the Implementation of these additional tariffs. 

Over the last decade, we have made tremendous progress In developing a loyal and enthusiastic base of 

Chinese consumers who enjoy California wines and appreciate their quality. These tariffs put our 

products at a price disadvantage and we urge swift resolution of this issue before long-term disruptions 

are felt. We will continue to pursue our marketing initiatives In China with confidence that the popularity of 

California wines will continue to grow." 

China Is one of the fastest growing wine markets in the world and will soon be second only to the U.S. in 

value. U.S. wine exports to China and Hong Kong were up 10% in 2017 to S197 million. The value of 

U.SJCalifornia wine exports to China alone have increased 450% In the past decade. 

Contact: 

Wne Institute 

Communications Dept. 

communications@wineinstilute.or 

415/356-7525 

### 
68 

f 


33810A.035

Wine Institute Urges Resolution to Escalating Trade Dispute 

Mar 23, 2018 

SAN FRANCISCO- Today's announcement by China's Ministry of Commerce that it may impose 

retaliatory tariffs on U.S. wine imports could have a significant negative impact on the future growth of 

wine exports to China. China is one of the fastest growing wine markets in the world and will soon be 

second only to the U.S. in value. U.S. wine exports to greater China (including China and Hong Kong) 

were up 10% in 2017 to $197 million. The value of U.S./Californla wine exports to China alone have 

increased 450 percent in the past decade. 

"Chinese retaliation against U.S. wine would put our producers at a significant disadvantage in one of the 

most important markets in the world at a critical time," said Robert P. "Bobby" Koch, CEO of Wine 

Institute. "As a result of free trade agreements, a number of our foreign competitors will soon have tariff 

free access to the Chinese market. This, combined with additional punitive tariffs on California wine. could 

result in lost market share for years to come." 

The United States is a member of the World Wine Trade Group (WWTG) and Wine Institute has long 

supported the WWTG position that wine should not be used as a retaliatory target in unrelated trade 

disputes. "It is incumbent upon all parties involved to resolve this dispute in a way that does not harm 

consumers or the hundreds of thousands of workers who rely on the wine industry for their livelihoods," 

said Koch. 

Wine Institute is the public advocacy association of 1,000 California wineries and affiliated businesses 

responsible for 85% of the wine produced in the U.S. and 97% of all U.S. ''"ine exports. The California 

wine industry contributes $114 billion annually to the U.S. economy and employs 786,000 Americans 

nationwide. 

### 

Journalists requiring further information should contact the Wine Institute Communications Dept. 
69 

Mr. THOMPSON. And I would like to yield the balance of my 

time to our Ranking Member on Trade, Mr. Pascrell. 

Chairman BRADY. Mr. Pascrell, you are recognized. 

Mr. PASCRELL. Thank you, Mr. Thompson, Mr. Chairman. Mr. 

Paul, you described in your testimony, which I read—I apologize, 

I wasn’t here to hear all of it—how global excess capacity in steel 

devastated U.S. companies and workers. The problem has gotten 

worse since 2012, if you look at the numbers. Aluminum production 

has dropped 60 percent just in that time, and in 2016, the Global 

Forum on Steel Overcapacity—you are familiar with that—was created to find a multilateral solution, and the OECD has been working on this issue for years. 

Do you think that the Global Forum has been effective, in your 

view? And do you think that unilateral action actually has the 

chance to incentivize countries to more meaningfully engage in the 

Global Forum? 

Mr. PAUL. Mr. Pascrell, thank you—— 

Mr. PASCRELL. We are talking about consequences here. 

Mr. PAUL. Yes. It is an excellent question. And I do think the 

Global Forum has been helpful in putting some focus on the issues 

at stake. I will say it has been an excruciatingly slow process, that 

there are some key partners that are not engaged in the Global 

Forum that have pervasive unfair trade practices in steel. 

I will say the greater issue here, Mr. Pascrell, is that China first 

recognized that it had excess capacity about 8 or 9 years ago in 

steel, and its leadership has made continued promises to reduce 

that excess capacity. The opposite has, in fact, happened, and as 

China’s economy waxes and wanes, the rest of the world is caught 

up in this trade tsunami. 

The American workers suffer the most because we have the most 

open steel market in the world. Our market is uniquely penetrated 

by imports—they account for about 20 percent of our consumption. 

And while other blocs in the EU may put up some safeguards, we 

are left for the industry filing after the fact very expensive trade 

cases to try to make up the difference. That is not a sustainable—— 

Chairman BRADY. Thank you, Mr. Paul. 

Mr. PAUL [continuing]. Policy. 

Chairman BRADY. Time has expired. 

Mr. PASCRELL. Thank you, Mr. Chairman—— 

Chairman BRADY. Mr. Smith, you are recognized. 

Mr. SMITH OF NEBRASKA. Thank you, Mr. Chairman. Thank 

you to all of our witnesses here today. And certainly, you bring 

some important perspectives, and Mr. Heisdorffer, I appreciate 

your perspective on agriculture. And obviously, heading up the Soybean Association, you bring that perspective, but also as a corn 

grower and a hog producer, I think you have an additional perspective. And so there is your formal testimony that we certainly appreciate, but also, you know, the impacts that are taking place or 

might take place. 

If you could share a little bit on how tariffs that are already in 

place or those that are proposed, how you see that affecting your 

community, not only your own business, but perhaps your neighbors’ planting decisions. We know that those are very important, 

70 

especially this time of year. And how, perhaps, banks and operating capital might be responding as well. Can you touch on those? 

Mr. HEISDORFFER. Yes, Congressman, I can. Right now, farm 

income is down 50 percent, crop prices are down 40 percent, and 

we are expecting—and that is over the last 5 years, since 2013— 

and we are expecting another possibly 6 to 7 percent this year of 

lower income. We cannot afford to lose a valuable customer like 

China. It is our number one customer, of course, with soybeans. All 

other countries combined do not come up to what China takes from 

the U.S. soybean producers. 

So yes, if we lose that and we lose our exports to South America 

we are going to end up losing farmers. It is already very close to 

happening out there now. We are going to lose some over the next 

year just because of the downed prices and things. I am putting in 

my 47th crop this spring, and I have served the soybean industry 

for 23 years, either on a State or a national level. My son farms 

with me. I am not so concerned about myself at this point, but I 

am concerned about my son’s welfare for the future, and for the future young farmers that are out there. 

Mr. SMITH OF NEBRASKA. All right, thank you. I yield back. 

Chairman BRADY. Mr. Larson, you are recognized. 

Mr. LARSON. Thank you, Mr. Chairman, and let me commend 

you and the Democratic leader, Mr. Neal, for this panel. It is not 

often that you get to sit in a committee room and hear the dynamic 

differences that exist within the panel itself. And, Mr. Chairman, 

I would suggest that perhaps we need another hearing, maybe 

more extensive, where we get to refine these. 

Because I couldn’t help but note the body language of individuals 

when Mr. Dooley was speaking, Mr. Newport’s reaction when Mr. 

Paul was speaking, and Mr. Kennedy’s reaction. And rather than 

having us inquire of you, it would have been great to see that dynamic contrast take place so that we can better sharpen our views. 

I say this because I think that what we are discussing here this 

morning is more tactical than in terms of policy, in terms of our 

response. And I think, Mr. Chairman, you were surgical in terms 

of how you discussed this in the beginning, and I think that points 

to a number of the things that individuals have said. So first, let 

me ask the panelists in very rapid order, are we experiencing 

globalization? Yes, Mr. Kennedy? Yes or no? Or is this a 

globalization issue? Mr. Wolfe. 

Mr. WOLFE. Absolutely. 

Mr. LARSON. Mr. Newport. Mr. Heisdorffer. Mr. Dooley. 

Ms. WILSON. Absolutely. 

Mr. LARSON. Mr. Paul. There is no question about the fact that 

what we are dealing with here is an issue of globalization. No one 

less than Richard Trumka has said what we need is a massive rewrite of the rules as they relate to global policy. Would you agree 

with that? Mr. Paul. 

Mr. PAUL. I think that is correct. I think that is a very aspirational goal—— 

Mr. LARSON. It is, but would you agree with it? 

Mr. PAUL [continuing]. Given the shortcomings of the WTO as 

it exists today. But yes—— 

Mr. LARSON. Ms. Wilson. 

71 

Ms. WILSON. Our industries actually flourished in the United 

States with some globalization policies. I think there are areas, including IPR rights, that we need to take a look at. But overall—— 

Mr. LARSON. But you would not—— 

Ms. WILSON [continuing]. We have supported free trade. We 

have added jobs in the United States because of it. 

Mr. LARSON. Would you say that we need a rewrite as it relates 

to globalization and its impact? 

Ms. WILSON. I would use your word, Congressman, and I would 

say we need a tactical rewrite. 

Mr. LARSON. Mr. Dooley. 

Mr. DOOLEY. I like Ann’s comment there. I think a tactical rewrite would be—— 

Mr. LARSON. A tactical rewrite? 

Mr. HEISDORFFER. Since we have had record crops of soybeans 

the last several years, we need global exports in order to maintain. 

Mr. LARSON. Mr. Newport. 

Mr. NEWPORT. Basically, we need fair trade. 

Mr. LARSON. Fair trade. Mr. Wolfe. 

Mr. WOLFE. I can see opportunities where fair trade has served 

us well, and trade policy, so I think we should leverage that as we 

look at a rewrite. 

Mr. LARSON. Mr. Kennedy. 

Mr. KENNEDY. I agree, I think we need free and fair trade, and 

we need it quickly, if we can, to eliminate some uncertainty. 

Mr. LARSON. Mr. Pascrell pointed out—and I think a number 

up here on the dais would agree, that tariffs can be an important 

tool, but not if they are used as a weapon. And there is more than 

I think a sense of concern up here from the dais about tariffs being 

used as a weapon. Mr. Newport, I noticed your response to Mr. 

Dooley’s comments. I was wondering if you wanted to have an opportunity for an exchange on what Mr. Dooley was saying. I noticed you nodding your head in disapproval. 

Mr. NEWPORT. Oh, no, I think when you look at what has been 

going on we have been facing a trade war in our industry. What 

we want is fair trade. When we are exporting products overseas, 

we are facing tariffs and other duties as an industry. We sell steel 

overseas. There are tariffs in place, there are duties in place, a lot 

of industries face it. But they can come here with no tariffs, without duties. 

And, you know, we talked earlier about the exemption process, 

and should it be targeted. Well, actually, on our allies, in electrical 

steel, as I testified, Korea and Japan are our two biggest issues of 

what is being imported in, and what was imported in the first 

quarter of this year from Korea equated to what they imported in 

total from 2012 to 2016. 

Mr. LARSON. Mr. Dooley, do you think we could successfully 

target and utilize tariffs as a tool versus a weapon, or how would 

you respond to Mr. Newport? 

Mr. DOOLEY. My response is, if you listen to some of the comments here, you would think that our economy was failing or not 

being globally competitive. But our service sector is globally competitive, if not a leader, our energy sector has now become a global 

72 

leader, the chemical manufacturing sector is a global leader, our 

U.S. agriculture sector is a global leader. 

And our concern is if you are not tactical, if you take an axe approach to, you know, heart surgery, and you have a unilateral implementation of a tariff that is targeted at one sector, it invites a 

retaliation. And that retaliation is going to go at our most competitive sectors. And that is where, you know, we have great concerns. 

Mr. LARSON. Thank you, Mr. Chairman, I—— 

Chairman BRADY. Yeah—— 

Mr. LARSON [continuing]. I do hope we have another hearing. 

Chairman BRADY. Thank you, Mr. Larson. Ms. Jenkins, you are 

recognized. 

Ms. JENKINS. Thank you, Mr. Chairman, and I want to thank 

all the panelists for joining us this morning. I have voiced my concerns many times about these recent tariffs and the harm that they 

could cause Kansas producers, manufacturers, and consumers 

alike. For instance, cattle producers, which Kansas ranks third nationally, note that beef exports account for around $300 a head, a 

point reiterated by several Kansas cattlemen who were just in my 

office yesterday. 

President Trump achieved a great victory last year by reopening 

the Chinese market to U.S. beef for the first time in more than a 

decade, but unfortunately, China has placed U.S. beef on a proposed tariff retaliation list, which could erase the gains our cattlemen and women have made in the Chinese markets. 

So in addition to family farmer ranch operations facing down retaliation over trade restrictions, extreme and exceptional drought 

is also creeping across most of Kansas, diminishing the odds for 

bumper crops and resulting in extraordinary measures to protect 

our livestock. Every producer knows that access to foreign markets 

and low trade barriers are crucial for rural America, even in the 

best weather conditions, but especially so when the weather turns 

sour. 

In fact, last month, the State of Kansas issued a statewide 

drought emergency, and the USDA recently reported that, nationally, just 32 percent of this year’s winter wheat crop was in good 

or excellent condition, compared to 51 percent last year. In Kansas 

specifically, it includes rates of 13 percent very poor and 31 percent 

poor. For an additional frame of reference, some cattle producers 

in the State are having to feed cattle on those wheat fields because 

the pasture grass is yellow and brittle when it should be green and 

lush. 

So with that being said, Mr. Heisdorffer, how do you foresee the 

long-term ag economy shaping up if periods of drought continue to 

hamper production and prices for what farmers are able to produce 

are greatly diminished from these tariffs and other threats of trade 

retaliation? 

Mr. HEISDORFFER. Well, to start with, you know, if this 

drought continues, and it is in my area, too. I am in Southern 

Iowa. Northern Iowa is not quite that way, but Southern Iowa is. 

We drained the bucket last year, there is nothing left down underneath. And if that continues, yes, like I said, we are going to start 

to lose farmers. There is no doubt about it. 

73 

And livestock, yes, we might be able to get a little bit out of 

crops, but they are going to start selling off livestock, which I am 

sure is going to happen in your State. And as that happens, farmers are just going to go out of business. There is no other way 

about it. We put everything forward to our families as farmers, and 

we try to continue that generation after generation. 

I am fourth generation, my son is a fifth, and we will keep that 

going, but I am so afraid for these young farmers nowadays, and 

not just that they may fail, but most of them are like me, who are 

in partnership with my son. And though I have had a lot of years 

of farming, they could take me along with them. 

Ms. JENKINS. Well, thank you. I guess you have confirmed my 

fear as well. And with that, Mr. Chairman, I yield back. 

Chairman BRADY. Thank you, Ms. Jenkins. Mr. Kind, you are 

recognized. 

Mr. KIND. Thank you, Mr. Chairman. Mr. Chairman, I think 

you said it very well in your opening statement, I think all the panelists agreed, too, that with China, we have a problem. I think we 

are all in agreement that they are stealing our intellectual property, they are requiring technology transfers, they are requiring 

joint ventures that place our companies in a minority position, they 

are dumping steel below market price in the global marketplace, 

and that is something that definitely needs to be fixed. 

But as someone who spent a strong proponent of a robust trade 

agenda in this Congress, I am afraid that America, we have a problem. We have an Administration that on day one turned their back 

on the most significant multilateral trade agreement in the 21st 

century, the Trans-Pacific Partnership, in the fastest-growing economic region in the globe, the Pacific Rim area. They put on ice the 

trade negotiations with the second-largest economic marketplace, 

Europe, with TPP. 

They threatened to blow up NAFTA, now they are moving down 

the unilateral road of 232 and 301 trade sanctions, and they have 

not embarked on one new bilateral trade agreement in the yearand-a-half that they have been in office so far. Our trade agenda 

is seriously off the rails, and it needs to get back on track quickly, 

or we are going to be suffering economically as a consequence. 

Mr. Dooley, I do subscribe to your viewpoint, but I think the unilateral approach makes it too easy for countries like China or anyone else to just retaliate in kind, and strategically hurt us where 

they know it is going to hurt the most. And that is something that 

should bother all of us. But I want to pick up on a comment that 

you mentioned in your opening statement, which I think bears a 

little fleshing out. Right now we are in the process, or the Administration put in a process exempting countries from the tariffs and 

requiring individual businesses to have to apply for exemptions, 

and you mentioned that we ought to be looking at allowing associations to be able to represent the members in the exemption. Why 

do you think that is important? 

Mr. DOOLEY. I think Ms. Wilson also commented on this as 

well. When you have the requirement that an individual company 

has to apply for an exemption—and it is also, kind of, a black box 

process—and if you look at a lot of the companies that do not have 

the internal capacity that have the expertise to even, you know, go 

74 

through that process, it is a significant impediment. And it harms 

businesses such as Mr. Kennedy’s, that are, you know, just—that 

is not what they do. They build and fabricate and, you know—— 

Mr. KIND. I have heard that there could be a number as high 

as 6,500 individual businesses applying for some form of exemption 

moving forward, is that right, Ms. Wilson? Or—— 

Ms. WILSON. I am not sure if it is 6,500, but we have almost 

1,000 now, and if you just look at our membership, many of our 

companies are going to have to file multiple petitions for some kind 

of exclusion, product exclusion. I think the other thing that is of 

concern is the way I understand the process may have an initial 

application, and there may be a request for more information. And 

some of this information is going to be considered proprietary. I 

mean, as you can well imagine, one reason why we would like to 

see a blanket exclusion process is because many of our members 

bring in similar types of products. They do not necessarily want to 

say who that is—— 

Mr. KIND. Yeah. Well, I hope the Administration will take that 

into consideration as they move forward. Mr. Newport, listen, I 

really appreciate your willingness to stand up and defend your industry and the jobs that depend on it, but there is also an important ratio that we need to keep in mind, and that is 20 to 1. For 

every one job that is affected by the production of steel and aluminum, there are 20 jobs—and I am looking at Mr. Kennedy right 

now—that are affected by the consumption of steel and aluminum. 

Can you sit here today and reassure a business like Mr. Kennedy’s that you can replace the lost steel, that they could suffer 

with these tariffs and still be price competitive in the marketplace 

so that they are not losing contracts as they move forward? 

Mr. NEWPORT. Yes, I think if you look over time, you know, we 

have been through it in the steel industry, whether it was 201 actions, et cetera, that the steel industry has been there to support 

manufacturing. And I think the key on the exemption process is 

making sure it is not another loophole. If we had trade cases that 

people had figured out how to get around, you have a 232 action 

becoming a process with exemptions that people are going to look 

for loopholes to get through. So the key is that it is effective, and 

that is really what the key needs to be. 

We have been here, we are also a supporter, and when you think 

about what is coming from the tier ones going into the auto industry, besides the steel manufacture, we actually supply parts into 

the auto industry. 

Mr. KIND. Mr. Kennedy, are you confident if the tariffs do move 

forward that you are going to be able to find replacement steel at 

a price competitive—— 

Mr. KENNEDY. Right now, our service suppliers have to get in 

line at the mill. I mean, there are hulls that are missing. A lot of 

that is the uncertainty. But there is a lot of fairly, freely-traded 

steel from our allies that we need. And then my question on the 

exemption is how do you exempt a new school or a new plant or 

a wing or a modification or product, a custom product, how do you 

exempt that? They are—— 

Mr. KIND. Yeah. 

75 

Mr. NEWPORT. And a comment, the tariffs are not stopping the 

imports. 

Mr. KIND. Okay. Thank you, Mr. Chairman. 

Chairman BRADY. Thank you, Mr. Kind. Mr. Paulsen, you are 

recognized. 

Mr. PAULSEN. Well, thank you, Mr. Chairman. This has been 

a really good panel and a really good discussion. We absolutely 

need to target these unfair trade practices, especially by China, 

that absolutely has engaged in theft of American technology and 

innovation. 

China’s actions have undercut our workers, stealing intellectual 

property, enacting hostile policies, forcing our American companies, 

again, to give up their technology. But these solutions do need to 

be targeted narrowly to avoid inflicting harm on our consumers as 

well, and our job creators, as we have heard, that rely on fairlytraded imports in order to be competitive. 

I have Minnesota medical device companies and supply industries that are very worried that the proposed tariffs under 301 on 

pacemakers, defibrillators, x-ray equipment, and orthopedics are 

going to end up making healthcare costs more expensive, drive 

them up. And, Mr. Chairman, I would like you to consent to enter 

into the record an April 6 article in the New York Times regarding 

this. If I could submit that for the record. 

[The submission for the Record of Hon. Erik Paulsen follows:] 

76 


33810A.036

Why Trump's Tariffs Could Raise the 

Cost of a Hip Replacement 

By SHEILA KAPLAN and KATIE THOMAS APRJL 6, 2018 

Pacemakers and artificial joints. Defibrillators. Dental fillings. Birth-control 

pills and vaccines. All are made in China, and all could be subject to new 

tariffs. 

Dozens of drugs and medical devices are among the Chinese products and 

ingredients that the Trump administration targeted for a potential 25 percent 

tariff in a proposal this week. The list includes some products that are in 

dangerously short supply, like epinephrine, used to treat allergic reactions, 

and others, like insulin, whose rising prices have driven public outrage in the 

United States. 

The proposed tariffs have unsettled the medical device and supply industries, 

given that a growing number of products. as well as their comoonents, arc 

now manufactured in China. In recent years, as trade groups have noted, 

Chinese manufacturing of medical equipment has undergone a major shift 

from throwav.'<ly items like surgical gloves to more complicated products like 

magnetic resonance imaging scanners. 

China's medical device industry has been expanding rapidly. An International 

Trade Commission report in January said the fastest growth was in sales of 

implantable orthopedic devices, plates and screws, mostly made of titanium 

a nd used for surgery and sports medicine. One analyst estimates that about 

12 percent of medical devices imported into the United States come from 

China, amounting to $3 billion a year. 

Several companies, including Medtmnic and Zimmer Biomet, have 

01thopedic device factories in China that export goods to the United States. 

In 2012, Medtronic, considered the wor1d's leading medical-device 

maker, h2illm1 China Kanghui Holdings, a major provider of orthopedic 

devices in China. Any products shipped from thooe opercttions to the United 

States would be subject to the tariffs. Medtronic declined to comment, saying 

it was still reviewing the proposal. 

And a report this week by RBC Capital Markets estimated that if the proposed 

25 percent tariffs took effect, the move could cost the medical device industry 

up to $1.5 billion each yeat-. Some of the higher costs would undoubtedly 

result in increased prices for those devices, affecting baby boomers, who are 

now among the biggest recipients of hip and knee replacements. 
77 


33810A.037

Brandon Henry, a medical device analyst for RBC Capital Markets, said some 

of the bigger medical technology companies were surprised to find their 

products on the list. 

Greg Crist, a spokesman for AdvaMed, the trade group for device members, 

said its members were "disappointed because this action threatens to affect 

the health and well-being of American patients and those around the world. • 

llow much would be passed on to consumers remains unknown. 

"The impact of this orthopedic device tariff isn't a straight line," said David A. 

Halsey, president of the American Academy of Orthopaedic Smgeons, in an 

email, adding that the group was working to assess the possible effects. 

It is still unclear whether the tariffs will be enacted: Companies have until 

May to lobby the administration for changes. But on Friday, President Trump 

ratcbeted. up the pressure by threatening to levy tariffs on an additional $100 

billion in imports, provoking China to respond that it would strike back yet 

again. 

Indeed, stocks of drug manufacturers remained largely unruffled after 

the unveiling of the list on Tuesday, but by Friday, the major medical device 

company stocks bad dipped along with the overall market. Medtronic shares 

were 2.7 percent lower for the week, and Zimmer Biomet was down 2-4 

percent. 

I t was unclear whether the tariffs would have a substantial effect on the drug 

industry, analysts said, even though China is a leading exporter of raw 

pharmaceutical ingredients. "We don't see much impact," Umer Raffat, a 

pharmaceutical industry analyst for Evercore lSI, said in a note to investors 

on Tuesday. 

That is because many generic drugs that contain Chinese ingredients are 

manufactured in countries like India, meaning they would not be subject to 

the tariffs. And brand-name drugs made in the United States are frequently 

so expensive that the list price often has little connection to the product's 

manufacturing cost. 

N~::v~::rthe::less, at least one trade group sounded the alarm on the tariffs, 

warning that they could exacerbate the already contentious issue of health 

care costs, just when the Trump administration has pledged to take action to 

lower drug prices. 

~we arc concerned that the proposed tariffs may lead to increased costs of 

manufacturing for generics and biosimilars and thus higher prescription drug 

prices for patients in the U.S.," said Jeffrey K. Francer. senior vice president 

and general counsel at the Association for Accessible Medicines, which 
78 

f 


33810A.038

represents generic-drug companies. The generic business has been struggling 

wit I (alling prices even as brand-name drug prices have risen. 

Several major manufacturers, including Pflzer, Merck and the generic-drug 

makers Mylan and Teva Pharmaceutical declined to comment. 

"The cynic in me thinks this is another way for companies to say they need to 

raise their prices," said Erin R. Fox, a drug-shortage expert at the University 

of Utah. 

Ms. Fox said she suspected that the tariffs could exacerbate shortfalls of 

generic injectable drugs - decades-old products that are mainstays in 

hospitals and have been jn short supply for years because of manufacturing 

problems and supply disruptions. 

While many pill forms of generic drugs are manufactured overseas, most 

generic injectable drugs are made in the United States, using raw ingredients 

acquired from overseas. But because many companies do not disclose where 

those raw ingredients come from - saying the information is proprietary- it 

is hard to know the impact of the proposed tariffs, Ms. Fox said. 

Two drugs on the list of !.300 Chinese exports are epinephrine and lidocaine, 

which are both in short supply in their sterile injectable form. 

"Things are so bad right now with the injectables, we don't need anything else 

to pile on, to possibly make things worse," Ms. Fox said. 

Heather Zoumas Lubeski, a spokeswoman for Par Pharmaceutical, a major 

manufacturer of injectable epinephrine, said the company's raw ingredients 

were imp01ted from Europe and that the proposed tariffs would not have an 

impact on Par or its parent company, Endo International. 

Even for some widely used products, it is unclear bow American consumers 

would be affected. While insulin is on the list, all three major companies that 

sell insulin in the United States - Eli Ully, Sanofi and Novo Nordisk - said 

they did not import insulin from China. (Novo Nordisk said that one rarely 

used insulin product, the NoyoPen Echo, does come from China, but that the 

company was committed to keeping it accessible to consumers.) 

Some analysts and trade lawyers pointed out that the list was an early draft 

and that many different industries and groups would be lobbying the 

government in the coming months so that their products would not be 

punished. 
79 

Mr. PAULSEN. Mr. Neal, if you want to sub in. 

Mr. NEAL. I am ready. 

Mr. PAULSEN. Okay. Without objection. But there are concerns 

here, as the article points out, that we are impacting consumers potentially with knee replacements, hip replacements that could go 

up because of orthopedic tariffs being put in place. And the Consumer Technology Association has outlined concerns that proposed 

tariffs on TVs and monitors will raise the price of a television 23 

percent. And given Ambassador Lighthizer’s testimony to us and to 

this Committee to minimize the impact to American consumers, 

this action just seems to contradict that testimony. And these are 

concerns that have been raised by the proposed $50 billion of tariffs 

coming up on products. We do not even know what might be on the 

next potential list of $100 billion that we are waiting on the Administration to potentially release. 

And look, I think the pro-growth policies that we have seen implemented, especially the tax overhaul, now implemented over the 

last year, has put our economy in a really good place, adding 

600,000 jobs just in the last 3 months, unemployment is at its lowest rate since 2000, and the economic growth numbers are averaging 3 percent in the last 3 quarters. 

That is double what they were the year previous, and nearly 

every quarter. And I am opposed to broad-based tariffs that are 

going to essentially be taxes that can backfire and then reverse our 

ability for American businesses and jobs to grow and actually impose economic harm. 

So, Mr. Kennedy, I want to follow up real quick in the time I 

have. I have heard the same concerns that you have expressed 

today from some of my Minnesota metal fabricating and manufacturing companies. They have seen steep price increases in steel, for 

instance, similar to the 40 percent you mentioned. 

Now, they have also said that their supply has gone from maybe, 

like, a 6 to 8 week waiting outlook to jumping overnight to as high 

as 22 weeks. Can you talk a little bit about how that type of a 

jump in supply also impacts your pricing? Or your jobs—— 

Mr. KENNEDY. Sure. 

Mr. PAULSEN [continuing]. Or your manufacturing and your 

ability to plan with certainty for the future? 

Mr. KENNEDY. Sure, thank you, Mr. Paulsen. Yeah, we are affected a number of ways. One is obviously pricing. We are at a 

price disadvantage against our foreign competitors, and I would 

imagine those in Minnesota are really, really close to their Canadian foreign competitors. But lead times are an issue, too. If I cannot meet the expected delivery of my customer and my competitor 

can because they can get their hands on the steel, then they win 

the work. 

You know, we talked about—you just mentioned that they can 

supply the steel, our mills can keep up, and it does not prevent imports. Well, uncertainty does. Uncertainty prevents imports. Right 

away, the imports stopped coming. Who is going to send that over 

not knowing whether or not it is going to be taxed or whether or 

not they are going to have to turn the ship around or dump it at 

a loss, and they are not going to do that. 

80 

And I can attest that our mills currently, a lot of those mills cannot keep up. And realistically, we should welcome competitive 

steel. We are not scared to compete, and I do not think that your 

Minnesota company fabricators are scared to compete. We want to 

compete, but we do not want our government putting up obstacles 

that prevent us from being able to compete. We worked hard to 

compete on our own and make ourselves competitive against our 

foreign competitors. But we cannot be at a price disadvantage to 

our competitors. 

Mr. PAULSEN. You know, Mr. Chairman, I think what we have 

heard, and I agree, is that our American manufacturers can compete and win anywhere. And so we just have to have that certainty, 

a level playing field in order to be able to do that. And we can win 

and sell American goods in every respect. 

Mr. KENNEDY. That is right, and you know what? Our mills 

can compete, too. I mean, Nucor Jewett is 2 hours from our facility. 

They are a U.S. steel producer, and they compete. They have hardworking guys. We come from the same stock of people over there. 

And they can compete. 

But not every mill can compete, and not every fabricator can 

compete, and we should not pick winners and losers. We should not 

prop up companies or industries that cannot at the expense of 

those that can. And that is exactly what is happening now. There 

are some mills that are going back to work, and that is great. 

There are some mills that should never go back to work. 

Mr. PAULSEN. Thank you, Mr. Chairman. 

Chairman BRADY. Thank you. Mr. Pascrell, you are recognized. 

Mr. PASCRELL. Thank you, Mr. Chairman. Mr. Chairman, the 

title of the hearing is ‘‘The Effects of Tariff Increases on the U.S. 

Economy and Jobs.’’ This is about jobs. The Economic Policy Institute reports that 3.4 million jobs, American jobs, have been lost 

due to China trade since 2001. And I think it has been laid out 

here that our steel and aluminum production in this country has 

plummeted due to Chinese overcapacity. 

We seem to know what the problem is. The question is what is 

the response? Many China experts and former government officials 

agree that our current policy just is not working. We have tried for 

over a decade. Past attempts at dialogue have not worked. A new 

approach is needed. 

The question now is what is the new approach, and will it be effective? The threat of tariffs, however, may be necessary to getting 

China to reform its anticompetitive protectionist policies. We have 

seen the pros and cons of that. But an article in the Times the 

other day kind of sums up everything in our dilemma. 

That article was on April 10, it was entitled, ‘‘How Long Can We 

Last Trump’s Tariffs at Home in the United States?’’ And it was 

about a company based in McKeesport, Pennsylvania. The company 

makes seamless vessels to store gasses at a high pressure. Steel 

cylinders of up to six tons that it sells to the likes of the Navy, 

NASA, and T. Boone Pickens Clean Energy. It has received the 

first bill from the 25 percent tariff that President Trump placed on 

steel from China and a few other countries: $178,703 assessed on 

steel pipe shipment scheduled to arrive at the port of Philadelphia 

today. That is equivalent to 2 weeks’ payroll. 

81 

Overall, tariffs on steel pipe that the company has ordered from 

China—some are already on the way across the Pacific—will add 

more than half a million dollars in raw material costs over just 6 

months alone. The article goes on to say, ‘‘ ‘How long can we last,’ 

mused Michael Larson, the company’s Chief Executive. ‘I do not 

know. We could go down relatively fast. The tariff will add 10 percent to the cost of CP Industries’ ’’—that is the company—‘‘ ‘their 

cylinders, which can sell for up to $35,000.’ ’’ 

Now, it would seem to me that we have a real dilemma when we 

try to respond. We have not been able to do it since this problem, 

as you pointed out, Mr. Paul, really struck us about 12 years ago, 

and onward. So how do we look at this? And how do we finally 

come to a settlement that is not just keyed in onto one industry, 

but it understands the effect that that industry may bring to other 

industries and the American consumer. That is not an easy thing 

to trace, is it, Mr. Paul? 

Mr. PAUL. If it were easy, it would have been done, Mr. Pascrell. 

I think that is fair to say. This is a process that is—we are at the 

beginning of it. I agree that we need to get to a better point. My 

hope is that Ambassador Lighthizer and Secretary Ross are moving 

in that direction. I will say that this has worked both ways. 

When our economy was humming along well, the steel industry 

was in a technical recession from about 2014 to about 2016 to 2017, 

and there was one reason for that and one reason only. And that 

was the overcapacity that generates all these other unfair trade 

practices that you see. For steel users, I think one of the solutions 

may, in fact, be downstream relief that should be temporary. I 

think the product exemptions—— 

Mr. PASCRELL. Well, some of these tariffs are temporary. 

Mr. PAUL. Pardon me? 

Mr. PASCRELL. Some of these tariffs—for instance, in the South 

Korean trade deal, we made them very temporary. 

Mr. PAUL. Yeah, there is a quota with respect to steel from 

South Korea. It is also important to understand that there are hundreds of dumping orders in place now on various products including 

steel, and that is an imperfect process. It is like playing whack-amole with trade policy. It is very hard to accomplish. My hope is 

that we speed toward this global solution that you referred to, Mr. 

Pascrell—— 

Mr. PASCRELL. Mr. Chairman, may I make—thank you—may 

I make a recommendation, if you will? Is it possible that in this 

next hearing, if we put it together as Mr. Larson suggested, which 

I think would be critical, we bring some economists in? It was just 

the report that came out yesterday about the consequences of what 

these tariffs are going to do. And I think we can get both sides together and talk about this, because we have to make decisions ultimately. 

Chairman BRADY. Thank you—— 

Mr. PASCRELL. Article 1, Section 8—— 

Chairman BRADY. We will certainly consider that. I would love, 

though, for some economists to be hearing from real-world people 

about these impacts—— 

Mr. PASCRELL. Yeah, I think it is a great idea. 

82 

Chairman BRADY [continuing]. And balance out, so we really 

hear both views. 

Mr. PASCRELL. Good. 

Chairman BRADY. Mr. Marchant, you are recognized. 

Mr. MARCHANT. Thank you, Mr. Chairman. I am very privileged in my district to have some companies that have projects that 

they are building across the world. And they are projects that last 

3 to 5 years when they start them. And one of the big concerns that 

they have is that they are mid-project in many of these, and they 

have no way to pass on. 

They did not contemplate, had no way to contemplate that these 

tariffs would hit them mid-project. And they are concerned about 

starting new projects or bidding new projects now, and unfortunately, some of them may get shelved or postponed because of just 

the sheer unpredictability of the cost. I think some of those industries will affect some of your production, Mr. Dooley. I am sure, Ms. 

Wilson, these are a lot of facilities. 

So, as these companies are beginning to deal with this, many of 

you deal with the production of the steel, fabrication of the steel. 

These are people that take the end product of your production and 

your fabrication and then try to piece them together into a very sophisticated module—a chemical plant, a power plant, you know, 

something like that. 

What do you see as things the Administration can do in their 

rules that they are making, their product exceptions, et cetera, that 

we can make sure that these projects are not disrupted, Ms. Wilson? 

Ms. WILSON. So the vast majority of our members make motor 

vehicle components for new vehicles, whether they are heavy 

trucks or light vehicles. The average—— 

Mr. MARCHANT. Toyota’s headquarters is in my district. 

Ms. WILSON. I know. And, you know, the average cost of a new car is about $35,000. This is a major expenditure for most Americans. So what we see here is the cost of steel—and the vast majority of steel and aluminum comes from the United States. The cost 

of these specialty steels and aluminum, if it goes up, that cost is 

going to go down to the consumer. And at $35,000, are we going 

to really be able to continue to sell cars? That is a serious concern 

for our members. 

I think what we have to take a look at is this exemption process 

for the countries. We also have to really look at this exclusion process for products. Because, you know, a lot of the steels that go into 

something like this are not the steels that, you know, Mr. Paul has 

been talking about that we have problems with. They are very specialized, and what we would like to see is relief for those kinds of 

things immediately. And will it completely do away with the cost 

rise? Probably not. But it will help ameliorate it a little bit. 

Mr. NEWPORT. Just one comment in regard—we are big in the 

auto industry, it is about 70 percent of our business, and we are 

also a direct supplier of parts. I think you have to put in perspective, there is approximately, on an average vehicle, one ton of steel 

used. And let’s just use $1,000 a ton on a high end for, you know, 

total metal products. And even if you put a 20 percent duty on 

that, you are talking $200 a ton on an average $35,000 vehicle. 

83 

So when we are looking at this, we are looking at cost impacts 

on different products that are a fraction of a percent. So I think 

we have to keep in perspective something even Secretary Ross 

pointed out, both in the steel and the industry—the aluminum industry—is really what is the overall impact—— 

Mr. MARCHANT. Yeah, and my projects, the companies that I 

am talking about—Fluor, Exxon—they are building projects that, 

after they are bid, they are 3 to 5 years out. And, Mr. Kennedy, 

you must be the provider for some of those parts, and they are 

needing some certainty to finish projects and bid new projects that 

sometimes just the preparation to bid is 3 years out. So that is 

what I am looking for in this entire process, some certainty to proceed and continue, not to disrupt the main business. 

Mr. KENNEDY. Yeah, we are in the exact scenario. I mean, we 

have rights that are locked in on projects. We get on a vendor supplier list at the beginning of a 3-to-5-year project, and we put some 

level of uncertainty into our pricing as does every other fabricator 

in the world when they price it. 

But when you immediately add a 25 percent tariff or effectively 

a 40 percent price increase, we are locked in on those rates, and 

our customers, even, are locked in on their rates. We still have to 

supply the steel for a year. We still have to supply the product, but 

we get no relief. We are bearing the cost. I can promise you we 

didn’t have 40 percent profit in our number. 

Mr. MARCHANT. Thank you, Mr. Chairman. 

Chairman BRADY. Thank you. Dr. Davis, you are recognized. 

Mr. DAVIS. Thank you very much, Mr. Chairman. I want to 

thank all of our very informative witnesses who have been with us 

this morning. 

Mr. Paul, let me ask you, according to the Guardian April 7, 

2018, issue, the world’s richest 1 percent already own one-half of 

the world’s wealth. And it is on course to control as much as twothirds of the world’s wealth by 2030. The wealthiest 1 percent is 

growing on an average of 6 percent annually, faster than the 3 percent growth of the remaining 99 percent of the world’s population. 

What type of jobs could be created with trade agreements and 

trade modifications that would encourage these individuals to invest and re-invest, and do you see tariff increases as bringing or 

attracting jobs and work opportunities back into the United States? 

Mr. PAUL. Mr. Davis, these are good questions, and I appreciate 

them. Let me speak to the types of jobs first. First, we obviously 

have a diverse economy, and one that has been in transition for a 

number of years. 

But manufacturing still plays an outsized role in our economy, 

both in terms of the types of jobs it provides—new evidence from 

the Economic Policy Institute shows that there is at least a 13 percent pay premium over the rest of the economy, and some studies 

show it to be larger than that—the types of manufacturing jobs 

tend to provide spin-off opportunities as well. 

You know, if AK Steel has a steel mill, there is a downstream 

and upstream and a whole environment that is supported by those 

types of jobs. It is also fair to say, and I think you know this from 

talking to your local economic development officials, that getting a 

manufacturing facility is the holy grail. 

84 

Because they know if they get a manufacturing facility, they are 

likely to get mainstream small businesses to come along with that, 

they are going to get more income spent in the community. You 

cannot say that for all its virtues about a retail outlet. A retail outlet is not going to bring a factory in. But the opposite is certainly 

true. 

So there is a value to these jobs that cannot be understated. The 

types of jobs that are being established or reestablished at the steel 

mills and aluminum smelters around the country are well-paying. 

Sixty-five thousand, seventy thousand, in some cases eighty or 

ninety thousand dollars. 

One in particular in Granite City, Illinois, in your State, that is 

a community I have visited many times, was beset by extraordinary poverty because of these unfair trade practices. The fact 

that there could be a level playing field is restoring some hope. 

There are 500 jobs coming back. These are well-paying jobs that 

are simply irreplaceable in that metro area. 

Now, with respect to the effectiveness of the tariffs in bringing 

these jobs back, again, I think on a temporary basis, companies respond to market signals. And if you need to build your steel facility 

in the United States, or your aluminum smelter, you will add capacity, you will add jobs to meet that demand. 

I think at the end of the day, and something that probably unites 

us on the panel, is that none of us want Beijing calling the shots 

in the American economy. And having an authoritarian state capitalist regime is something that a private sector company should not 

be expected to compete against in a global economy. But that is the 

situation that we face right now. 

To me, tariffs are an emergency room measure. They are triage 

until we can get a much more sustainable approach, but they are 

absolutely necessary to achieving the objectives that we are seeking. 

Mr. DAVIS. Thank you very much, and of course, we know that 

China is the big elephant in the room. And would anyone quickly 

suggest something very concrete that we might be able to do with 

China? 

Mr. NEWPORT. So there is an industry we have been working 

on globally with global producers in trying to address the overcapacity. So I think what this has done, the action that has occurred has actually resulted in probably the most amount of activity that we have seen collectively in the last couple of years. There 

has been some slow progress, as was mentioned at the G20 in 

OECD, but we are seeing action now in discussions with how to address it from many countries. 

Mr. DAVIS. Thank you, Mr. Chairman, I yield back—— 

Chairman BRADY. Thank you, Doctor. Mr. Renacci, you are recognized. 

Mr. RENACCI. Thank you, Mr. Chairman. I share President 

Trump’s concern about unfair trade, including the global problem 

of overcapacity in steel and aluminum and the theft of American 

technology innovation. China is distorting the market and hurting 

Ohio workers and businesses through its aggressive and unfair 

policies. At the same time, it is critically important that we underVerDate Sep 11 2014 10:24 Mar 25, 2019 Jkt 033810 PO 00000 Frm 00088 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\33810.XXX 33810
85 

stand and address any unintended consequences so we can collaboratively fine-tune the approach. 

As I always say to my staff, if you do the right thing in Washington, there are no hard decisions. That includes favoring free 

trade when everyone is playing by the rules, always putting America first when other countries are distorting the market, and being 

ever-vigilant not to create winners and losers along the way. Before 

coming to Congress, I spent 35 years in the business world. 

I started over 60 businesses I provided as context to explain how 

I view the product exclusion process from the 232 tariffs. While I 

understand the Commerce Department’s need for detail before 

granting exclusions, it seems especially burdensome for small businesses lacking resources. 

So I ask each of you the following yes or no question: are small 

businesses with very limited resources in a burdensome situation 

in navigating the product exclusion process, and would allowing 

them to pull together on exclusions via an association or other 

means, would that seem like it might help diminish the burden? 

So start from the left and move forward. 

Mr. KENNEDY. Sure, but I would like to point out, how do you 

exclude certain products, like building a new school or a new hospital, or adding a wing to a facility or custom projects or modifications? How do you—— 

Mr. RENACCI. Well, that is why I am talking about the exclusion process. Is that burdensome, yes or no? 

Mr. KENNEDY. Absolutely. 

Mr. RENACCI. Mr. Wolfe. 

Mr. WOLFE. I believe it is as well. 

Mr. RENACCI. Mr. Newport. 

Mr. NEWPORT. I do not see how you can bring them together 

because they are so unique. 

Mr. RENACCI. Do you have any thoughts? Yes or no? 

Mr. HEISDORFFER. I agree. Yes. 

Mr. DOOLEY. Yes. 

Mr. RENACCI. All right. 

Ms. WILSON. Yes, we think it is very burdensome. 

Mr. PAUL. I do not view it as necessarily burdensome. I think 

it is a necessary step in the process to ensure there are no loopholes or unintended consequences. 

Mr. RENACCI. Again, it depends on whether you are the small 

business having to go through it, but I do understand. I am glad 

to see AK Steel represented here today as the last producer of 

grain-oriented electrical steel in the United States. As Mr. Newport 

mentioned, AK Steel was headquartered in Ohio. Their footprint 

includes Coshocton, Mansfield, Middletown, Walbridge, and Zanesville. I know Mr. Newport joins me in applauding the President’s 

effort to crack down on unfair trade practice. We need hearings like 

this so we can work to avoid unintended consequences. 

One such unintended consequence starts with the fact that the 

25 percent steel tariff under the Section 232 action does not cover 

goods made from electrical steel. Leaving out these goods will result in a workaround to the 232 action in that manufactures using 

electrical steel can avoid the tariff by simply manufacturing the 

product outside of the United States and then importing the goods 

86 

back into the country. Said differently, the concern is who is the 

biggest winners of the steel tariff could be foreign and domestic 

companies who manufacture outside of the United States before 

sending their goods into the U.S. market. 

Mr. Newport, can you further explain the national security importance of the United States having the ability to produce electrical steel domestically? 

Mr. NEWPORT. If you think about electricity, you need it to run 

businesses, you need it to power our homes, you need it to power 

the financial markets, et cetera. When you think about when a 

hurricane hits, what that has done to our country sometimes when 

you have had that hit and you have to get the power restored; 

when you think of the attacks that occurred in New York when 

power was lost and, you know, the financial markets were down 

and needing power restored; et cetera, you think of how quickly 

you need to get that power restored. 

And we have taken actions in the industry to adjust our operations to make sure we prioritize our work to support that industry. And I think about it as if you have to rely on going to China, 

Japan, or Korea after a natural disaster or something else occurs, 

or have that product brought to our country if they choose to do 

so—and by the way, if they are the only ones producing it longerterm, what do you think will happen with the cost of that product 

if they choose to ship it to you. 

And I do not think, as a country, we want to put reliance on another country for something that is critical to run our businesses, 

to run our companies, and actually to have economic growth in our 

country. 

Mr. RENACCI. Thank you. I want to continue to work with all 

my constituents on how to make sure that we do not have any window between what the President wants to get done and what Ohio 

businesses and the economy really need. I am committed to helping 

all Ohioans in working through any issue that they have with the 

232 or 301 tariffs. 

I appreciate the Chairman, the staff, and my colleagues working 

with American businesses on addressing unintended consequences 

of tariffs. I also encourage my friends in the Administration, my 

colleagues here in Congress, to continue to work collaboratively toward the best possible outcome for the American people. And I 

yield back the balance of my time. 

Chairman BRADY. Thank you, Mr. Renacci. Ms. DelBene. 

Ms. DELBENE. Thank you, Mr. Chairman, and thanks to all of 

you for being with us today. And, Mr. Wolfe, as you know, our 

home State of Washington is the most trade-dependent State in the 

country. We are the gateway to some of the fastest-growing markets in Asia, and 40 percent of our jobs are tied to trade. 

In an increasingly interconnected world, my constituents rely on 

open markets, whether that is selling berries and agricultural products overseas; being able to buy fresh, healthy produce in grocery 

stores year-round; or access to affordable technologies, like computers and smart phones that enable our students, our researchers, 

and our entrepreneurs to innovate. 

But the impact of trade on our region extends well beyond our 

State. Many agricultural products from across the country, includVerDate Sep 11 2014 10:24 Mar 25, 2019 Jkt 033810 PO 00000 Frm 00090 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\33810.XXX 33810
87 

ing wheat, corn, and soybeans, make their way to China and other 

Asian countries through our ports. And on the other side, billions 

of dollars of imports headed to other parts of the country come 

through Sea-Tac in the ports of Seattle and Tacoma. 

Mr. Wolfe, you touched on this in your opening testimony, but 

could you please expand on the economic impact they could have 

on Washington State, and also, on how many jobs in our region 

could be affected by a slow-down in economic activity due to tariffs? 

Mr. WOLFE. Thank you. As you mentioned, some 40 percent of 

the jobs in the State of Washington are tied to trade. And we have 

talked about manufacturing jobs, and certainly manufacturing jobs 

are critically important to our economy. Yet, those are not the only 

jobs that are important to our economy. 

Trade creates a tremendous amount of valuable jobs not only for 

the State of Washington, but for all of the United States. I am talking about jobs like the longshore jobs on the working water front, 

the truck drivers that service our gateway, the railroads that service our gateway, the warehouse distribution companies, and certainly the exporters that provide those goods to foreign markets. 

So if we take a unilateral approach to trade policy where we are 

lobbing back and forth with our trading partner, China, we run the 

risk of damaging those valuable jobs, not just in the State of Washington, but throughout the United States. 

I would say the impact just in the State of Washington could be 

tens of thousands of jobs if we enter into a trade war with China, 

because China is our most trade-dependent partner in the State of 

Washington. So it would have a huge impact on the economy in the 

State of Washington, and, I believe, throughout the United States. 

Ms. DELBENE. Given supply chain disruptions and just uncertainty for businesses, we know that can cause people to lose longterm contracts. We also know that you can lose business quickly, 

and it is hard to get that business back. 

Between these tariffs, and the fact that Canada is participating 

in trade agreements in Asia and with the European Union, are you 

worried about trade being diverted to Canada in the Port of Vancouver? And how would that hurt the long-term competitiveness of 

the Ports of Seattle and Tacoma and Sea-Tac? 

Mr. WOLFE. Thank you for that question. Certainly, as we are 

situated geographically in close proximity to the Canadian gateway, we are seeing more and more trade move through the Canadian ports rather than using our gateway. There are a number of 

reasons for that, one of which is the potential risk of these tariffs 

on trade and the uncertainty that it creates for business. 

I was visiting with one of our valued export customers just recently, a fruit grower in Eastern Washington, and they shared with 

me that although there still is uncertainty about the impact of 

trade, they are looking at those other gateways, including the Vancouver BC gateway, as an alternative gateway for their exports as 

a result of the discussion around trade disruption in the State of 

Washington and nationally. 

So it is hard for me to measure the impact today, yet, that uncertainty is creating questions for the business community in our 

backyard and the potential of job loss. 

88 

Ms. DELBENE. And do you agree that if you lose that business, 

it will be a lot harder to get it back? 

Mr. WOLFE. Absolutely. We have seen examples of where our 

customers have lost market share globally, and then we resolve 

whatever the issue was. I think even as an example, with the disruption on the West Coast between the employers and our labor 

partners a few years ago, there was a shift in the trade lanes as 

a result of that. And some of that market share, you never get 

back. And so there is certainly risk there. 

Ms. DELBENE. Thank you. I yield back, Mr. Chairman. 

Chairman BRADY. Thank you. Mr. Meehan, you are recognized. 

Mr. MEEHAN. Thank you, Mr. Chairman. I want to thank this 

panel for a robust discussion. I think we have all benefitted from 

the idea that there are complex issues here, and I think we also 

all agree that we need to be dealing directly with the implications 

of Chinese dumping and other kinds of activities. 

Mr. Chairman, I hope we also appreciate the 301 implications, 

because there is a lot of intellectual property and other kinds of 

issues, notwithstanding there are implications to what has been 

proposed. 

And, Mr. Dooley, in your presentation, you discussed, I think, 

some merging opportunities to the United States, which have been 

realized by virtue of the shale revolution and investment in this 

country, which has really driven job growth, which has given us opportunities for international markets in chemicals and other kinds 

of things. 

They are job creators, but one of the concerns I have, can you 

speak to the question of people who have not only made investments in those opportunities, but foreign-based investment that 

has come onto our shores to take advantage of this, and whether 

those long-term plans are implicated by this kind of inactivity, 

which causes an interruption that changes their projections? 

Mr. DOOLEY. Yeah, thank you for the question. You know, as 

I stated, our industry has had a dramatic increase in our global 

competitiveness. There has been $196 billion in new investment, 

half of which has already been completed or is in the process of 

construction, and the rest of it is in the permitting process. This 

is unprecedented. Sixty-three percent of that is foreign direct, so it 

is chemical companies from Europe, from China, from Brazil, from 

India that are recognizing that we have a global competitive advantage, and they are making significant investments here in the 

United States. 

They are making these investments not to serve the domestic 

marketplace, but to capitalize on the U.S.’ competitive advantage 

to serve the global marketplace. They are making those also predicated that we are going to have sound trade practices that will not 

result in implementation of tariffs against our exports of chemicals 

globally. 

And that is what our concern is here, and that is where—you 

know, no one disagrees, you know, with the inappropriate actions 

in the market-distorting practices that are used in China. But I 

think what we should be focused on is what are the metrics for success? How do we determine when we are winning? 

89 

And that is what, if we are very concerned of the—right now, if 

you look at the Section 232s and the 301 tariffs, and we did an 

evaluation in terms of the metrics in terms of what were the economic impacts, you know, holistically, to the United States, we are 

convinced our industry would suffer. And I think you would say the 

soybean industry would suffer. You know, Ms. Wilson’s constituency would suffer. It is just, you know, there are dramatic impacts. 

Maybe the steel industry and aluminum industry would see a marginal improvement. 

But is that the right policy that is going to maximize the economic benefits that will benefit workers, that will benefit companies, small and large, in the United States? And that is where it 

is not the objective, but it is the tactical, strategic approach that 

you take. And we think that what we are looking at right now, if 

there is not significant modification in terms of what is ultimately 

implemented, is that it will have an adverse impact on the broader 

U.S. economy. 

Mr. MEEHAN. And you talk about the implications. Mr. Newport, a question for you if you have a moment to answer it. Because 

I am concerned that when we look at the capacity to be able to supply here in the United States, if we are being challenged in terms 

of imports, do we have the capacity to meet these demands? And 

are there changes now with the abrupt, I guess, higher level that 

is being paid all over the investments that were made that were 

predicated on lower prices of steel? 

Are we going to be able to meet that capacity to fulfill the requirements that we have currently? And are we going to be losing 

by virtue of people making changes in the kinds of aluminum and 

steel that they are manufacturing to meet, you know, this demand 

so that aluminum goes into high-grade things like airplane parts, 

but I lose the aluminum that is necessary for a can manufacturer 

in my district? How are we going to be able to assure that while 

this is going on, that we can supply the steel that is necessary for 

American-based businesses? 

Mr. NEWPORT. I think two things: one, there is—— 

Chairman BRADY. Sorry, Mr. Newport—— 

Mr. MEEHAN. Maybe if there is an opportunity to—— 

Chairman BRADY. The time has expired. Perhaps you could answer in writing, Mr. Meehan—— 

Mr. MEEHAN [continuing]. Supplement the record in some 

way—— 

Chairman BRADY. Yeah, please. That is a great question. Thank 

you, Mr. Meehan. Ms. Chu, you are recognized. 

Ms. CHU. Mr. Paul, I would like your viewpoint on this particular issue. In addition to being on the Ways and Means Committee, I am also a Member of the House Small Business Committee. Small businesses are extremely important to our economy. 

They create two out of every three new jobs, and in my home of 

Los Angeles County, many of these small firms have developed 

their business models to export overseas, often to Asian countries 

across the Pacific Ocean. 

According to the Census Bureau, the majority of businesses engaged in importing and exporting goods are small or mid-sized 

businesses. In fact, 76 percent of exporters in the United States 

90 

and 75 percent of importers have less than 20 employees. Also, I 

understand that with the rate of U.S. goods being exported to 

China increasing by 579 percent between 2001 and 2017, trade 

with China has been particularly robust. Among the U.S. businesses exporting to China, 53 percent of them have fewer than 20 

workers. 

Given these statistics, I am concerned about whether imposing 

tariffs on China’s exports in steel and aluminum and the retaliatory measures taken by China on U.S.-made products would have 

an impact on small businesses back in our districts. Can you speak 

to how small businesses may be impacted by the tariffs on steel 

and aluminum? 

Mr. PAUL. Ms. Chu, it is a good question, thank you so much 

for asking it. I agree that small businesses and the U.S. business 

community in general can benefit from exports, and certainly 

China has been a growing market. I would like to see it grow even 

further. And with respect to both the steel and aluminum actions 

on 232 and the Section 301 action on intellectual property rights 

violations, I think the strategy is to ensure that we have a level 

playing field and that we have more market opportunities in 

China. 

If you recall, Mr. Thompson talked about wine and the addition 

of the tariff on that. It is stunning to me that there is a 48 percent 

tariff on wine right now that China has and that we have not 

pushed back enough. Or with respect to soybeans, where there are 

limitations on value-added processed soybeans coming into China, 

they prefer to get the raw commodity. 

There are far too many restrictions that China has in place that 

are limiting our export opportunities, which is why the boats going 

into Seattle and Tacoma are a lot heavier than when they are 

going out. I would like to see much more balance to this trade relationship. And part of that is to eliminate the market-distorting and 

anticompetitive practices that China has. 

With respect to small businesses in particular, we are looking 

ahead at a lot of advanced technologies and thinking that the 

United States can have success because we are an innovation leader. I am thinking in particular of nanotechnology and biotechnology 

and artificial intelligence and robotics. All of these industries have 

been targeted by the Chinese government and its Made in China 

2025 program to have national champions that will exclude competition from countries like the United States. 

I view the tariffs as the beginning of the conversation rather 

than as the exclamation point at the end of it. I think we have a 

lot of work to do. I think there is many sectors of the economy that 

could benefit from a much more balanced relationship with China 

than we have right now. 

Ms. CHU. Well, I am so glad you mentioned the wine, because, 

of course, that is a big issue in my State of California. China has 

increased tariffs on U.S. agricultural products such as wine, such 

as almonds, pistachios, and oranges that are grown in my home 

State of California. And according to the Wine Institute, China is 

one of the fastest-growing wine markets in the world and will soon 

be second only to the United States in value. 

91 

The value of the U.S. wine exports to China has increased 450 

percent in the past decade, and it is an important export market 

for U.S. wine producers. And in 2016, 11 percent of California 

wine, which was worth $160 million, was exported to China, and 

in addition, 12 percent of California produced almonds, worth $518 

million, was exported to China. And overall, there were $2 billion 

worth of agricultural exports sent to China. So can you discuss how 

retaliation by China on these products may impact these industries 

in California’s economy as a whole? 

Mr. PAUL. Yeah, I do think that the retaliation to the extent 

that it is extralegal should be vigorously challenged by our U.S. 

trade representative at the WTO and through other mechanisms, 

including bilateral consultations. And I think that all of those efforts should proceed expeditiously. 

Ms. CHU. Thank you. 

Chairman BRADY. Thank you. Mr. Holding, you are recognized. 

Mr. HOLDING. Thank you, Mr. Chairman. I appreciate you 

holding this hearing. It has been very informative. Like the other 

Members here, I completely agree that the issue of unfair trade 

practices by China must be addressed. North Carolina has a very 

diverse economy. I have heard from folks at home regarding how 

trade actions impact agriculture and manufacturing sectors, and if 

farmers from my district were here today with us, I think they 

would echo the points that have been raised by Mr. Heisdorffer. 

So, Mr. Heisdorffer, you mentioned in your remarks that there 

is room to expand our exports into China. And you mentioned that 

we should focus on expanding our trade rather than restricting it, 

and I would agree with you. So my question to you is can you 

elaborate on what specifically we can do in order to expand our exports to China, and what barriers that you see right now that prevent us from expanding our exports to China? 

Mr. HEISDORFFER. Yes, sir. Well, the United States Soybean 

Export Council works constantly through all countries, besides 

China. China was one of the first places they were in. It has been 

20 or so years ago that ASA started in China to develop that trade, 

and now the Soybean Export Council does that in other countries, 

smaller countries. 

We are going to have to continue to expand just to maintain 

what we have. Because, like I said, we have South America, who 

is more than anxious to take a penny of our trade if they can, and 

Mexico is our number two customer in soybeans, and our number 

one customer of soybean meal. 

I cannot specifically tell you how we can just go in and—you 

know, we have more soybeans to sell. Let us try to sell them to 

China. If we keep working with them, we have expanded that market over a number of years, it keeps growing. If we can continue 

to do that, it would put us in good shape. So—— 

Mr. HOLDING. We will be on a good trajectory. So maybe as a 

followup, you know, what are the successful tools that American 

farmers are using today, as far as increasing their availability for 

exports and so forth? And can we strengthen any of those tools? 

Mr. HEISDORFFER. That is correct. Where I said Brazil has 

more land, U.S. farmers have to use technology and new genetics 

in order to make up for larger production. And we have done that, 

92 

and we are increasing the yields significantly every year, as long 

as weather permits. And so we will continue to use those technologies to expand our production. 

Mr. HOLDING. So we excel in technology, another reason why 

Chinese unfair trade practices and thievery of our intellectual property needs to be countered. Existing programs are out there to help 

farmers, are there any programs that you are aware of that are not 

working really as they are intended to work? 

Mr. HEISDORFFER. I do not know what programs we have— 

yes, we have the ARC and PLC programs in the farm program. 

Those are only if you have a loss. 

Mr. HOLDING. Right. 

Mr. HEISDORFFER. And just like crop insurance, you have to 

have a loss. And no one wants to have a loss. 

Mr. HOLDING. Right. 

Mr. HEISDORFFER. So really, they are not any kind of a subsidy. You know, China says we are getting subsidies. Well, there 

is no subsidy, as you know, when it comes to the U.S. farming—— 

Mr. HOLDING. Right. Well, thank you, and Mr. Chairman, I 

think we have agreement that China is a strategic trader that will 

play by the rules when it only behooves them, and ignore them 

when these rules do not work in their favor. So I look forward to 

continuing our work here in the Committee on this issue. And I 

yield back. 

Chairman BRADY. Thank you, Mr. Holding. Mr. Schweikert, you 

are recognized. 

Mr. SCHWEIKERT. Thank you, Mr. Chairman. Look, I am going 

to try not to go over the questions, because sometimes that is one 

of our bad habits is asking the same thing over and over. So let’s 

actually take a slightly different approach. We know right now that 

a lot of our bilateral organizations that actually should have helped 

us head off massive excess capacity in China and other places are 

not working. And so this is going to be a novelty for me. I am going 

to actually start with Mr. Paul. 

If I came to you right now and said, ‘‘As the United States and 

our trading partners, China being one of them, we need to change 

our bilateral organizations so they are no longer debating societies, 

where we sit there and talk and talk and talk and talk and talk 

and talk, and then we talk about talking. How do we actually move 

so things can move quickly, and that when there is actually a finding, that it is not just the marginal to that one sliver, but actually 

can move across the trading platform of the world?’’ 

Mr. PAUL. That is a good question, Mr. Schweikert. I will first 

say that we are constrained somewhat by our obligations to the 

World Trade Organization. I am going to set those aside for a moment—— 

Mr. SCHWEIKERT. No. And I am living—this is on what being 

a utopian—— 

Mr. PAUL. Certainly. 

Mr. SCHWEIKERT [continuing]. Instead of these flare-ups 

where we have to, in many ways, threaten trade to actually force 

what bilateral organizations should have already fixed. 

Mr. PAUL. Absolutely. So you would need the collaboration of 

the major steel-producing companies of the United States, first of 

93 

all. And you have most of that through the G20—not all, but most. 

And what you would want to do is add the countries to that. You 

would want to establish objective criteria, and to ensure that countries are committing to aligning their supply and demand as much 

as possible, and that there are no government interventions in 

their industries. 

For instance, 5 of the 10 largest steel companies in the world are 

owned or partially owned by the Chinese government. That is simply not a level playing field. You would have to provide some mechanism to—— 

Mr. SCHWEIKERT. Okay—— 

Mr. PAUL [continuing]. Alter that, and then there would have to 

be enforceable, agreed-upon—you would have to enforce those divisions—— 

Mr. SCHWEIKERT. Okay, so the checklist, I have had a fixation 

on timelines—— 

Mr. PAUL. Yeah. 

Mr. SCHWEIKERT [continuing]. And responses instead of on 

delays. And forgive me, it is just the hazard of the 5-minute rule. 

Mr. Newport, I was under the impression, because of the low prices 

of our natural gas futures, a lot of other energy that we actually, 

if things were—what is the term, ceteris paribus, you know, level— 

we should be a low-cost producer in the world. Your opinion? 

Mr. NEWPORT. Yeah, I believe we are very competitive. The 

thing we do not have that others have, like China, is government 

subsidies to support the business. So that is really what is key is 

having a level playing field. 

Mr. SCHWEIKERT. Let’s just do baseline energy costs compared 

to our other competitors, particularly Europe and other places 

where their hydrocarbons are imported in. What is the differential? 

What is our energy production cost? When you produce a ton of 

steel, you know, the dollars it costs, how much of that ton of steel 

was energy? 

Mr. NEWPORT. It is a smaller percentage when you look at it. 

Raw materials and energy are probably about 60 percent of our 

cost. So the key component is your scrap and your iron ore that you 

buy. 

Mr. SCHWEIKERT. Okay. 

Mr. NEWPORT. And alloys and a lot of things from the chemical 

industry that we use for processing steel, et cetera. So energy is a 

piece of it, especially in the electrical and furnace business. 

Mr. SCHWEIKERT. All right, and I am running out of time, and 

I wanted to get to this. How do you respond to Mr. Kennedy and— 

forgive me—even some of my family that is in the fabricating world 

that appreciate and have love and caring for the mill, but they 

make things, and there is a lot more of them making things, and 

the cascade effect of the price surges, particularly over the last, you 

know, 6 weeks, has not been particularly helpful to their contracts? 

What do I tell them? 

Mr. NEWPORT. Well, I would comment on a couple of things. 

Just one, I think the market will settle down some. There has been 

overreaction, there has been a lot of uncertainty, I agree, there is 

a lot of uncertainty, which creates a lot of issues in all of our businesses and that we have to address. Also, in regard to supply mateVerDate Sep 11 2014 10:24 Mar 25, 2019 Jkt 033810 PO 00000 Frm 00097 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\33810.XXX 33810
94 

rial, imports have not stopped. We have had successful trade cases, 

we have had these 232 reports flooding in—— 

Mr. SCHWEIKERT. Yeah. But it is just my fear that—and this 

is a horrible—I mean, you want to save, because we need the capacity, but there are multiples and multiples out there on the fabricating side, and they are also our brothers and sisters, and they 

should not be cast aside either. I yield back. 

Chairman BRADY. Thank you, the gentleman’s time has expired. 

Mrs. Walorski, you are recognized. 

Mrs. WALORSKI. Thank you, Mr. Chairman. Thanks to all of 

you witnesses for taking the time to be here. It has been a fascinating discussion, I am thankful that you are here. We are here 

to examine the effects of tariffs on jobs and the economy, so I want 

to share some observations from my district. I want to provide 

some context before I do. 

My district is in Northern Indiana, which has the second-highest 

concentration of manufacturing jobs in the country. They manufacture RVs, boats, trailers, and other heavy equipment. Plenty of 

suppliers are also in the area. The unemployment rate now in Cook 

County is around 2 percent, but there are thousands of jobs open 

on any given day, so really, it is more like zero. 

These are good-paying jobs, too. The average RV worker’s salary was $68,000 in 2016, so this is what is at stake. With that in mind, 

I just want to relay some of the information that I have received 

from business owners in my district. If they were sitting here 

today, this is what they would tell you. 

One manufacturer said, ‘‘We have seen a 50 percent increase in 

the price of steel, mostly since the tariffs were announced. Additionally, there is a shortage of steel. We are furloughing the production line in one facility today and will probably have to furlough 

some of the guys in our main facility later in the week due to lack 

of availability of material. We have raised our prices to customers 

because our product is a low-margin item. The combination of the 

increase and the lack of availability is affecting sales.’’ 

Another manufacturer that produces bearings said, ‘‘We cannot 

switch to a U.S. source, it would take 1 to 2 years for us to get approval from our customers if there was a U.S. source. We will continue to import steel and we will pay the duties. So far, we have 

incurred about $15,000 in tariff costs with the potential of another 

$240,000 based upon the orders we have already booked with our 

Japanese steel supplier. 

We are moving forward with our exclusion requests. So far, the 

cost has been close to 100 hours to complete these exemption 

forms, along with some legal costs for review and advice. We are 

beginning to talk to our customers regarding possible price increases this summer.’’ 

A trailer manufacturer said, ‘‘We have rolling shortages of steel 

and we are on allocation from our supplier in Utah. Prices have already gone up 25 to 30 percent respectively on aluminum and steel 

because of speculation. Now we are seeing a trend past 30 to 35 

percent each, and of course, I am livid. The manufacturer also cancelled a factory expansion that he was planning with his tax cuts.’’ 

A steel fabricator said, ‘‘We observed steel prices starting to move 

up in early 2017 on just the talk of potential steel tariffs, and a 

95 

sharp escalation in steel prices in the last 3 months as a tariff 

started to become reality. This has resulted in a 15 to 29 percent 

increase in the cost of our steel. To put this in perspective, our increase in steel cost is larger than the entire cost of providing health 

insurance to our work force.’’ 

A component manufacturer said, ‘‘We are the sole manufacturer 

left in the United States that manufactures this type of product. 

Our competitors import all or most of their finished product from 

either Mexico, China, or Vietnam, et cetera, therefore, avoiding any 

impact on this tariff. The bottom line in this is if you raise our 

steel and aluminum prices, our prices will have to increase in order 

to cover the cost. Our foreign competitors will not be affected. We 

currently purchase all of our steel and aluminum from domestic 

sources.’’ 

A canning company said, ‘‘We are in the process of trying to build 

a 147,000 square foot warehouse. The company building the warehouse gets their steel from Canada, a country exempted from the 

steel tariff. However, we are unable to get a firm quote even out 

of Canada, because prices are beginning to rise there as well with 

so much demand shifted to Canada. It is not on hold, we have to 

build it. So we are at the mercy of a volatile market.’’ 

And the final story I would share with you is a steel processer 

said, ‘‘When purchasing raw materials, we give preference to domestic steel mills wherever possible. We enjoy long, outstanding relationships with many domestic mills. We want them to thrive. 

The actual dynamics of the entire metalworking market have 

evolved in the last 40 years. In some cases, we find the domestic 

mills cannot meet the quality standards required by our customers, 

or they cannot meet the quality standards at a competitive cost. In 

those cases, we will buy foreign material. Why put a tariff on these 

items?’’ 

And, Mr. Chairman, with that, I yield back. 

Chairman BRADY. Thank you. Mr. LaHood, you are recognized. 

Mr. LAHOOD. Thank you, Mr. Chairman. I want to thank the 

witnesses for being here today and for your important testimony. 

I represent a heavy ag district in Central Illinois. Ours is the 

eighth-largest in terms of corn and soybean production in the country. 

Also, I am blessed to have Caterpillar have their operational 

headquarters there. And whether it is Caterpillar or John Deere, 

or our farmers, obviously, they are affected by the Administration’s 

current trade policy. And I have described the Administration’s 

trade policy as in some ways unorthodox, unconventional. We have 

had Ambassador Lighthizer here, and Secretary Ross. 

And, I guess, Mr. Heisdorffer, when I look at our ag community 

and I look at what is going on with NAFTA in our current negotiations, which, obviously, we are having our eighth round this week, 

and the concerns there in looking at the potential tariffs on steel 

and aluminum and the retaliation there, what we hear from the 

Administration is that give them some time in terms of negotiating. 

But I look at the commodities markets, and I look at the prices, 

and the prices continue to go down. But I also look at what our 

farmers have to do to, you know, think out 6 months, 10 months, 

96 

a year in advance, and so much of what our farmers do is looking 

at the future and what they are going to do. And the uncertainty 

that we have right now is what I hear every day from my farmers, 

many of which supported the President when he ran. 

You look at how well he did in Iowa and my part of the country, 

and we just had Secretary Ross here a couple weeks ago, and, you 

know, he was trying to reassure us and give them some time. I 

guess, I would ask you, what gives you comfort or reassurance with 

the direction we are heading as you talk to farmers in your area, 

and other soybean producers? 

Mr. HEISDORFFER. More exports is, of course, our biggest 

push. We all have to make decisions, as you said, a year in advance, more or less. We are going to put in a corn crop, we have 

to start putting nitrogen on the year before. I am a livestock person, so we have that swine manure that we have to take care of 

in the fall, and we inject that into the ground, according to our manure management plan, and that is our nitrogen for our corn crop 

the following year. 

So those acres are committed. And so soybeans work the same 

way. Whatever acres do not go to corn usually gets rotated. Understanding that your State is the number one soybean producer 

here—in the last few years, anyway—we are proud that we can 

produce a protein that will help feed the world. And soybeans are 

that protein. And we will continue to do that as long as we can, 

but any kind of interruption in our exports really hurts us. 

Mr. LAHOOD. Thank you. Congressman Dooley, I appreciate 

your comments as it related broadly to trade. I want to maybe ask 

your comments when I look at the justification of what this Administration is looking at in terms of these tariffs on aluminum and 

steel and national security, and using that as the reliance and looking at the standard with the WTO and how these cases have been 

dealt with, it seems to me—particularly when you hear from our 

Defense Department on what they say about national security as 

it relates to steel and aluminum—and you couple that with the fact 

that we have not really partnered with our European partners or 

the Canadians or our other allies in terms of a trade strategy that 

would go after the Chinese a little bit more. Can you comment on 

that? 

Mr. DOOLEY. Thank you, and I think that is—you know, when 

we look at the implementation of the 232s, it was on national security grounds. You know, there needed to be, from our perspective, 

a little consideration given to who are our strongest allies. 

Is our national security really jeopardized because Canada is a 

source of steel to the United States? I would suggest not. Nor 

would I suggest that Mexico or Brazil or our allies in the EU were 

going to jeopardize their security and the U.S. national security by 

failing to import critical steel to the United States. 

That group of allies, though, should be more aligned and prepared to engage with this Administration in a more aggressive, collaborative effort to put pressure on China to address some of their 

inappropriate practices that are leading to the excess capacity. 

Mr. LAHOOD. Thank you. 

Chairman BRADY. Thank you, Mr. LaHood. Before I recognize 

Mr. Kelly, I want to thank the witnesses for being here. I apoloVerDate Sep 11 2014 10:24 Mar 25, 2019 Jkt 033810 PO 00000 Frm 00100 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\33810.XXX 33810
97 

gize, I have to scoot down to the White House. You know, April 17 

is the last time Americans will have to file their taxes under this 

old, broken tax code that burdened American manufacturing and 

farmers with the highest tax rates in the world. 

I want to thank you for being here. I am just going to—you have 

been a remarkable panel, and very insightful. Mr. Kelly, thank you 

for providing witness for us as well, and you are recognized. 

Mr. KELLY. Thank you, Mr. Chairman. And thank you all for 

being here. I think we need to start talking about trade. There are 

so many different ways to look at it, but one of the things that I 

have been marveled at is that for decades now, we have complained 

about our loss of market share, somehow thinking that there is an 

honor system out there that people will just stop doing bad things 

to us because we are nice to them. I have to tell you, being in the 

automobile business and watching the loss of market share has 

been incredible. You do not get it back once it is gone. You do not 

get it back. 

Mr. Newport, I cannot tell you how much I appreciate you being 

here today. You know, last week, during our work week, we actually went down to AK to watch them make the electrical steel. We 

watched them make that grain-oriented electrical steel. We also 

were up in Sharon—and Wheatland, too—when we were in Farrell 

looking at the crankshaft business up there at Sharon Crankshafts. 

So with all that in mind, I was looking at some things here, and 

it says, ‘‘The U.S. power system is comprised of 3,300 utilities, 

3,300 utilities that work together to deliver electric power through 

200,000 miles of high-voltage transmission lines, 55,000 substations, and 5.5 million miles of distribution lines that bring electricity to millions of American homes and businesses.’’ And any of 

the system’s principal elements—power generation, transmission, 

or distribution—could be targeted, and we know that. 

And the question is when you go to AK—and I watched the hardworking men and women of AK and what they are doing, and I 

have been there my whole life, so I know what they do, and I would 

really suggest that Members of Congress, instead of talking at it, 

go look and see what these people do. Actually see what it is we 

are talking about. Do not let somebody give you a bunch of talking 

points and say, ‘‘This is what it is.’’ 

You are the last producer of electrical steel in the United States. 

I am constantly told about how fragile our power grid is, and how 

it is at the very—we could lose that, and if we were to lose that, 

what would the effect be on our national security? And I understand the concern about, well, what is going on now, and how this 

talk is being harmful to futures, and how it is disrupting. 

I would just suggest that this idea, again, that people telling you, 

‘‘Oh, no, no, Kelly, you know, free trade as long as it is fair trade.’’ 

I say, ‘‘You know what, and so what do you do when you find 

that it is not fair trade?’’ 

And they say, ‘‘Well, you go to the WTO.’’ 

I say, ‘‘That is fine. And how many years does it take to get a 

ruling on it?’’ 

‘‘Well, you know, sometimes three, sometimes four.’’ 

I said, ‘‘Okay, that ship has sailed. Okay, you win the case, you 

lose the market.’’ 

98 

I wish we would stop talking about unfair trade practices and 

change them to illegal trade practices. If we sit back—and we finally have a President that just didn’t talk about it when he was 

campaigning or she was campaigning, but when the rubber meets 

the road, when you actually get in the office, well, it has only been 

14 months, and I know we have passed no judgment on the previous couple decades that we just talked about it and did nothing. 

Mr. Newport, could you talk about the effect, if we were to lose 

AK, if we were to lose the only producer of electrical steel in the 

United States, what kind of jeopardy that puts our power grid in? 

Mr. NEWPORT. Yeah, when you think about it, if you would 

have something that would occur, whether it be a national disaster, 

you have a terrorist attack, or something else, or you just have 

something failing the system—which there have been blackouts 

that have occurred over the last decade or two in our country, and 

think about what that has done to businesses, what that has done 

to the financial markets, et cetera—how critical an impact, or how 

big of an impact that would have to our industry. 

I can tell you, you know, the other competitor that produced the 

product went out of the business in 2016. Our business levels have 

not gone up, they actually have gone down. So our utilization is actually lower than it was a year ago, despite the other competitor 

that made it going out of the business. 

But I can tell you also what will happen is if something would 

occur that they continue to flood the market and take over the 

market, if we weren’t making it, when they are the only supplier, 

a foreign producer coming in, I can tell you what I believe would 

happen is the price of that is not coming down. 

You think about that, what that could do to our energy costs, and 

what that can do to our businesses when we become solely reliant 

on something overseas, and I agree with you. It is getting fair 

trade. We have already, you know, taking on the trade wars, we 

have already faced it. It has been going on for decades. 

We have seen it, as I gave examples, on electrical steel. And because people were unfairly and illegally trading steel does not give 

them the right to buy that steel. What we want is fair trade. If we 

cannot compete, that is fine. I have no problem with that. And we 

addressed that. 

Mr. KELLY. Yeah, good. I wish I had time—we really do need 

to talk to all of you for a much longer time than this. You flew in 

from all over the United States and you get 5 minutes to talk about 

your concerns. 

So we want to keep doing that, but I really do believe that at 

some point, you are going to not just talk the talk, you better walk 

the walk. And for us to sit back and allow the rest of the world 

to pick our pockets, and say, ‘‘I wish they would not do it,’’ somewhere along the line, we are going to get caught up with this. 

I have to tell you, being in the automobile business, there is very 

few people out of work that can buy a car or a truck. And I am 

watching this, and us losing. Our base, our manufacturing base, 

puts us in one hell of a bad position in a global economy right now, 

in a situation where everything is just so fragile. 

99 

So I want to thank you all for being here, you guys are tremendous for coming in. Ladies, thank you all for being here, we really 

appreciate it. 

Ms. JENKINS [presiding]. Mr. Reed, you are recognized. 

Mr. REED. Well thank you, Madam Chairwoman, and it is great 

to be way over here. I feel like I am in Kansas. It is good to see 

you. Anyway, I just want to thank the panel for being here, and 

I want to echo some of the things that Mr. Kelly, my good friend 

from Pennsylvania, indicated. And as this Administration goes 

down this clearly new trade policy and Putting America First agenda, I join in looking forward, not backward. 

And one of the things that I know my colleagues have already 

touched upon a little bit is I do not think most Americans, when 

I go back to my district in Western New York—it is a rural area, 

my home town is Corning, New York, it is up near Buffalo, Rochester, the Pennsylvania border—they have no idea, as has been 

confirmed here today, that we do not have a trade agreement with 

China. China is operating under the WTO standards. Nobody 

knows what that is, that is a DC term, to a large degree, to the 

people that are working hard day in and day out in Western New 

York. 

And so one of the things that I wanted to stress today and question the panel on, as we put these new tools in this trade policy, 

and as we go after that even, level playing field that we are looking 

to achieve—and I hear pretty much consistent agreement from the 

panel, that is, kind of, the outcome everyone is looking for here— 

as we go into that future negotiation possibly with China—and I 

was glad to see the president of China indicate a willingness in his 

public comments to engage in a conversation, I think that is critical 

to being successful here—what would you offer us, from your perspectives? 

When we sit down at some point in time in the future—because 

I do believe we will sit down with these representatives from China 

and other trading partners—to address that even and level playing 

field, what are the priorities? How do we take on the overcapacity 

issue of steel coming out of China? 

What are you looking for, what would you say to us as we build 

that next trade agreement? What would you say are the key provisions that have to be in that agreement to make it enforceable and 

ensure that American workers have that opportunity to compete on 

that even and level playing field? Anybody like to go first in regard 

to that? Go right ahead. 

Mr. PAUL. Sure, Mr. Reed, I would be happy to. And I appreciate your leadership on manufacturing—— 

Mr. REED. I appreciate that. 

Mr. PAUL [continuing]. I know you have done a lot of policy 

work on that. You can start with the Section 301 report. There are 

a number of commitments that China has repeatedly made to protect intellectual property, to stop cyber-hacking, to eliminate forced 

technology transfers, and to eliminate other anticompetitive practices that they have failed to implement. And there have to be, 

again, consequences for that, whether it is a loss of market access 

or tariffs or some other mechanism, there needs to be consequences 

for that lack of market norms. 

100 

The second thing, and this is the more troubling and difficult 

thing, is that China wants to be treated like a market economy, 

yet, it is fundamentally an authoritarian state capitalist regime 

that has resisted both bilateral and multilateral efforts to conform 

to world trade rules. 

There is not an easy question for—or, there is not an easy answer for that, particularly with President Xi, kind of, doubling 

down on the desire to build national champions, and as I mentioned, Made in China 2025, which is targeting the next generation 

of our industries. It is steel today, it is robots tomorrow. We have 

a lot at stake here with respect to American innovation and American jobs. 

But fundamentally, what hasn’t worked is simply kicking the can 

down the road. We have been willing in the past—and I do not 

want to touch on it like you suggested—but we have been willing 

in the past to simply accept China’s word and move on to get to 

the next negotiation. That has been a failed strategy. It has not 

worked. I am—— 

Mr. REED. Sanctions, so I am hearing—— 

Mr. PAUL [continuing]. I am glad, in a way, that the President 

has laid the cards on the table because—— 

Mr. REED. I appreciate that. 

Mr. PAUL [continuing]. This is a long overdue conversation. 

Mr. REED. And that is exactly where I am not going to go. And 

one of the things that I have not heard a lot of conversation on 

today, because we are talking about steel and aluminum: currency 

manipulation, to me, is one of the biggest things that is sticking 

out there unaddressed and is the elephant in the room. 

So does anybody want to touch on that in my short time left? I 

would appreciate it. But are there any other comments? When we 

negotiate this with China, what are we looking for? 

Ms. WILSON. I do not necessarily disagree with Mr. Paul. I 

think we have long been a champion on IP rights with our manufactured products. But I think what we are hearing from our suppliers is because we have cast a wide net, we are bringing in product and we are having consequences that are going to affect U.S. 

workers. 

Mr. REED. And I appreciate that short-term consequence—— 

Ms. WILSON. That is the reason that has brought me here. 

There is no—— 

Mr. REED. I am looking at the long-term—— 

Ms. WILSON [continuing]. Yeah, I understand. 

Mr. REED [continuing]. The long-term effects. Anyone else—— 

Ms. WILSON. The short-term would hurt us. 

Mr. REED [continuing]. Want to offer anything, especially on 

currency? Yes, sir. 

Mr. WOLFE. Yes, I would just encourage us to look at leveraging 

the export opportunities and some of our small- and mid-sized business and the growth markets in China. 

Mr. REED. Perfect, thank you. Well at that, my time has expired. Thank you, Madam Chair. And thank you to the witnesses. 

Ms. JENKINS. Mr. Smith. 

Mr. SMITH OF MISSOURI. Thank you, Madam Chairwoman. 

Thank you all for being here. I definitely appreciate the conversaVerDate Sep 11 2014 10:24 Mar 25, 2019 Jkt 033810 PO 00000 Frm 00104 Fmt 6633 Sfmt 6602 I:\WAYS\OUT\33810.XXX 33810
101 

tion. I represent Southeast Missouri. We have been devastated by 

the illegal dumping practices of the Chinese when it comes to aluminum. In March of 2016, I saw 900 jobs vanish because we could 

not smelt aluminum the way we had for decades, because of the 

illegal subsidizing of the Chinese government of aluminum. 

Let me give you some interesting numbers that need to be reiterated, because some people may not understand it, based on the 

conversations I have heard today. In 2000, the Chinese produced 

roughly 10 percent of the world’s aluminum. This was in the recent 

report that was put out by Secretary Ross at the Department of 

Commerce. 

As of 2015, they produced over 55 percent of the world’s aluminum. In 15 years, they went from 10 percent to 55 percent, 

roughly. In that same timeframe, in 2000, we had just under 20 

aluminum smelters in the United States. Up until just recently, we 

had two fully operational aluminum smelters. 

High-purity aluminum is very important for our national defense 

efforts. We all know that. That is what came out in the report. But 

we only had one plant doing it. Now we are going to have two. The 

day after the President issued his aluminum tariffs, I stood in New 

Madrid, Missouri, with the announcement of 450 new jobs that 

were opening up. 

My district is an agriculture-based district. The largest community is 38,000 people. We grow more soybeans in Southeast Missouri in seven counties than the entire State of Missouri. But we 

also have an aluminum smelter. 

Granite City, Illinois, is 50 miles from my congressional district. 

We have been hit hard by the illegal Chinese practices. When we 

talk about a trade war, and people talk about a trade war, Mr. 

Paul, do you know how many tariffs the Chinese impose on products that come into their country? How many different tariffs? 

Could you guess? 

Mr. PAUL. The Chinese have significant tariffs on virtually 

every American product coming into its country. 

Mr. SMITH OF MISSOURI. They have over 19,000 tariffs on 

goods coming into China. We need to remember that as U.S. citizens, that the Chinese are not looking out for the American citizen. 

The Chinese are not looking out for the American worker. The Chinese are not looking out for the American farmer. That is why they 

have all kinds of tariffs on added-value soybean products. And that 

is why they decided to go after the soybean farmers in Southeast 

Missouri with a 25 percent tariff. 

I hope that the president of the Chinese government will decide 

to work and negotiate with President Trump. That is what he is 

asking for, that is what we are needing. We are needing fair agreements, fair deals, to look out for the Americans. They are pulling 

out billions, hundreds of billions of dollars of our wealth by unfair 

trade practices, by over 19,000 trade tariffs. Whether it is steel, 

aluminum, soybeans, corn, biodiesel, pork, or beef. All of it. And we 

need to do everything we can in supporting the President to make 

sure we get the best agreement possible so that we are treated fairly and appropriately. 

And so I thank you for the conversations, but I think we need 

to understand that the true problem that we have to look at are 

102 

these countries that are not treating us fairly. We just want to be 

treated fairly. We want to be good neighbors, whether it is Canada 

or Mexico or China or South Korea. We want to be good trading 

partners and good neighbors, but we want to be treated fairly and 

appropriately. 

We want to make sure the soybean farmers in Southeast Missouri are getting the best, best value for the products that we grow. 

We want to make sure that the aluminum industry and steel industry are thriving and surviving. 

But we have to do that by making sure we are not taken advantage of. And we have been taken advantage of for way too long. 

And it has been on the backs of American farmers, American workers, and American manufacturers. 

And let me just point out, the Wall Street Journal, on April 6, 

talked about aluminum decreasing since March 1 by 4 percent. 

They got a 10 percent tariff, but the price of aluminum has decreased by 4 percent. That is the opposite of what everyone said 

prior to the President proposing that. We just need to make sure 

things are fair and free, but when 19,000 tariffs are imposed by one 

country, that is not fair. Let’s look at the Chinese. Thank you, 

Madam Chairwoman. 

Ms. JENKINS. I, too, would like to thank our panelists for appearing before us today. Please be advised that Members have 2 

weeks to submit written questions to be answered later in writing. 

Those questions and your answers will be made part of the formal 

hearing record. With that, the Committee stands adjourned. 

[Whereupon, at 1:16 p.m., the Committee was adjourned.] 

[Submissions for the Record follow:] 

103 


33810A.039

<SitcuitvBrands. 

The Honorable Kevin Brady 

Chainnan 

Committee on Ways and Means 

11 02 Longworth HOB 

Washington D.C., 20515 

April 25, 2018 

Dear Chainuan Brady and Ranking Member Neal, 

The Honorable Richard Neal 

Ranking Member 

Committee on Ways and Means 

1139E Longworth HOB 

Washington D.C., 205 15 

We write to express Acuity Brands' concerns about the economic effects of recent trade 

actions both undertaken and proposed by the Trump Administration. Specifically, we are 

concerned that the recently-enacted steel and aluminum tariffs, along with the proposed tarifls on 

Chinese goods, will harm American businesses in a variety of ways- making it harder for them 

to affordably acquire necessary materials, utilize existing supply chains, and compete in both 

domestic and international markets. 

For reasons explained in further detail below, Acuity Brands urges Congress to work with 

the Administration to evaluate both the 232 tariffs and the proposed 30 I tariffs, carefully 

consider the full scope of the economic impact they may have on many American businesses and 

industries (e.g., cost increases for component parts and materials, supply chain disruptions, loss 

of technological advancement and efficiency improvements, etc.), and tailor any finalized tariffs 

in a manner that minimizes potential hann to American companies. 

I. Company Background 

Acuity Brands, Inc. (NYSE: A Yl) is a North American market leader and one of the 

world's leading providers of lighting and building management solutions for commercial, 

institutional, industrial, infrastructure, and residential applications throughout North America and 

select international markets. With fiscal year 2017 net sales of $3.5 billion, Acuity Brands 

currently employs approximately 13,000 associates. We are headquartered in Atlanta, Georgia 

and have operations tluoughout North America and in Europe and Asia. 

The Company's lighting and building management solutions vary from individual 

manufactured products to intelligent network systems. Individual products include luminaires, 

lighting controls, emergency lighting, lighting components, controllers for various building 

systems (including HV AC, lighting, shades, and access control), power supplies, and prismatic 

sJ...)'Iights. Networked systems, meanwhile, allow the infrastructure in buildings, roadways, and 

properties to communicate data regarding operations and activities; this can optimize energy 

efficiency and enhance building occupants' experiences- all while reducing operating costs. 
104 


33810A.040

IT. The Steel and Alumi.num Ta.-iffs Unfairly Ha.-m Amet·ican Businesses 

With regard to the sted and aluminum tariffs, we remain concerned that they unfairly 

penalize a number of U.S. businesses across a variety of industries. As we have noted in previous 

communications with the CoDlDlittee, Acuity's ability to continue innovation in the lighting and 

building management sectors, as well as the networked systems and Internet of Things sector, is 

directly impacted by these tariffs. Despite Acuity's strong business relationships with domestic 

steel mills, the tariffs have created metal availability and pricing concerns, as well as sourcing 

uncertainty, which threaten to harm Acuity's ability to provide the highest-quality products and 

services to our customers at the best cost. 

First, the fast implementation of the tariffs has put strain on domestic steel capacity, as 

domestic mills are unable to ramp up production immediately to meet demand. ln many cases, 

domestic capacity will not be able to meet demand for at least a year, and in the interin1, there are 

no safeguards to keep the cost of processed steel and aluminum from spiraling higher and lllgher 

(even beyond the percent increase from the tarifl). Even when full domestic capacity is achieved, 

there is no guarantee that prices will be affordable for businesses. Meanwhile, processed steel 

from China is being imported without any implication of increased tariffs, further harming U.S. 

businesses. 

Second, while Acuity has worked to mai11tain strong relationships with domestic mills, 

many of those mills may have relationships with and supply lines through other countries that 

have been impacted by the tariffs. Although we understand and appreciate that the Department of 

Commerce is working to process country exclusions, there remains a high degree of uncertainty 

about which countries may get an exclusion or how long they will last. This uncertainty hampers 

Acuity's ability to plan sourcing strategies with any degree of reliability, hurting our business 

and our customers. 

Third, in addition to the impacts on Acuity and the lighting/building solutions industry, 

we would note that the impacts of the tariffs will have ramifications for a much broader swath of 

industries. For example, pricing uncertainty resulting from the tariffs could negatively impact 

any construction projects-including school and hospital projects, commercial renovations, and 

so on- that use Acuity products. Furthermore, the energy efficiency sector, wlllch employs more 

than 2 million Americans and is growing, could take a rut as energy-efficient lighting products 

will become more expensive and less available for use. This will harm Acuity's sales, as well as 

the ability of these related industries to expand their economic impacts. It also will negatively 

affect the long-tenu environmental benefits and monetary savings for businesses that result from 

construction of energy-efficient buildings. 

In sum, while we appreciate the intended goal of supporting the domestic aluminum and 

steel industries- as noted, Acuity is a strong supporter of U.S. steel, purchasing much of our 

steel from U.S. mills- we are concerned that the tariffs may ultimately operate as a de facto tax 

on domestic manufacturers of finished products across the nation, harn1ing not only Acuity, but a 

multitude of other businesses across a variety of industries. 

Page 2 of 4 
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ill. Tariffs on Chi.nese Goods Tht·eaten to Iucrease Costs ofEuergy-Ef.ficieut Goods aud 

Smart Technologies 

As an initial matter, Acuity takes pride in being a U.S.-headquartered manufacturer that 

provides more than 4,000 good-paying domestic jobs to hard-working Americans. We are 

concerned that the proposed tariffs on Chinese goods, particularly those that target electrical 

component parts, will affect Acuity's ability to maintain its competitive business standing. 

Moreover, beyond the potential direct impacts on Acuity, the proposed tariffs also threaten to 

hann the U.S.'s statu s as an innovation leader in emerging areas such as energy efficiency and 

smart technologies. 

With regard to the Trump Administration's Section 301 investigation into Chinese trade 

issues, we do understand-through direct experience in our industry- the desire to attempt to 

curtail China's less-than-favorable trade behaviors. We are concerned, however, that inclusion of 

certain products on the list of goods that may face additional tariffs could hann Acuity's 

business, the broader lighting industry, and related industries. 

In particular, we are concemed about the list's inclusion of electronic components and 

LED chips that are vital parts of a number of energy-efficient products and smart technologies 

tbat Acuity produces. These parts are not easily sourced, as they are not generally available from 

domestic suppliers and it would be incredibly difficult to adjust Acuity's supply chains. 

Ultimately, Acuity would likely have to bear an increased cost for these products. Preliminary 

estimates show that the tariffs on these products could end up costing Acuity as much as $10 

million annually, as long as the tariffs are in place. 

In addition to the immediate effect of increased costs for products, Acuity would also be 

likely to face longer-tem1 supply chain disruptions as a result of the proposed tariffs. Many 

vendors who manufacture impacted components or materials in China are already developing 

plans to shift production to other low-cost countries. As such, we are concemed that U.S. 

manufacturers could be faced with significant business disruptions without an offsetting benefit 

for U.S. labor. Moreover, the proposal could simply shift the trade deficit to different country. 

The tariffs would also put Acuity and other domestic manufacltlrers at a competitive 

disadvantage by exposing them to tariffs on necessary c-omponents and materials, while finished 

goods may still be imported from foreign countries at a rate much lower than the proposed 

component tariffs. This creates a compounded burden on domestic manufacturers who may be 

exposed to both increased costs for components and lost sales resulting from imported, low-cost 

finished goods. Customers are aware of these issues and could be driven to shift their purchases 

to vendors outside the U.S., further harming Acuity's business prospects. 

Ultimately, therefore, Acuity risks facing increased cost burdens associated with the 

tariffs on vital component parts, as well as supply chain disruptions, both of which would affect 

Acuity's ability to competitively price its products. Meanwhile, Acuity is already facing 

increased competition from foreign companies that do not have to contend with the tariffs, as 

well as an increasing competitive disadvantage from companies that can import fmished goods. 

Page 3 of 4 
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IV. Conclusion 

Again, Acuity urges Congress to work with the Administration to evaluate both the 232 

tariffs and the proposed 30 I tariffs, consider the full scope of the potential economic harm that 

could impact a variety of industries across the country, and tailor the tariffs accordingly. One 

manner in which the tariffs could be tailored, for example, is through a specified timeframe for 

their application (we would suggest less than one year). Addressing unfair trade practices by 

other countries should not come at the expense of American businesses. Instead, policies should 

be implemented lo, among other things, avoid disruptions in global supply chain strategies and 

minimize uncertainty for domestic manufacturers. 

If properly designed and implemented, tariffs can help address trade imbalances and 

unfair trade practices without harming the ability of American businesses to succeed and grow. 

Moreover, appropriate trade actions will not ham1 the ability of the U.S. to lead in areas such as 

energy efficiency and smart technologies. We appreciate the focus Congress has placed thus far 

on the larger real-world impacts of the Administration's recent trade actions, and we ask that you 

continue to work to minimize hann to U.S. businesses. 

CC: The Honorable David Reichert 

Chainnan 

Subcommittee on Trade 

Committee on Ways and Means 

1103 Longworth HOB 

Washington D.C., 205 15 

The Honorable Bill Pascrell, Jr. 

Ranking Member 

Subcommittee on Trade 

Committee on Ways and Means 

1103 Longworth HOB 

Washington D.C., 20515 

?J/p~ Cheryl English 

VP, Government & Industry Relations 

Acuity Brands 

Cheryi.English@AcuityBrands.com 

770-860-2660 

Page 4 of 4 
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STATEMENT FOR THE RECORD 

SUBMITTED BY: 

THE ADVANCED MEDICAL TECHNOLOGY ASSOCIATION (AdvaMed) 

HOUSE WAYS AND MEANS COMMITTEE 

HEARING ON THE EFFECTS OFT ARIFF 

INCREASES ON THE U.S. ECONOMY AND 

JOBS 

APRIL 12, 2018 
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Introduction 

The Advanced Medical Technology Association (AdvaMed) appreciates the opportunity to 

provide comments on tariff policy to the House Ways and Means Committee. AdvaMed 

represents approximately 300 of the world's leading medical technology innovators and 

manufacturers of medical devices, diagnostic products and medical infonnation systems. 

AdvaMed members range from the smallest to the largest medical technology innovators and 

companies. 

AdvaMed is dedicated to the advancement of medical science, the improvement of patient care, 

and in particular, the contribution that high quality health care technology can make toward 

achieving those goals. We are a research-intensive industry, spending as much as 20 percent of 

revenue on R&D to provide patients the most innovative technologies and to compete in a highly 

competitive global market. 

The medical technology industry, an American success story, is one of the few remaining 

manufact11ring sectors of the U.S. economy with a positive net balance of trade. The people who 

work in the U.S. medical technology industry depend on trade to ensure security, growth, and 

new opportunities. In fact, medical technology industry salaries are nearly 30 percent higher than 

the average U.S. salary because the industty employs so many highly skilled workers in the areas 

of research and development, manufacturing, sales and management. TI1e medical technology 

industry is responsible for nearly 2 million high-paying U.S. jobs - roughly 519,000 directly and 

1.6 million indirectly - and 9,800 manufacturing facilities across the 50 states. 

Medical technology accounts for 3 percent of U.S. Gross Domestic Product. TI1e U.S. exports 

over $50 billion worth of medical devices annually. Opening markets and ensuring a level 

playing field are essential to the future growth of the U.S. medical technology industry. 

Backgt·ound 

Section 301 of the U.S. Trade Act of 1974 authorizes the President to take action against a 

foreign govemment that implements policies that violate international trade agreements or is 

deemed unjustified, unreasonable, or discriminatory, and burdens or restricts U.S. commerce. 

Section 301 can be self-initiated by the United States Trade Representative (USTR) or by 

petition from an affected stakeholder. Typically, the goal of a Section 30 I investigation is to 

negotiate a settlement that results in the elimination of a banuful trade barrier. 

Initiation ofSe.ction 301 investigation against China began August 2017 and is in response to the 

Administration's position of China's unfair trade practices related to the forced transfer of U.S. 

teclmology and intellectual property theft. A tina! report of this investigation was released 
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on March 22, 2018, with a list of products subj ect to a 25 percent tariff released by the USTR on 

April 3, 2018. 

The list provides a 25 percent duty be applied to around I ,300 tariff lines worth around $50 

billion in total on Chinese goods imported into the U.S. It is anticipated that the USTR will issue 

a fmal detenuination on the products subject to the additional duties by late summer at the 

earliest. 

Improving Access fot· U.S. Medical Technology Manufactut·ers to Chinese Mat·kets is 

Threatened . The Chinese medical technology market is over $25 billion. China imports about 

70 percent of its medical devices and imports are expected to grow. U.S. companies continue to 

be the leading suppliers of medical devices to China, capnaring one-third of all medical device 

imports. China's growing economy and middle class, and increasing demand for healthcare by a 

rapidly aging population will continue to make the country an attractive market for U.S. medical 

technology manufacturers. 

USTR's Section 301 Repot·t DID NOT Include Medical Technology. USTR's 183-page report 

released on March 22,2018, "Findings of the Investigation Into China's Acts, Policies, and 

Practices Related to Technology, Transfer, Intellccntal Property, and Innovation Under Section 

301 of the Trade Act of 1974," does not mention medical devices. Thus, it was a surprise to see 

USTR's 301 list includes tariffs on medical technologies. 

Medical Technology is Approximatelv $3 billion of the $50 billion in Goods. There are at 

least $3 billion worth of medical technology products on the 30 I list. 1l1is is a significant 

amount focused on one industry that the USTR did not find evidence of forced technology 

transfer or intellectual property theft. 

Impact of Tariffs on Medical Technology is Likely Undet·stated. The $3 billion estimate only 

includes medical devices specific tariff lines using 2016 trade data and does not account for the 

various non-medical device component parts (semiconductors, switch boards, etc.) that are 

included in finished medical device products. Thus, the impact on the medical technology 

industry is understated, unfair, and 01mecessary given the absence of medical teclmology in 

USTR's March 22 report. 

Impact on Healtbcat·e Costs. Numerous studies have shown that medical technology not only 

directly impacts the health, well-being and life of Americans, but also provides significant 

economic benefit. A 25 percent tariff could increase the cost ofhealthcare and limit patient 

access to life-saving teclmology. 

Non-tariff BatTicrs Could Be Implemented. Even though China's initial retaliation list did not 

include medical technology, the government could impose non-tariffbarriers that would 

detrimentally impact U.S. manufacturers and negate significant policy gains we have made in 
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China in recent years. For example, localization, regltlatory and procurement policies could be 

implemented in response to USTR's Section 301 List, with the ultimate benefit of improving 

China's domestic industry and strengthening their position to compete intemationally at the 

expense of U.S. fmns. 

We believe a successful negotiating resolution to the current crisis is possible and strongly 

encourage that medical technology be removed from the current USTR 30 I list as this process 

moves forward. As noted by USTR's March 22 report, the lack of evidence of forced technology 

transfer and intellectual property theft does not warrant tariffs on medical technology. 

Implementing tariffs on medical devices could increase health care costs, limit access to lifesaving medical technology, and harm U.S. manufacturing and jobs. 

List of medical devices and diagnostics included in the USTR 301 list: 

• X-Ray, generators, screens, desks and chairs associated 

• Ultrasound 

• MR 

• CT 

• Needles 

• Catheters 

• Defibrillators 

• Hearing aids 

• Pacemakers 

• Orthopedic appliances and artificial joints 

• Radiation Therapy 

• EKG 

• Syringes 

• Scintigraphy, SPECT and PET 

• Patient monitoring systems 

• Ophthalmic devices 

• Anesthesia delivery 

• Psychological aptitude testing apparatus 

• Respiration devices 

• Dental (e.g. drills, burs, fillings, artificial teeth) 

• Thermometers 

• Electrosurgery devices 

• Drains 

• Flu kits 

• Cannulae (tubes) 

• Blood grouping reagents 

• Wound care, e.g. adhesive dressings 

• Ostomy appliances 
111 


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' -

I.~~~~AIADA American International Automobile Dealers Association 

SUBMITTED COMMENTS OF 

AMERICAN INTERNA TlONAL AUTOMOBILE DEALERS ASSOCIATION 

Hearing on the Effects of Tariff Increases on the U.S. Economy and Jobs 

United States House of Representatives 

Committee on Ways and Means 

Aprill2, 2018 

American International Automobile Dealers Association 

500 Montgomery Street, Suite 800 

Phone: 703-519-7800 Fax: 703-519-7810 
112 


33810A.048

United States House of Representatives 

Committee on Ways and M eans 

Hearing on the Effects ofTariff Increases on the U.S. Economy and Jobs 

SUBM ITIED COMMENTS OF 

AMERICAN INTERNAnONALAUTOMOBILE DEALERS ASSOOAnON 

This statement is submitted by the American International Automobile Dealers Association1 

(AIADA). Established in 1970, AIADA is and continues to be the only association whose sole 

purpose is to represent America's international nameplate automobile franchises that sell and 

service vehicles in the U.S. Our mission is to increase awareness in Washington, D.C., and 

around the country of our members' contributions to their communities and the American 

economy, and to preserve and promote a free market for international brand automobiles in 

the United States. 

Affordability 

According to Forbes2

, there are five areas of spending t hat will consume over 50% of the money 

earned by American consumers. The five areas are: home, car, children, education and 

retirement. For most, the biggest purchase will be a new house, whether it's a condo or a single 

family home, housing is the largest portion of most budgets. Following the purchase of a house, 

the consumer's automobile is often the next largest. Statisti and the U.S. Department of 

Transportation estimated that there were nearly 222 million licensed drivers in the U.S. that 

drove over 268 million registered passenger vehicles in 2016. Increasing the cost of an 

automobile will affect nearly all of them. 

The concern of affordability is not new to the auto industry. The economic logic most budget 

conscious consumers follow when financing an automobile is the 20/4/10 ratio. That means, 

1 AIADA represents America' s international nameplate automobile franchises that sell and service the following 

brands: Acura, Aston Martin, Audi, Bentley, BMW, Ferrari, Genesis, Honda, Hyundai, lnfiniti, Jaguar, Kia, Land 

Rover, Lexus, Maserati, Mazda, Mercedes, MINI, Mitsubishi, Nissan, Porsche, Rolls Royce, Sm art, Subaru, Toyota, 

Volkswagen, and Volvo. These retailers have a positive economic impact both nationally and in the local 

communities they serve, providing more than 550,000 American jobs. Visit AIADA online at www.aiada.org. 

' Forbes, Five Expenses That Will Consume SO Percent Of Your Lifetime Earnings, 

https:/Jwww.forbes.com/sites/work-in-progress/2010/08/02/lifetime-earnings-home-car-children-educationretirement/#2d1Sb54f507d 

' Statista research and analysis is a combined provider of market research as well as research and analysis services. 
113 


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when buying a new vehicle a consumer should put down at least 20 percent, finance the car for 

no more than 4 years, and keep the monthly payment at or below 10 percent of your pre-tax 

monthly income. Consequently, when t he cost of new vehicle rises by even the smallest 

amount, via regulation, tariffs or taxes, auto dealers become concerned that those new costs 

will reduce sales. 

As technology has advanced, as regulatory burdens of manufacturing have increased, and with 

time, the cost of vehicles has increased. In March of 2018, Kelley Blue Book4 reported the 

estimated average transaction price (ATP) for light vehicles in the United States was $35,285. 

This cost is an increase of $703, up 2 percent, from March 2017. At the same time, household 

income has remained fairly stagnant. Cox Automotive5 found that while the current average 

price of a new car has increased by 35 percent in t he past 20 years, household income has only 

increased by 3 percent. New tariffs would make an already bad situation worse. 

Tariffs have already impacted the auto industry for over fifty years. Today there is a 2.5% tariff 

on cars entering t he United States and a 25% tariff on trucks- it's often referred to as the 

Chicken Tax because it was put in place in 1963 in response to a German tax on chicken. The 

Chicken Tax has been around so long consumers don't realize they are still paying it when they 

go truck shopping, but it's why there are only six brands of pickup trucks to choose from and 

over 30 brands of sedans. Without competition for international nameplate brands, domestic 

truck manufacturers are free to markup their trucks knowing options are being artificially 

limited for American truck buyers. 

The impact of proposed tariffs would be felt throughout the entire dealership. In addition to 

the increase in the cost of the vehicle, servicing and repairing a car would also increase, as 

tariffs would also cause t he cost of individual parts to rise. Consumers least able to afford the 

added cost will be the most impacted. Customers need safe cars and trucks to transport their 

families and get to work. They don't need a new consumer tax, i.e. tariff, increasing the costs of 

their necessities. 

Tariffs that take the form of taxes on consumers would significantly impact new car sales 

through higher prices, reduced demand, restricted choice, and new obstacles for customers 

seeking auto loans. 

' Since 1926, Kelley Blue Book has been one of the best·known names in the auto industry. Today, KBB.com 

extends the tradition, with trusted values and a reputation for innovation, including resources to help you 

research, price and shop for the car you've been looking for. 

' Cox Automotive is a leading provider of products and services spanning the automotive ecosystem. No matter 

the stage of the auto buying or selling process, we have a solution for clients of any size. 
114 


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For example, a recent studl completed by the Council on Foreign Relations analyzed the 

effects of the proposed 25% steel tariff on the auto industry. The analysis estimates: 

... an average car requires roughly 1.2 tons of steel to build. Given that tariffs tend to 

increase import prices (which determine domestic prices) by at least as much as the 

tariff, we calculate that a 25 percent steel tariff will increase the price of new passenger 

vehicles manufactured in the United States between 0.5 and 0.8 percent. 

Now, based on calculations for the sensitivity of auto sales to price, we estimate that 

such price rises of American-made cars would translate into a decline of between 1.6 

and 3.6 percent in global sales. 

The historical relationship between U.S. auto sales and employment is tight .... Based on 

this relationship, we would expect declining sales to result in auto-industry job losses 

ranging from 18,000 to 40,000 by the end of 2019. 

In summary, that's possibly an almost 4% sales decrease and a job loss that could reach 40,000 

Americans. Those numbers would cause a dramatic downstream impact on not just dealership 

operations, but the American economy as a whole. 

The automobile industry is so globally integrated that many automobiles traditionally thought 

of as "foreign" brands are actually built right here in the U.S. and with more U.S. parts than the 

traditional American brands. Not one car sold in Ameri ca contains 100 percent domestically 

produced content. Therefore, tariffs will increase the price on all new vehicles, not just socalled foreign vehicles. 

Jobs 

Across the United States and in communities in every state, many Americans are employed as a 

result of the international nameplate automobile industry, including the 577,000 employed in 

9,600 international nameplate automobile franchises. Many more Americans benefit from 

being able to purchase quality products at affordable prices that result from this integrated 

supply chain. AIADA highlights its economic impact along with the Association of Global 

Automakers in its annual report, Here for America: International Automakers and Dealers in 

America7. 

• Council on Foreign Relations, Trump Steel Tariffs Could Kill Up to 40,000 Auto Jobs, Equal to Nearly One-Third of 

Steel Workforce, https://www.cfr.org/blog/trump-steel-tariffs-could-kill-40000-auto-iobs-egual-nearly-one-thirdsteel-workforce 

7 AIADA, International Automakers and Dealers in America, 

http://www.aiada.org/sites/default/files/HereForAmerica2017 web3.pdf 
115 


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International nameplate franchises, with their annual payroll of 32 billion dollars, also account 

for an additional 527,000 indirect jobs. In 2016, those same franchises sold 8.4 

million vehicles, or 59 percent of total U.S. market share. International nameplate auto dealers 

did not stop there. In 2016 t hey spent an overwhelming $4.8 billion on advertising and sold $54 

billion in parts and services. International nameplate auto dealers are a large, visible, and vital 

cog in our nation's economy, and they rely on t he competitive pri cing of their products to 

maintain and grow t heir businesses. 

AIADA's dealer members represent the retail side of the international auto manufacturing 

industry, which has also invested heavily in the United States. International automakers have 

invested $75 billion in U.S. operations and have more than doubled their production in the U.S. 

over the past 15 years, producing 47 percent of all vehicles built here in America. In 2016 alone, 

5.5 million vehicles were built by the American employees of international nameplate 

manufacturers in the U.S., of which 925,000 were exported to over 140 countries worldwide. 

International automakers directly and indirectly employ 1.29 million Americans and exports of 

international autos alone supported 265,000 US jobs. In fact, in 2017, according to data from 

the U.S. Department of Commerce, the BMW Manufacturing factory in South Carolina was the 

leading U.S. automotive exporter by value. AIADA highlights all this information to ensure that 

the committee members are aware of the economic impact of international auto dealers and 

automakers in every state, town and Congressional district in the United States. 

These facts prove that trade is an engine of economic growth and is a proven strategy for 

building global prosperity. Open trade and investment policies play a crucial role in allowing 

international nameplate dealers, many of whom operate second and t hird generation family 

businesses, to compete on a level playing field in cities and towns across the U.S. These policies 

provide consumers with competitive pricing and service on some of the most popular vehicles 

on American roads today. 

Conclusion 

The automotive industry in the U.S. is constantly evolving, and international nameplate 

automobile manufacturers and dealers are designing, building, and selling more vehicles across 

the U.S. than ever before. In the process, they are redefining the meaning of an "American" car. 

International nameplate dealers are growing their investment in the Ameri can economy and 

communities in a variety of ways and today provide the majority of America's auto retailing jobs 

and vehicles for American consumers, selling 59 percent of the new cars purchased by 

American consumers in 2016. 

AIADA and its 9,600 American auto dealers strongly support a pro-growth economic agenda, 

and believe it can be accomplished with a positive trade message, not the threat of tariffs and 
116 

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taxes. As the U.S. Chamber found, America drives the world economy, but outside our borders 

are markets that represent 80 percent of t he world's purchasing power, 92 percent of its 

economic growth, and 95 percent of its consumers. 

We don't need more tariffs, we need more trade agreements. Agreements with our trading 

partners ensures t hat trade is fair, regulated, and gives American businesses large and small t he 

framework they need to grow and thrive in a globalized economy. Trade keeps our economy 

open, dynamic, and competitive, and helps ensure t hat America continues to be the best place 

in the world to do business. 

We appreciate the opportunity to submit our statement for the record and thank the Chairman 

and the committee. 
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.... 

Statement of the 

American Farm Bureau Federation 

Statement to the House Committee on Ways and Means 

regat·ding the hearing: 

Effects ofTarifflnueases on the U.S. Economy and Jobs 

April12, 2018 

Submitted By: 

The American Farm Bul'eau Federation 
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33810A.054

The American Fann Bureau Federation (Fann Bureau) offers the following statement for 

the record on the hearing: Effects ofTarifflncreases on the U.S. Economy and Jobs. 

Trade is critical to the livelihood of the U.S. agricultural sector because it spurs economic 

growth for fanners, ranchers and their mral communities. Agriculture supports jobs in the 

food and agricultural industries and beyond. The fact is that 95 percent of the world's 

consumers live outside of the United States and over 20 percent of U.S. fann income is 

based on exports. Expanding opportunities for U.S. crop and livestock producers to 

access international markets will boost fann income in the United States, while 

preserving existing access is critical to maintaining farm income at current levels. U.S. 

agricultural exports amounted to $140.5 billion in FY2017. Imports, critical for certain 

products, especially out-of-season produce, totaled $119.1 billion in FY20 17. 

Trade agreements have contributed significantly to the decades-long positive growth in 

trade by U.S. agriculture. Between 2003 and 2017, U.S. agricultural exports to countries 

with which we have trade agreements increased from $24 billion to $59 billion annually, 

equating to nearly 45 percent of aU agricultural exports. Existing trade agreements have 

proved successful in tearing down tariff and non-tariff trade barriers that hinder US. 

fanners' and ranchers' competitiveness and prevent us from taking advantage of 

consumer demand for high-quality U.S. food and agricultural products throughout the 

world. For consumers, trade agreements provide access to new varieties of food products 

and off-season supplies of fresh produce. 

The US. exported over $19.6 billion in agricultural products to China in 2017, ranking it 

as the #2 export market for US. fanners and ranchers. The Chinese market is especially 

critical for US. soybean growers as $12.4 billion of the $21.6 billion (nearly 60 percent) 

of soybean exports in 2017 went to China. 

Any effort to impose tariffs on Chinese in1ports by the U.S. runs the risk of retaliatory 

measures against U.S. agricultural exports. The impact on American farmers and 

ranchers, and associated businesses, must be considered when pursuing trade actions. 

US. agriculture has strongly supported, for decades, efforts to open the world to our 

agricultural and other trade products. 

On April 2, 2018, China began retaliating against U.S. agricultural products with 

increased tariffs on pork (25%) and fruit (fresh and dried), tree nuts (shelled and in-shell), 

wine, ginseng, denantred ethanol and other products ( 15%). This action is in response to 

increased U.S. steel and aluminum tariffs on China that went into effect on March 23, 

2018. These tariffs will impact roughly $2 billion in US. food and agricultural exports. 
119 

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The U.S. is also considering imposing tariffs on $50 billion of various Chinese imported 

products Under section 301 of the Trade Act of 1974. China has published a retaliation 

list that would take effect should these U.S. tariffs take effect. The agricultural products 

potentially subject to a new 25 percent import tariff include soybeans, sorghum, cotton, 

com, wheat, beef and other products. China has also launched a case in the WTO against 

the U.S. on the proposed product tariffs. These proposed tariffs would impact 

approximately $16.5 billion in Chinese imports of agricult11ral and food products from 

the United States. 

Fann Bureau believes in negotiations, not additional tariffs, to resolve trade issues. 

American farmers and ranchers rely heavily on export markets for their business success, 

especially at this time of reduced fann income. Agriculture needs a growing trade, not a 

reduced and burdened trade. 
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Written Statement for the Record by Casey Guernsey 

Spokesman for Americans for Farmers and Families 

Submitted to the U.S. House Committee on Ways and Means 

April 12, 2018 

Chairman Brady, Ranking Member Neal, and Members of the House Committee on Ways and Means, !hank you for holding 

this important hearing on the effects of tariff in<:reases on the U.S. economy and jobs. As someone who immediately felt lhe 

unintended consequences of the Trump Administration's tariffs on certain steel and aluminum imports, I greatly appreciate 

your efforts to further examine the issue and identify remedies to help prole<:! America's jobs, particularly in the agricull\Jral 

sector, access to markets around the wo~d and e<:onomic strength. 

My name is Casey Guernsey. I'm a seventh-generation farmer from Harrison County, Missouri. Even during my stint in state 

potaics as a member of the Missouri State House, I have spent most of my life working on my family's farm, wl1ich has been 

raising cattle for more than 150 years. I'm writing today on behalf of Americans for Farmers and Families (AFF), a coalition of 

more !han 100 members- including the American Soybean Association !hal is le$!ilying today- advocating for the 43 million 

American workers supported by the food and agriculture industry. 

Our organization's core mission is to help preserve and modernize the North American FreeT rade Agreement (NAFT A). 

However, in light of escalating trade tensions with China, AFF recently launched a new project called ·Retaliation Hurts Rural 

Families: wl1ich is specifically focused on highlighting the impact tariffs could have on communities throughout rural America. 

We recognize and appreciate President Trump's commitment to protecl American interests through trade. But farmers and 

families are beginning to pay the price for his methods. In response to Trump's steel and aluminum tariffs, China made good 

on its threat to levy tariffs on S3 biltion worth of U.S. goods, including a 25-percenttariff on pork, a 25-percent on soybeans, 

and a 15-percen! tariff on fruit, nuts and other agricultural products. 

This is bad news for America's food and agriculture exporters and workers. China has become the largest customer for 

America's farm products, buying well over S20 biiRon per year. According to a re<:enUy-released study from The Trade 

Partnership, lhese retaliatory tariffs could cost the U.S. nearly 470,000 jobs, including 24,000 in the agriculture industry alone. 

Add~ionally lhe 2018 Farm Forecast reports that net farm income in inflation-adjusted dollars is at as lowest level since 2002. 

Retaliatory action only expedites this decline. 

Despae talks between the Unaed States and China, threats of even more tariffs have continued. These countermeasures will 

have crippling consequences for America's food and agriculture industries, wl1ich stand to lose thousands more jobs, millions 

more customers and billions more dollars as a result of these actions. And unfortunately, promises of "compensation" cannot 

reverse the damage to our industries and communities. Securing a better NAFT A deal will. 

As China continues to target America's food and agricull\Jre industries- closing off access to major marl<ets, threatening jobs 

and harming rural families - our message to this committee, Congress and the administration is simple :~ is more critical now 

than ever to flllalize a modernized NAFTA that will further enhance our abilay to sell home-grown goods to customers around 

the world, wl1ile keeping prices lower, paychecks higher and creating more jobs in the United States. 

NAFTA's contnbution to our economy cannot be overstated. Under this important agreement, U.S. food and agriculture 

exports have more than quadrupled and account for 25 percent of American exports. NAFT A has helped to grow domestic 

jobs and supported $127 billion in annual e<:onomic activity. And in 2016 alone, the U.S. exported $43 billion worth of 

agricull\Jral products to our NAFTA partners. There is no doubt that America's farmers and rural communities have benefited 

greatly from this agreement. Now, President Trump has an opportunity to make it even better and deliver the certainly we 

desperately need to keep our farms afloat and maintain our contnbution to the U.S. economy. 
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33810A.057

From cuHing taxes to rolling back hannfut regulations, this administration and members of this committee have been 

instrumental in propelling America's economic expansion, puHing more money into the pockets of fanners and improving lives 

for families ae<oss the country. 

We ask that this committee stand with the fanning community and rural families by ensuring that these economic gains are 

sustained and that America continues to be the world's breadbasket for decades to come. Americans for Fanners and 

Families look forward to working with you as a part of that effort. 

Thank you for the opportunity to submit our thoughts today. 

ORGANIZATIONAL MEMBERS 

Agribusiness Council of Indiana 

Agricultural Retailers Association 

AgXplore 

Almond Alliance of California 

American Bakers Association 

American Beverage Association 

American Cotton Shippers Association 

American Dairy Coalition 

American Farm Bureau Federation 

American Feed Industry Association 

American Frozen Food Institute 

American Fruit and Vegetable Processors and Growers Coalition 

American Peanut Producl Manufacturers, Inc. 

American Soybean Association 

Animal Health Institute 

Association of American Railroads 

Association of Equipment Manufacturers 

Brockmann Fanns 

Bums & McDonnell 

California Fann Bureau Federation 

Can Manufacturers Institute 

Cargill 

Cooperative Network 

Com Refiners Association 

Croplife America 

Distilled Spirits Council 

Edge Dairy Farmer Cooperative 

Food Marketing Institute 

Fresh Produce Association of the Americas 

Global Cold Chain Alfoance 

Grocery Manufacturers Association 

Growth Energy 

Independent Bakers Association 

Indiana Beef Cattle Association 

Indiana Corn Growers Association 

Indiana Dairy Producers 

Indiana Soybean Alliance 

International Dairy Foods Association 
122 


33810A.058

Iowa Assoaation of Business and Industry 

lowaComGr~ 

iowa-Nebtaslc8 Equ.pment Dealers Assoaabon 

John Deere 

Kansas City Soulhem 

MAP Farm 

Marene Farms 

Michigan Com Growers Association 

Midwest Food Products Association 

Missouri Agrib<Jsiness Association 

Missouri Cattlemen's Association 

Missouri Chamber of Commerce and Industry 

Missouri Com Growers Association 

Missouri Dart Association 

Missoun Grooers Assoaabon 

Missoun Peiloleum Cooncil 

Missoun POfk Assoaabon 

Missouri Relaiers Association 

Missouri Soybean Association 

National Association of Egg Farmers 

National Association of State Oepartmenls of Agriculture 

National Assoaation of Wheat Growers 

National Com ~Association 

National Graon and Feed Association 

National Grooers Association 

National M1. Producers Federation 

National OiiSH<I Processors Association 

National POfk Producers Coonc:i 

National Polalo Council 

National Renderol<s Association 

National Restaurant Association 

National Retail Faderntion 

National Sorghum Producers 

National Turl<ey Federation 

Nonh Arnencan M1lers Association 

NOf1h Ca<oina POfk Counci 

Northwest Honlc:oJibnl Council 

Ohio COfn & Wheat Growers Associabon 

Orchard Country Product 

Prosody Consulting, LLC 

Retaillnduslry Leaders Association 

R& LFarms 

SNAC lntemationa.l 

Sieftar Industries 

St. Louis Agrib<JSI08$S Club 

Sweeten« Users AsSOCiation 

The fe<lilze< lnsbtule 

The Hardwood Fade<ation 

Uppe< MISSISSippi, IJ.nois, and Missoun R.vers Assoaabon 

US Apple Assoaabon 
123 

f 


33810A.059

USA Rice 

U.S. Dairy Export CouncO 

U.S. Dry Bean Council 

U.S. Hide, Skin and leather Association 

US Rice Producers Association 

Walmart 

WIB Agribusiness Coalition 

Wisconsin Agri-Business Association 

Wisconsin Corn Growers Association 

Wisconsin Paper Council 

Wisconsin Potato & Vegetable Growers Association 

Wisconsin State Cranberry Growers Association 

INDIVIDUAL MEMBERS 

Brian Smith, farmer and Wayne County Commissioner in Milanville, Pennsylvania 

Brian Munzlinger, Missouri Stale Senator (R·Wil6amstown) 

Casey Guernsey, Former Representative and Dairyman in Harrison County, Missouri 

Dan Hegeman, Missouri Slate Senator (R·Cosby) 

Dan Naylor. farmer and former State Director, PA Dept. of Agri<:utture 

Ed Wiederstein, former president of the Iowa Farm Bureau 

Eri<:k Coolidge, owner of LE·MA·RE Farms in Wellsboro, PA 

Jim VanBlarcom, owner of Sugar Branch Farms in Columbia Crossroads, PA 

Martin Yahner, ownerofYahner Brothers Farm in Patton, PA 

Sonya Anderson, Missouri State Representative (R·Springf~eld) 

CONTACT INFORMATION 

info@americansforfarmersandfamOies.com 

111111 
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33810A.060

EDDIE STEWART, President 

DIRK ElSPERMAN, Senior Vice President 

ROBERT C. LANHAM, Vice President 

JOEL ZINGESER, Treasurer 

STEPHEN E. SANDHERR, Chief Exewtive Officer 

JEFfREY 0. SHOAF, Chief Operating Officer 

April 24, 2018 

The Honorable Kevin Brady 

House Committee on Ways and Means, Chairman 

Washington, D.C. 20515 

Dear Chairman Brady. 

AGC of America l)'lf ASSOCIATED C£t"£RAI CON'llW:lOIISOf AMfR'CA 

Building on Experience 

The Associated General Contractors (AGC) of America appreciates your ongoing efforts in the House 

Committee on Ways and Means to review the Administration's steel and ahuninum tariffs, assessing both 

their inunediate and potential impact on the U.S. economy. As the nation's leading constntction trade 

association, AGC represents more than 27.500-member companies that rely upon steel and aluminum to 

build our nation's infrastmcture. The Administration's broad metals tariffs directly threaten pricing 

stability and are adding to steel and almuinum price increases and order delays. Without stable pricing, 

the industry faces the prospect of project delays and cancelations, pulling up to 66.000 constntction jobs 

at risk.

1 

While AGC recognizes the vital need to protect national security interests, the Administration's decision 

to exceed the Department of Commerce's top-line recommendation of a 24% blanket tariff on all steel 

imports and a 7.7% tariff on all aluminlllll imports is highly conceming. National security also depends 

upon a thriving national economy, of which construction is a vital component For reference, gross 

domestic product (GOP) from constmction in the U.S. reached $660.5 billion in the fourth quarter of 

201 711

• 

AGC urges the Conm1ittee to consider the disproportionate and hannful effect these tariffs are having 

upon the construction industry, and to take any steps available within the Committee's jurisdiction to 

ameliorate the impact of these tariffs on construction. 

Construction Use 

AGC's 6.700 general contracting fmns. more than 9,000 specialty contracting firms. and almost 12.000 

service providers and suppliers all depend on steel and aluminum for a wide variety of construction 

projects. Aluminum is used in all types of buildings for window frames and curtain walls, siding, and 

other architectural elements, and, according to the American Iron and Steel Institute, the constmction 

industry consumes 43 percent of domestic steel. For instance. wire mesh is used in highway concrete. 

while steel plate and wire for cables go into bridges. Buildings use large amounts of smtctural steel for 

piles and beams, rebar for reinforcing concrete, and steel studs for interior walls. Pipelines are almost 

entirely made of steel. Other infrastntcture uses a variety of steel for rails and signaling systems; airport 

mnways, control towers and terminals; harbor wharves and seawalls: and many other uses. With such a 

'Francois. Joseph and Baugbam. Laura: "RowJd 2: Trndins. Partners Respond. The Estilll3ted Impacts ofTariffs on Steel and 

AlumimutL" The Trade Portnenbip. Mardi 13. 20t8 

• U.S Bureau ofEcooontic Analysjs 

2300 Wilson Blvd., SUite 300 • Arlington, VA 22201·3308 

Phone: 703.548.3118 • Fax: 703.837.5400 • www.agc.ora 
125 


33810A.061

dependence on steel and aluminum, the health of the construction industry is particularly susceptible to 

price increases. 

The steel and aluminum tariffs have already triggered a surge of orders that mills say they cannot fill on a 

tin1ely basis, causing prices for certain aluminum and steel products to rise sharply and disrupt project 

delivery schedules. While increased steel prices will likely lead to cost increases for existing projects, the 

operations and financing of current, budgeted projects are already being disrupted. Bid prices will rise for 

future projects, and public owners, which generally have lixed budgets, will be forced to reduce the 

number and/or scope of projects they put out, including schools, highways and bridges. Some private 

projects will be canceled as construction cost increases make them uneconomic. 

Impact on the Workfot·re 

Most importantly, the proposed tariffs on steel and aluminum will also have a direct and negative iulpact 

on construction employment. The steel and aluminum tariffs wi.llthin out a construction workforce that is 

already experiencing worker shortages. The projected number of jobs that could be affected is staggering. 

According to a Trade Partnership Worldwide report prepared for the Business Rotmdtable, 66,022 

construction jobs could be at riskY1 The Coalition for a Prosperous America (CPA), a domestic 

agriculture, manufacturer and union coalition, puts that figure at 10,635 construction jobs."' These figures 

do not take into accotmt how the constntction industry could be exposed to retaliatory trade measures . 

. Permanent Countl·v Exemptions and Expiration Date 

To remedy this, Congress should press the White House and United States Trade Representative (USTR) 

to expand the list of exempted countries and make penuanent the "temporary" issued exemptions. The 

seven nations currently exempted are staunch U.S. allies. Congress should also pressure the White House 

and USTR to set a tariff expiration date to help stabilize prices and facilitate the construction industry's 

decisions regarding long-term planning and hiring. Uncertainty is driving up prices, hindering project 

platming, and leading to workforce cuts. It is also threatening the viability of President Tmmp's proposed 

infrastntcture plan. 

Impact on the Administt·ation's Infrastructure Plan 

The President's infrastructure plan depends upon non-federal investment- state. local, and private 

funding sources. Such investment would be hindered by increased project cost estimates from rising 

material prices. Broad, global tariffs on steel and almninum weaken the President's campaign promise to 

rebuild this nation's cmmbling infrastntcture. Without the appropriate funding sources, it will not be 

possible to help rebuild and maintain the country's roads, bridges. mass transit. railways, airports, pons 

and tlood control stntctures. As the President himself has noted numerous times, the United States' global 

competitive edge is dulled by its outdated infrastructure system, and the country's growing gulf in goods 

trade with China could be narrowed by an overhauled i.nfrastntcntre system. Steel and aluminum tariffs 

will not close this gap, nor do they pose a significant threat to China's economy. htstead, they threaten the 

• Francois, Joseph and Baugham. Laurn: .. Round 2: Trading Pattners Respond. The Estimated lntpa<:IS of Tariffs on Steel ~nd AJwuinwn." 

Tite Trade Pat'lnership, March 13.2018. 

"'ferry. Jeff: .. St~l & Aluminum Tariffs Prod\1ce Minimal Impact on Jobs.. GOP: CPA Economic Model Refutes AJarntist Trade Partnership 

Snady." Coalition fol' a Prosperous America. Mal'ch 20. 2018. 

2300 w ason Blvd., Suite 300 • Arlington, VA 22201·3308 

Phone: 703.548.3118 • Fax: 703.837.5400 • www.agc.org 
126 

f 


33810A.062

very livelihood of the men and women who stand ready to carry out the President's vision, rebuild the 

country's infrastn1cture, and restore our competitive advantage. 

Conclusion 

While the House Ways and Means' April 12 hearing was a heartening first step, AGC remains hopeful 

that the Committee will take meaningful further action and hold USTR accountable as it seeks to 

negotiate country exemptions against a May I duty-free deadline. Again, we commend your willingness 

to explore the tariffs issue, but we also implore you to consider applying greater pressure on the 

Administration. 

These broad, global tariffs on steel and aluminum pose serious harm to the constn•ction industry and 

directly affect AGC's more than 27,500 commercial construction firm membership. AGC looks forward 

to ongoing consultation with you and your colleagues as the committee moves forward to address the 

steel and aluminum tariffs issue. 

Sincerely, 

Jint111y Christianson 

Vice President, Government Relations 

2300 Wilson 81'1<1 •• Sulle 300 • Arlington. VA 22201·3308 

Phone: 703.548.3118 • Fax: 703.837.5400 • www.agc.org 
127 


33810A.063

House of Representatives Committee on Ways and Means 

Hearing on the impact of steel and aluminum tariffs 

Statement of Jim McGreevy - President and Chief Executive Officer of the Beer Institute 

Hearing Date: April 12, 2018 

Chairman Brady, Ranking Democrat Neal, and Members of the Committee: 

My name is Jim McGreevy, and I am the President and CEO of t he Beer Institute, one of the 

oldest trade associations in Washington, DC, representing America's brewers, beer importers, 

and suppliers. 

A majority of the volume of beer sold in the U.S. is packaged in aluminum cans and aluminum 

bottles, made from aluminum cansheet. Although 98% of our cansheet is domestic, imported 

primary aluminum is an essential input. Tariffs or other measures limiting the importation of 

primary aluminum or can sheet will hurt the economic activities and jobs our industry supports. 

When President Trump and Secretary Ross were touting the benefits of aluminum tariffs, they 

were very specific that the increased costs to end-users would be negligible. Secretary Ross 

went further to assert that the cost of a can would only go up less than a penny. However, since 

the tariffs were announced, the price of primary aluminum has skyrocketed, largely because of 

increases in the Midwest Premium (MWP), which is part of the price all aluminum purchasers in 

North America must pay for metal. 

When a brewer buys cansheet or finished cans, it pays a Midwest Transaction Price (MWTP) 

plus conversion and fabrication charges. The MWTP has two major components: the London 

Metal Exchange (LME) price and the MWP. 

The LME price is an underlying base price for the aluminum metal as traded daily on the London 

Metal Exchange, which is an open exchange where global aluminum producers and users can 

discover a fair and transparent price for primary aluminum which is used to make cansheet and 

ultimately, beverage containers. 

The MWP is an additional premium above the LME price. Metal producers created the MWP 

many years ago as a means of covering the full logistical cost of moving metal from a supplier's 

warehouse to a buyer's plant. Factored into the MWP are: freight charges, finance costs, port 

charges and duties, and warehousing charges, including rent and load in/load out charges. 

The MWP is set by a single entity, Platts, which is a division of McGraw-Hill. Platts enjoys a 

unique and unregulated controlling influence over benchmark pricing for commodity markets. 

End users must pay whatever Platts sets as the MWP. 

Platts sets the MWP by means of an opaque polling system. Platts asks traders, banks, and 

aluminum producers to provide pricing information concerning actual completed transactions 

resulting in movement of physical metal. The MWP is set in an opaque manner without 
128 


33810A.064

meaningful input from aluminum purchasers. It is effectively set by those who benefit from it 

the most. Because the MWP is completely unregulated, it is ripe for possible manipulation. 

There is good reason to believe that the MWP does not currently reflect the actual logistical 

cost of moving metal from a supplier's warehouse to a buyer's plant. The MWP is much higher 

than the actual logistical cost. 

As the attached chart shows, the MWP has skyrocketed since the Commerce Department 

delivered its tariff recommendations to the White House and increased further since President 

Trump's tariff announcement. The increases started in earnest on the mere recommendation of 

tariffs. While some portion of the more recent increase is attributable to t he April 6, 2018, 

announcement of sanctions against Rusal, a major Russian aluminum producer, the increases 

overall far exceed what one would expect from t hose sanctions and application of a 10% tariff. 

Platts Midwest Premium (MWP) 

'" 

, 

~tl>l/ M ¥11 Aj)rl/ N~fll 

u.s. Aluminum Premiums 

Cents/LBS 

~u ~u oou -u -u •a -~ -• 

-~bMW,Cril¥!td((t"ll~ 

The MWP price has skyrocketed almost three fold since the Commerce Department delivered its tariff 

recommendations to the White House, and further since President's Trumps announcement 

We hope the Committee will take a closer look at this issue, which is having a significant 

negative impact on aluminum users. 
129 


33810A.065

Section 232 

I am the owner of Dai lchi USA, ltd. -an importer of stainless steel from Malaysia, Taiwan, and Vietnam. 

Our customers are primarily companies that further process the material we sell to them, for sale to 

manufacturers, in various industries including automotive, appliances, kitchen equipment, construction, 

and so on. 

We are now facing tariffs reaching 25% on our imports. Our primary objections to the current 

application of Section 232 to stainless steel are as follows: 

1) The Ross report only examined carbon and alloy steels, not stainless steel. Despite this, stainless 

steel has included along with these steels whose industries were actually examined. 

2) The countries that President Trump has exempted, or is reportedly considering exempting, 

other than Mexico, do not have stainless steel mills and are thus not stainless steel producers. 

Therefore, these exemptions will not save our industry. 

3) Although the Ross report takes pains to ascertain the quantity of steel that was imported into 

the USA in the past several years, the report fails to mention the quantity of steel exported from 

the USA during that same period, much less analyze the one against t he other. The report also 

fails to note the breakdown of of these imports into subtypes of steel product, which 

correspond to stages of the manufacturing process. Thus, the report fails to notice imports of 

semi-raw materials (such as slabs) which are typically purchased by USA steel mills, which 

ultimately are sold as finished steel product billed as "Made in America". 

4) The Ross report focuses almost exclusively on the larger capacity of production from China and 

how it is harming the industry in USA. However, as in 2016 anti-dumping duties were levied 

against stainless steel from China, Chinese produced stainless steel has not been sold in the USA 

for almost two years in any event! 

5) In 1998, anti-dumping duties were levied against the following countries for stainless steel, 

duties which remain in place today: 

a. France 

b. Germany 

c. Italy 

d. Japan 

e. Korea 

f. Taiwan 

With these dumping duties still in place, any exemption given by President Trump for these 

countries, does not help our industry-the existing duties already prevent imports from being 

economical. 
130 


33810A.066

6) There is an inherent contradiction between the purpose of Section 232 tariffs- for national 

security - and President Trump's use of them as a bargaining chip for his NAFTA negotiations. 

How can President Trump use them as leverage to push the EU to reduce tariffs on Americanmade products, as per his tweet of March 11? How can President Trump suggest that Australia, 

which is not even a producer of stainless steel, be exempt, because we have a trade balance or 

surplus with them? Is this Section 232 action for National security or to reduce the USA trade 

deficit? 

7) Presently, there are 4 mills that produce stainless steel in the USA. Outokumpu (owned by a 

Finnish parent company), North American Stainless (Owned by a Spanish parent company), AK 

Steel (Publicly traded on USA exchanges) and ATI (Now a joint venture with Tsingshan of China). 

Thus, 3 of the 4 USA stainless producers are owned by foreign entities. ATI has closed their melt 

shops, and instead imports their slabs (the output of the first stages of processing) from 

Tsingshan in Indonesia. ATI's reasoning, from their own press release, is that it is that much 

cheaper to buy the slabs elsewhere than to produce t hem themselves. It is expected that 

President Trump will grant ATI an exemption for the importation of slabs from Indonesia from 

their Chinese partner. If Section 232 tariffs are being enforced for National Security and 

President Trump blames China for our countries woes, why should stainless steel slabs for ATI 

be excluded when they come from a Indonesian mill owned by a Chinese company, which is 

known to be subsidized by the Chinese government? 

8) It is worthwhile to note that Dai lchi USA, Ltd. exported more stainless steel in 2017 from the 

USA than we imported. The dollar value of our exports was double that of our imports. 

9) There are some types of stainless steel that the existing USA mills are more efficient at 

producing, and those are that which we export, and there are others that foreign mills are more 

efficient at producing, and those are that which we import. This is the true meaning of free 

market. 

Furthermore, with regard to the effects on the USA as a whole, these tariffs will ultimately result in 

inflationary action on prices of almost all goods in the USA, as most goods contain some steel, stainless 

steel, or aluminum. This applies both to consumer goods, construction, and infrastructure. 

Inflationary pricing will curtail exports, incentivizing companies to move their factories from the USA to 

overseas countries, so that they can compete in global markets. BMW built their largest plant in the 

world in South Carolina, from where they export cars to all over the world. How can they continue this 

when their steel and aluminum costs have increased by 25% or more? Six days before President Trump 

even signed the Section 232 action, Steel Dynamics, followed by other USA steel mills, already increased 

their prices steel products by 18.5%. After the signing of Section 232, AK Steel stopped offering material 

on their web portal, saying that they "need to determine what the new market prices are". 

Thus, Section 232, ostensibly signed for purposes of National Security, fails to accomplish not only in 

that, but also in trying to save jobs in USA steel mills that were lost to automation and not 

underutilization or foreign competition. Are we ready to start a trade war with every steel, stainless 
131 

f 


33810A.067

st eel, and aluminum producing nation in t he worl d for no discernable gain? Are we, the citizens of the 

USA really willing or able to pay higher prices for our cars, appliances, homes, and bridges? 

Please, stand against the application of Section 232 and the disastrous effects it will have on our 

economy. At t he very least, stainless steel should not be included. Furthermore, Congress should act to 

limit t he President's power to unilaterally enact Section 232, so t hat he alone cannot impose tariffs, a 

power which is in any event properly vest ed in the legislature (as per Article I, section 8 of the 

Constitution). That, and not this application of Section 232, will save American jobs, prevent trade wars, 

curtail inflation, and buttress prosperity. 
132 

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33810A.068

March 13. 2018 

Member of Congress 

United States Capitol 

Washington, D.C. 20510 

Dear Member of Congress: 

Edge 

Edge Dairy Farmer Cooperative urges you oppose any tariff approach that could disrupt our long-standing 

trade relationships. In reaction to President Trump's recently imposed tarifl"s on imported steel and 

alumimun, we want to highlight the threat posed to our existing dairy exports caused by this position. 

Fonned in 2010, Edge has nearly 800 dairy farmer members throughout the midwest and is tbe fastest 

growing dairy c,ooperarive. 

As you already know, exports are crucial to keeping our dairy commnnity strong. Recent trade statistics 

show that U.S. dairy exports represent about one-seventh of total U.S. milk production. That works out to 

one day's worth of milk production every week. Our dairy fanners are concerned about the possible 

retaliatory measures our trading partners could impose that would limit our products' ability to reach 

consumers in other cotmtries. If history is any indicator, agriculrural products are often the first targeted. 

Dairy farmers across the nation are experiencing a prolonged period of depressed milk prices. Foreign 

marke ts represe111 tbe best oppommity to address this chatlenge. We know that dairy products can help meet 

future protein demands from the rapidly growing global population. Our dairy farmers are ready to meettbat 

demand, but first we need to maintain our existing markets. We already face uncertainty over our two largest 

markets- Canada and Mexico- because of the ongoing NAFT A negotiations. For that reason, Edge urges the 

Administration to succesfully reamhorize a modernized NAFT A that does not disrupt the critical partnership 

that currently exists. We also support seeking improved access and new export opportunities in other foreign 

markets. 

Edge appreciates your understanding and anention to our concerns. We appreciate that you have a lready 

been engaged on tbis issue. We hope you will remain engaged as necessary to safeguard our exports and 

protect our fanners. 

Sincerely, 

-~Brody Stapel 

Presidellt 

771i< M~nitnwnr Rtf <;t~> R I r.r~>~>n R~v W I <;4<11 I Q70 lUl< 0070 I vnir~>nfmil~ rnm 
133 


33810A.069

() 

rnA Flexibl.e ~ackaging r rH. Assoc1atton 

Connecting. Advancing. Leading. 

Flexible Packaging Association (FPA) 

Statement for the Record 

House Ways and Means 

185 Admiral Cochrane Drive 

Suite 105 

Annapolis, MD 21401 

Tel (410) 694·0800 

Fax (410) 694-0900 

www.flexpack.org 

Hearing on the Effects of Tariff Increases on the U.S. Economy and Jobs 

Thursday, April12, 2018 

My name is Alison Keane, and I am President and CEO of the Flexible Packaging 

Association (FPA). FPA is the voice of U.S. manufacturers of flexible packaging and their 

suppliers. The association's mission is connecting, advancing, and leading the flexible 

packaging industry. Flexible packaging represents over $30 billion in annual sales in the 

U.S. and is the second largest and one of the fastest growing segments of the packaging 

industry. The industry employs over 80,000 worket·s in the United States. Flexible 

packaging is produced from paper, plastic, film, aluminum foil, or any combination of these 

materials, and includes bags, pouches, labels, liners, wraps, rollstock, and other flexible 

products. With respect to tariff impacts, the industry uses aluminum foil, and it is used for 

everyday food and beverage products such as candy, salty snacks, yogurt, and beverages; as 

well as health and beauty items and pharmaceuticals, such as aspirin, shampoo and shaving 

cream. Aluminum foil provides the barrier protection from oxygen, light and bacteria that 

these products need to ensure stable shelf-life and freshness. Aluminum foil is also used by 

the flexible packaging industry to ensure sterility for medical device packaging enabling the 

products packaged, such as absorbable sutures, human tissue, and artificial joints, to 

maintain their efficacy at the time of use . 

•• 

~~·~· ~·-· 
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33810A.070

The Section 232 investigation, which resulted in the 10% tariff on aluminum, which 

includes foils produced from that aluminum, was initiated under the Trade Expansion Act 

of 1962, and was to determine what, if any, effects imports of aluminum have on national 

security. FPA is not aware of any impacts aluminum foil imports fo r use in the packaging 

industry has on U.S. national security and the Department of Commerce Report entitled 

"Effects of Aluminum Imports on the National Security," (Report) did not specify any. FPA 

supports efforts to protect domestic manufacturing and ensure national security, however, 

these efforts must consider the impact and consequences on all U.S. manufacturing 

industries, and the recently imposed 10% tariff on aluminum imports does not. Aluminum 

foil imports necessary for the packaging industry, and without application for national 

defense, should have been excluded from the tariffs. In its investigation, the Administration 

was to consider a range of factors related to national security, including the economy and 

the effects of foreign competition on the economic welfare of domestic industries, including 

impacts on employment. However, this does not appear to have been the case. These 

import restrictions on aluminum will have a significant negative impact on the flexible 

packaging industry and its employment in the U.S with regard to aluminum foil converting. 

A recent 

FPA was pleased to see that one aspect of the Report was adopted in t he 

Administration's proclamation instituting the aluminum tariffs - the process for exclusions 

from the tariffs "upon request of affected parties if the steel or aluminum articles are 

determined not to be produced in the U.S. in a sufficient and reasonably available amount 

or of a satisfactory quality or based upon specific national security considerations." 

However, according to the direct-final regulations implementing the exclusionary process 

(83 FR 12106, March 19, 2018), trade organizations, such as FPA, can not petition on behalf 
135 


33810A.071

of their respective members, even though our members would all be making the same 

request- that aluminum foil is exempted as it is not make domestically in the quantities 

and quality needed for the packaging industry. Many manufacturers, particularly small 

businesses, rely on their trade associations to assist them in responding and negotiating 

solutions to government regulations. By not allowing trade associations to file on behalf of 

their industries, this rule is encouraging excessive and duplicative filings and will 

disproportionately impact small businesses. And, the tariffs went into effect on Ma rch 23, 

2018, when the earliest possible date Commerce could grant an exclusion would be May 18, 

2018, when the exclusions will "generally" be approved. So, there is no guaranteed 

timeframe in which petitioners will know whether or not their petition has been approved 

and they will have already been paying the tariff for at least 90 days. The damage to U.S. 

flexible packaging jobs may very well already be done after 90 days of this ta riff, and once 

again, this process will certainly disproportionately disadvantage small converting 

businesses that cannot afford to front these costs. 

Further, there is little to no clarity on the petition process from the rule. Commerce 

must supply FAQ's answering such questions as how confidential business information 

(CBl) can be submitted. Right now, there is simply a check box on the form where 

businesses can state that they have CBI information and there is no indication of the 

process for submitting such; whether or not the petition is incomplete without the 

information and if so, what the timeline for completion would be; nor if the arbitrary 25-

page limit of the petition includes or does not include this CBI. Similarly, the rule states 

that Commerce may approve a broader exclusion request to apply to multiple similarly 

situated importers but gives absolutely no information on how groups of companies can 

apply for this broader exclusion. Again, as trade associations such as FPA, do not "use 
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aluminum in business," we can not file on behalf of multiple companies. If a product 

exclusion is granted because it is not manufactured domestically in quantities and quality 

necessary for the industry - why wouldn't that exclusion be granted to all users of the 

product? Lastly, the exclusion process, if granted, would only be applicable for one-year. 

Will companies have to petition for the exclusion every year? If the product is not available 

domestically now, why does Commerce believe it will be available next year, or the year 

after, or ever? It should not be up to individual companies to prove to the Administration 

that these products do not exist domestically, this should have been part of Commerce's 

analysis before instituting the overly broad tariff in the first place. Even if the domestic 

aluminum foil suppliers guaranteed to start making the aluminum foil gauges flexible 

packaging manufacturers need tomorrow- it would take several years for the mills to 

produce the quantity and quality of the foil our companies need. Further, under Federal 

Food and Drug Administration regulations, substitution of the foil substrate could take two 

to ten years for approval. depending on use in packaging for food or medical devices. 

FPA is also concerned about the lack of transparency with regard to the Section 

232 remedy and the process Commerce will use to monitor and report on its effects. As 

stated above, while the investigation was supposed to take into consideration the effects of 

foreign competition on the economic welfare of domestic industries, including impacts on 

employment; the Report failed to address downstream industries dependent on aluminum 

or steel. How will Commerce monitor and report on the effect of this tariff on the primary 

manufacturers of aluminum in the U.S.; let alone downstream industries, which were 

ignored in the Report? A recent report by the Trade Partnership Worldwide. LLC/The 

Trade Partnership estimates the job loss for downstream users of aluminum and steel 

under the Section 232 tariffs would be 18 for every one job created in those sectors. 
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Commerce must be accountable to show the impacts to all affected industries and 

ultimately work towards alleviating the devastating impacts of these tariffs on downstream 

users of aluminum products and mitigating the burdensome and unnecessary paperwork 

this exclusionary process would apparently mandate on an annual basis. 

The Section 232 investigation and proposed remedy is paralleling an International 

Trade Commission (lTC) investigation and remedies for Chinese aluminum foil imports. 

Thus, FPA members are being penalized twice- first with the lTC anti-dumping and 

countervailing duties that in some cases exceed 140%, and then with the new 10% tariffs 

on other imports of aluminum foil, which are applied on top of the duties already in place. 

The consequences of the tariff under this investigation, combined with the duties from the 

lTC probe, is the loss of flexible packaging jobs in the U.S. The negative impact on American 

jobs by cutting off the supply of aluminum foil for flexible packaging manufacturing will far 

outweigh any job benefits that are envisioned by the lTC and Section 232 taxes. These 

duties and tariffs are leading to U.S. companies sourcing aluminum foil from other non-U.S. 

manufacturers at a much higher cost; Chinese suppliers of printed or otherwise converted 

aluminum foil products entering the U.S. market, since this bypasses the duties; andjor U.S. 

companies moving flexible foil packaging production outside the U.S., thereby reducing the 

amount of U.S. foil converting jobs. There is simply no scenario where the benefits to the 

U.S. aluminum manufacturers outweighs the detriment to the U.S. flexible packaging 

industry. 

Aluminum foil used by the flexible packaging industry is not manufactured in the 

U.S. in the quantities and qualities needed. Failure to invest, and quality lapses, including 

gauge, width, and lack of appropriate alloys all contribute to the fact that the U.S. producers 

of aluminum foil are not able to serve the U.S. flexible packaging industry. In fact, the lTC, at 
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its preliminary hearing on March 30, 2017, found that domestic ultra-thin foil production 

"may be limited or nonexistent" Thus, the packaging industry in the U.S. should be granted 

an exclusion for aluminum foil imports from the Section 232 tariff. Since FPA is not eligible 

to petition on their behalf, Commerce should recognize the broad-based exclusion the rule 

mentions to reduce the repetitive and burdensome petitions it will received with regard to 

this foil for flexible packaging manufacturers. 

FPA shares the same goal as the domestic aluminum foil producers who want more 

American jobs and understands the importance of protecting national security. This tariff is 

not the answer. The Administration should find ways to work together to improve our 

country's competitiveness. Everybody loses in unfair trade cases, especially the American 

consumer. 

Thank you. 
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Introduction 

Garmin International, Inc. ("Garmin International") appreciates the opportunity to comment on 

the proposed Determination of Action Pursuant to Section 301: China's Acts, Policies, and 

Practices Related to Technology Transfer, Intellectual Property, and Innovation - USTR-2018-

0005. 

Garmin International respectfully submits that the proposed additional duty of 25 percent on a 

list of products from China at the 8-digit level is too broad. 

Garmin International believes that USTR-2018-0005 as written is inconsistent with the spirit of 

the Section 301 findings, and Garmin proposes below to exclude specific products at the 10-

digit tariff level, rather than at the original 8-digit level, thereby enabling the USTR to target 

those products that fall within the spirt of the findings. 

A. Company Overview- Garmin 

Garmin Ltd., through its operating subsidiaries, is a leading worldwide provider of 

navigation, communications and information devices, most of which are enabled by 

Global Positioning System, or GPS, technology. Garmin operates in five business 

segments: the outdoor, fitness, marine, auto and aviation markets. Garmin Ltd.'s shares 

are publicly-traded on the NASDAQ Global Select Market under the ticker symbol 

"GRMN". Garmin has a market capitalization of approximately $11 billion, and annual 

revenue of over $3 billion. 

Garmin employs over 4,600 people in the United States, including over 3,500 people in 

Kansas, over 500 people in Oregon, over 200 people in Arizona, over 80 people in 

Maine, over 75 people in North Carolina, and over 45 people in each of the states of 

Minnesota and California. Garmin also has employees in Florida, Michigan, Missouri, 

Massachusetts and Oklahoma. 

Garmin International, located in Olathe, Kansas, is Garmin Ltd.'s principal operating 

subsidiary in the United States. Garmin's research and development operations, FAAapproved aviation product manufacturing operations and North American distribution 

operations are centered in the Olathe, Kansas facility. Garmin has a significant aviation 

manufacturing facility in Salem, Oregon, as well. 

Within the last 5 years, Garrnin established a manufacturing facility in China, where 

Garmin manufactures personal navigation devices that are imported by Garmin 

International for distribution to the U.S. market from Garmin's Olathe, Kansas facility. 

Garmin owns 100% of its manufacturing facility in China and it did not seek any financial 

incentives from the Chinese government that require Garmin to transfer any of its 

intellectual property rights to the Chinese government. Garmin has registered many of 

its trademarks and patents in China, and Garmin has experienced helpful cooperation 

from Chinese customs authorities in ferreting out counterfeit Garmin products in China. 

Garmin has never experienced a mandatory transfer of any intellectual property rights in 

China, and Garmin is not aware of any significant theft in China of its intellectual 

property rights. All of the workers at Garmin's 100% owned manufacturing facility in 

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China are Garmin employees, subject to Garmin policies to maintain the confidentiality 

of all Garmin confidential and proprietary information. 

In addition, Garmin imports VHF radios from China that it sells as accessories to its 

marine products. Garmin also imports LCD displays from China that it incorporates into 

the aviation products that Garmin manufactures at its production facilities in Olathe, 

Kansas and Salem, Oregon. These LCD displays are critical to the manufacturing 

processes that take place in the United States and if subject to the additional 25% tariff 

will negatively impact our ability to manufacture aviation products in the United States. 

Additional information about Garmin is available on its website, www.garmin.com, or 

upon request. 

B. Proposed Action Pursuant to Section 301 

The President directed the U.S. Trade Representative (Trade Representative or USTR) 

to conduct an investigation into the laws, acts, policies, and practices of the Government 

of China to determine whether or not they were unreasonable or discriminatory and were 

harming American intellectual property rights, innovation or technology development 

under section 301 of the Trade Act of 1974. This type of investigation is used when a 

foreign country denies the United States it free trade agreement rights or carries out 

practices that are unjustifiable, unreasonable or discriminatory. The USTR conducted its 

investigation and determined that China's actions were unreasonable or discriminatory 

and burden or restrict U.S. commerce. The President is authorized upon an affirmative 

finding by the USTR to take unilateral actions against China. The White House 

determined that appropriate action was to assess an additional duty of 25 percent on a 

list of products from China valued at $50 billion. The list of products are defined by 8-

digit subheadings of the Harmonized Tariff Schedule of the United States (HTSUS). 

Below sets forth the findings by the USTR leading to the present exercise of determining 

which products will be subject to additional tariffs: 

Memorandum dated March 22, 2018 (83 FR 13099) Key Findings 

China's Acts, Policies, and Practices are Unreasonable 

China has engaged in a wide-ranging, well-funded effort to direct and support the 

systematic investment in, and acquisition of, U.S. companies and assets to obtain 

cutting-edge technology, in service of China's industrial policy. USTR finds these 

acts, policies, and practices to be unreasonable under 19 U.S.C. § 2411(b)(1). 

(emphasis added). 

The "unreasonable" conduct of a foreign government is defined as an act, practice, 

or policy as one that "while not necessarily in violation of, or inconsistent with, the 

international legal rights of the United States is otherwise unfair and inequitable." In 

determining reasonableness, USTR also takes into account, to the extent 

appropriate, whether foreign firms in the United States are provided reciprocal 

opportunities to those denied U.S. firms. China's acts, policies, and practices are 

unreasonable because they are directed and supported by the government, and 

unfairly target critical U.S. technology with the goal of achieving dominance in 

strategic sectors. (emphasis added). 

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China has directed enterprises to pursue outbound investment with the express 

objective of acquiring and transferring technology. China has articulated this 

objective in numerous state planning documents and policies, in furtherance of both 

military and economic goals. China has also drawn on a range of tools to implement 

this approach -for instance, through the control that it exercises over SOEs, statebacked banks, and investment funds, and through its outbound investment approval 

regime. 

As a result of these efforts, investments are often "politically driven and financially 

supported by Chinese government funds. In short, the Chinese government has the 

means and authority to prevail (and does prevail) on Chinese firms on where to 

invest, what to invest, and how much to invest. 

U.S. Trade Representative's Objective 

In a Memorandum dated March 22, 2018 (83 FR 13099), President Trump directed the 

Trade Representative as follows: 

Section 1. Tariffs. (a) The Trade Representative should take all appropriate 

action under section 301 of the Act (19 U.S.C. 2411) to address the acts, 

policies, and practices of China that are unreasonable or discriminatory and that 

burden or restrict U.S. commerce. The Trade Representative shall consider 

whether such action should include increased tariffs on goods from China. 

C. Garmin Believes the Tariffs Should be Targeted at the 10-Digit Level, Rather than 

at the 8-Digit Level 

The proposed list of products that would be subjected to the tariffs is currently 

designated at the 8-digit level of the Harmonized Tariff Schedule of the United States 

(HTSUS). Garmin believes further delineating products at the 10- digit HTSUS 

designation, as they are delineated upon import by the Customs and Border Protection 

(CBP), would capture commercial electronics that are outside the scope of "cutting-edge 

technology." For example, Garmin believes that personal navigation devices, VHF radios 

and LCD displays are not cutting-edge technology. These products have been in 

existence for many years and are mature technologies. 

Garmin believes the list of products should be targeted at the 1 0-digit HTSUS level, 

rather than at the 8-digit level -allowing for more specific targeting of the "cutting edge 

technology", and thereby increasing the likelihood of changing the unfair practices 

mentioned in the report. Specifically, Garmin proposes that the following 10-digit 

products should be excluded from the proposed tariffs because they are not "cutting 

edge technology•: 

8526.91.0020 - Radio navigational aid apparatus (Reception Only) 

8526.91.0040 - Radio navigational aid apparatus (Other) 

8525.60.1040 • Marine VHF-FM 

9013.80.7000- Flat panel displays other than for articles of heading 8528, except 

subheadings 8528.52 or 8528.62 

Page3 of4 
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Additional Comments Regarding Personal Navigation Devices (8526.91.00 [20 or 

40]) 

In addition to Garmin's belief that personal navigation devices (8526.91 .00 [20 or 40]) 

should be excluded from the proposed tariffs because they are not "cutting edge 

technology", Garmin believes that imposing the proposed tariff on personal navigation 

devices would lead to an artificial short s upply of personal navigation devices in the 

United States. According to independent market research by the NPO Group, as of 

January 2018, Garmin had an 80% share of the market for personal navigation devices 

in the United States, and, as mentioned above, Garmin manufactures many of its 

personal navigation devices at its 100% owned manufacturing facility in China. If the 

proposed tariffs were applied to these devices, we cannot absorb the costs and would 

be forced to significantly raise prices for these devices. 

Given that Garmin has an 80% market share in the United States, this price increase 

would be a significant deterrent to the purchase by consumers of personal navigation 

devices in the United States. The higher prices may lead some consumers to opt for the 

less reliable navigation applications on their smart phones. The smart phone navigation 

systems are less reliable because they are dependent on cell tower coverage. They also 

consume a significant amount of the smart phone's data. Many consumers in the United 

States have contacted Garmin over the years to tell us how grateful they were to have a 

personal navigation device during and following natural disasters, such as hurricanes, 

when cell coverage was unavailable. 

In addition, because much of the research and development for personal navigation 

devices is done by Garmin engineers in its Olathe, Kansas facility and other Garmin 

facilities in the United States, a declining market in the United States for personal 

navigation devices caused by increased prices could resull in job losses for engineers in 

those facilities. 

It is important to note again that Garmin owns 100% of its manufacturing facility in 

China, and Garmin has not voluntarily or involuntarily transferred any of its intellectual 

property rights to the Chinese government. Therefore, excluding personal navigation 

devices from the proposed tariffs would not in any way be detrimental to the USTR's 

objectives. 

Page 4 of4 
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33810A.079

April 20, 2018 

Representative Kevin Brady 

Chairman, Committee on Ways & Means 

U.S. House of Representatives 

Washington, DC 

Representative Richard Neal 

Ranking Member, Committee on Ways & Means 

U.S. House of Representatives 

Washington, DC 

Dear Chairman Brady, Ranking Member Neal, and Distinguished Members of the Committee: 

On April 3'•, the Office of the United States Trade Representative announced its decision to impose tariffs on 

1,300 categories of Chinese goods under Section 301 of the Trade Act of 1974. A day later, the Chinese 

government responded with a proposal to impose import tariffs on 106 categories of US products. 

On behalf of the Greater Houston Partnership, I'm writing to inform you of the potential negative impact these 

actions can have on our region. During the last couple of weeks, we hosted workshops with leaders of the LNG, 

petrochemical, financial, legal, and construction industries to discuss the actions being proposed as a result of 

the recent Section 301 and Section 232 investigations. 

While the proposed tariffs under Sections 232 and 301 would have a negative impact on certain segments of 

the Houston economy- particularly those segments dependent on imported steel tubulars and structural steel 

-of greatest concern is the likely Chinese response to the proposed U.S. tariffs. 

The Chinese retaliation announced on April 4

1

• proposes a 25% tariff on a number of products we export from 

Houston. In 2017, Houston exported $2.44g billion of commodities under those specific categories. That 

accounted for 31.7% of our exports to China in 2017. There are an additional six categories which likely don't 

originate from here but are handled by our customs district. These include grains, vehicles and vehicle parts. We 

handled $909.1 million of these goods in 2017. This accounted for 11.8% of our exports to China. The combined 

$3.357 billion in exports equates to 44 percent of our exports to China. 

The figures above are small compared to the expected growth in Houston exports to China. Houston exports to 

China have grown by 26.8% per year (compound annual growth rate) from 2012 through 2017, considerably 

faster than the rate of growth in Chinese imports over the same period (8.3% CAGR). 

The United States is in the midst of an energy renaissance. Houston's innovation and entrepreneurship have 

been the main elements to achieve the unprecedented growth in our country's energy production. As a result 

of this "feedstock advantage; more than $50 billion has been invested in our region to expand our 

petrochemical production capacity. China has always been considered as a priority international market for this 

expanded capacity. 

On a related subject, our nascent LNG industry has the potential to capture considerable market share of this 

segment of the global energy industry. Importantly, at the same time our first LNG terminals were starting 

operations, the Chinese government announced its strongest push to increase use of natural gas to replace coal. 

Although no specific mention of LNG tariffs has been made by the Chinese government, the current uncertainty 

on bilateral trade policy is adding unnecessary complexities in the negotiation processes that our Houston-based 

LNG firms are undertaking with potential Chinese buyers. Long-term policy stability is a key element to move 

forward with investment decisions in the Gulf Coast to satisfy Chinese demand for LNG over the next 50 years. 

Natural gas is a commodity that China can source from Australia, Qatar or Russia. 
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It is important - and critical to U.S. interests - that our companies win this generational opportunity to export 

LNG to China. We should not impair their ability to succeed in securing long-term contracts that will benefit our 

country for decades. 

We recognize that certain Chinese practices with respect to technology transfer, intellectual property, and 

market access need to change, consistent with WTO rules and China's emergence as a major economic player 

on the global state. We believe these issues can best be addressed In an atmosphere of mutual respect between 

our countries. 

We stand ready to assist as you continue promoting your targeted approach to address unfair practices while 

avoiding harm to U.S. workers and job creators. 

Regards, 

Bob Harvey 

President and CEO 
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33810A.081

April26, 2018 

Hon. Kevin P. Brady 

Chainnan 

Committee on Ways and Means 

Washington, DC 20515 

DONALD F. SANTA 

PRESIDENT & CEO 

Hon. Richard E. Neal 

Ranking Member 

Committee on Ways and Means 

Washington, DC 20515 

Dear Chainnan Brady and Ranking Member Neal: 

The Interstate Natural Gas Association of America (INGAA) requests that this letter be included 

in the record for the hearing held on April l2, regarding " the effe.ct of tariff increases on the U.S. 

economy and j obs." INGAA is a trade association that advocates regulatory and legislative 

positions of importance to the interstate natural gas pipeline industry. Our 27 members comprise 

the vast majority of U.S. interstate natural gas pipeline companies. INGAA's members operate 

nearly 200,000 miles of pipelines and serve as an indispensable link between natural gas 

producers and consumers. 

On March 22, INGAA joined with seven other energy associations to file a letter with the 

Committee on Ways and Means expressing our concerns with the tariffs imposed on steel (and 

steel product) imp011s levied under section232 of the Trade Expansion Act of 1962. The 

natural gas pipeline industry depends on the availability of steel and steel line pipe. Our steel 

requirements are atypical, however. Federal safety requirements and industry construction 

standards require steel specifications that exceed those commonly used for other products, such 

as automobiles and building materials. Pipeline-quality steel is a specialty product, available 

domestically in only limited supplies. In fact, certain steel pipe products are unavailable 

domestically. 

Recent innovation bas allowed for the unprecedented development of shale gas resources across 

the U.S., including in states such as Petmsylvania, Texas and Ohio. These newly accessible gas 

supplies have greatly reduced consumer energy costs and have given U.S. industry a competitive 

advantage in global markets. This has spurred the revival of U.S. industries that use nan1ral gas 

as a source of energy and as feedstock (such as petrochemicals, fertilizer, glass and metals). 

Abundant natural gas also has changed the landscape in the electric power sector, lowering 

wholesale electricity prices and reducing emissions in regions such as New England and the 

Southeast. 

Tbe availability of pipeline-quality steel is critical to building tbe pipeline infrastructure 

necessary to realize fully the potential of this abundant, affordable domestic energy resource. 

The uncertainty created by the section 232 tariffs threatens to delay and perhaps even diminish 

the consumer welfare, job creation and economic growth benefits of our domestic energy 

abundance. 

INTERSTATE NATURAL GAS ASSOCIATION OF AMERICA 

20 F STREET, NW, SUITE 450 ·WASHINGTON, DC 20001 
146 

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33810A.082

TI1e following anecdotes from two INGAA member companies illustrate how the tariffs are 

affecting the pipeline industry: 

• Company A is currently permitting a $1 billion project to serve a major utility that 

requires additional pipeline capacity to meet customer demand for residential and 

commercial natural gas se111ice. The pipe has vety e;>:acl, unique specifications not 

common to most projects. When the company sought bids for the material, domestic 

suppliers expressly laid the company that they could no/meet the project specifications. 

The pipe order was therefore placed several weeks ago with a foreign supplier. 

Company A e:.pec/s to take delivet)' within the next several weeks. The announced tariffs 

have added significant uncertainty to the markets, and to the overall cost of the pmject. 

• Company B is seeing a broad, negative impact from the 232 tariffs on its ability to 

reasonably procure steel goods for its energy infrastructure projects. The costs are 

immediate and across the board. For example, Company 8 has a ctll'rent project with 

existing contracts for highly specialized, imported steel pipe. The new tariff boosts costs 

by 25 cents on evet)' dollar spent. This dramatically changes the economics on which the 

deal was based and adds price uncertainty and risk that did not exist before. At the vety 

least, it would be equitable/or the Department of Commerce to grandfather such existing 

agreements so as not to punish energy infrastructure development already undetway with 

assumed economics, and allow the domestic steel industty time to expand its capacity and 

capabilities to meet future demand. 

INGAA endorses the recommendations made by the American Chemistry Council at the April 

12 hearing regarding the section 232 tariffs. Specifically, the ACC recommended that the Tnnnp 

Administration: 

I) Make current country exemptions pemtanent. 

2) Allow associations to make exclusion requests on behalf of members. 

3) Apply product exclusions to all companies, and not company-by-company. 

4) Exempt strategic U.S. allies from the tariffs, without conditions. 

We urge the Conunittee on Ways and Means to continue its oversight of the section 232 tariffs, 

and to take legislative action, if necessary, to ensure the re.commendations listed above. The 

significant cost and uncertainty created by these tariffs threaten the ability to build the pipeline 

infrastmcture necessary to realize the full benefit of our nation's energy abundance. 

Thank you for the opportunity to submit these comments for the record. 

Respectfully, 

Donald F. Santa 
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33810A.083

FREEDOM 

PARTNERS 

Statement to the 

~\ AMERICANS FOR \11 PROSPERITY. 

UNITED STATES HOUSE OF REPRESENTATIVES 

COMMITTEE ON WAYS AND MEANS 

from 

NATHAN NASCIMENTO, EXECUTIVE VICE PRESIDENT 

at FREEDOM PARTNERS CHAMBER OF COMMERCE 

and 

ALISON ACOSTA WINTERS, SENIOR POLICY FELLOW 

at AMERICANS FOR PROSPERITY 

Thursday, Aprii1Z, 2018 

Freedom Partners Chamber of Commerce ("Freedom Partners") and Americans for Prosperity 

appreciate the committee's efforts to highlight the economic impact that tariffs have on the American 

economy and jobs. Trade has been a hallmark of t he American economy since our founding. Tariffs, the 

subject of today's hearing, are intended to protect American industries, however they have an opposite 

but greater effect of harming other American industries as well as workers and consumers. This means 

new tariffs w ill also undermine the gains from the recently-enacted "Tax Cuts and Jobs Act-" 

Accordingly, Freedom Partners and Americans for Prosperity strongly oppose tariffs, quotas and other 

trade barriers. 

Trade's Benefits are Win-Win 

Trade between individuals, companies, and countries, helps promote well-being and prosperity. It 

provides access to a rich array of goods and services for both trading partners. Trade offers benefits to 

the most people, and is an essential part ofthe economy in nearly every state of the country.' As the 

current round of new tariffs are aimed at China, it would be helpful to remember that trade has helped 

people in both countries grow and prosper. 

Our biggest export markets, in order, are Mexico, Canada, and China, 2 which is currently our biggest 

agricultural export market' . Our fami lies, workers, and businesses benefit from access to abundant and 

1 Mark Perry, "How important is international trade to each US state's economy? Pretty important for most US 

states" Carpe Diem, American Enterprise Institute March 9, 2018 https:lfwww.aei.org/publication/how-importantis-international-trade-to-each-us-states-economy-prettv·important-for-most-us-states/ 

2 "Top Trading Partners, February 2018" U.S. Census Bureau https://www.census.gov/foreigntrade/statistics/highlights/toppartners.html#exports 

l "lnfographic: U.S. Agricultural Exports to China, 2016" U.S. Department of Agriculture, Foreign Agricultural 

Service https://www.fas.usda.gov/data/infographic-us-agricultural-exports-<:hina-2016 

1 
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33810A.084

affordable materials and goods, our trading partners benefit from access to the goods and services t hat 

our farmers, workers and manufacturers export. Opening markets is a net win-win and we should 

continue to work with other countries to unwind problematic trade policies. 

Tariffs are Counterproductive and Have a Failed History 

Rather than opening markets, tariffs are punitive measures that close access to U.S. markets and so 

represent a step backward. They harm American workers, consumers, and businesses and those of our 

trading partners in t he process. 

Open competition creat es strong incentives for businesses and industries to improve their products by 

innovating. Often, this leads to lower prices, increasing efficiency, or development of new products and 

services. Tariffs and other trade barriers, however, create a bubble for the businesses and industries 

they protect. This bubble isolates them from competit.ion and creates artificial disincentives to innovate 

and improve their own competitiveness. 

Numerous studies have analyzed the costs of tariffs and other measures to restrict trade on a variety of 

industries and found they far outweighed any benefit. One study on trade protections, including tariffs, 

showed that between the 1950s and 1970s, they did not revitalize affected industries.• Many of those 

affected companies failed to invest in new innovative ways to regain their competitiveness. Another 

study on steel and auto protections found that although tariffs effectively limited imports, over the longterm they discouraged improvements in quality and cost controls and merely postponed the inevitable 

decline of the business. 

Between the 1990s and early 2000s there were nearly 150 different antidumping provisions in effect on 

imported steel. Yet according to one study,' the U.S. steel industry had shrunk in terms of employment 

and investment, with some firms declaring bankruptcy. The costs of restrictive trade policies on steel to 

U.S. consumers ranged between $200,000 and $2.3 million for every American steel industry job that 

was protected.• 

In short, punitive trade policies like tariffs have huge costs on consumers and industries, like 

manufacturers, which use imports in their business. These costs outweigh the benefits for the small, 

select group of so-called winners. They certainly did not have any lasting positive impact on the steel 

industry. 

Lastly, policies like tariffs do not operate in isolation. Trading partners often respond with tit-for-tat 

retaliatory measures that can quickly escalate into a full-blown trade war that could sharply constrict 

trade. In today's global economy, the damage would be significant. This is the potent ial situation we 

now face w ith China, and it is extremely concerning. As evidence that tariffs are self-defeating, threats 

of escalating retaliatory measures are already injecting unnecessary uncertainty into our markets. The 

damage, for example, to agriculture commodities such as soy beans is compelling but far from isolated. 

'Scott Uncicome, "No Mr. President, American Steel Protection Hasn't "Worked" in the Past" Cato at liberty, Cato 

Institute, February 31, 2018, https:Uwww.cato.org/blog/no-mr-president-american-steel-protectionism-hasntworked-oast 5 Scott Uncicome, "Doomed to Repeat It The long History of America's Protectionist Failures" Cato Institute Policy 

Analysis 819, August 22, 2017 https://obiect.cato.org/sites/cato.org/files/pubs/pdf/pa-819-updated.pdf 6 lincicome, "No Mr. President ... " 

2 
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33810A.085

In response, Washington policymakers are purportedly considering new measures to protect farmers, 

including tapping depression-era programs like t he Commodity Credit Corporation. However, we would 

strongly oppose such an approach as ill-advised and expensive. Moreover, farmers just want to be able 

to engage in trade without harmful tariffs or additional convoluted government aid such as price 

supports.' 

Subsidies, in the Form of Tariffs, Do Not Help the American Economy Grow 

In a system of free enterprise, companies and industries should succeed based on the value they create 

for society. Yet many countries persist in subsidizing or otherwise supporting their industries. For 

example, China supports their steel industry, while the U.S. subsidizes American corn, wheat, cotton and 

other farm commodities. These government subsidies siphon away precious resources from their 

citizens to benefit specific industries at home. Yet, by subsidizing industries that export, the government 

is also sending benefits abroad. China's subsidized steel benefits U.S. manufacturers, while U.S. farm 

subsidies support China's food supply. The better answer to tariffs is for both countries to roll back 

these expensive government supports. 

Solutions to Promot e Sust ainable Economic Growth 

Tariffs are lose-lose- they harm our country and our trading partners. There are other solutions: 

First, rather than escalating trade tensions and heightening economic uncertainty across the world 

t hrough high-stakes t ariffs, the administration should focus on negotiating with its trading partners to 

address concerns and find mutually agreeable solutions. 

Next, policymakers in Washington should continue to implement policies that increase economic 

freedom and t he international competitiveness of U.S. companies - without protectionist or corporat e 

welfare policies. This should include ending agricultural subsidies for agricultural commodities such as 

corn, wheat, and cotton, sugar quotas, and other price support programs. 

Policymakers should remove ot her trade barriers. The U.S. ranks as only the 63'

0 best country for trade 

policy, according to t he Economic Freedom of the World Annual Report.8 

Congress should reauthorize Trade Promotion Authority which facilitat es the president's ability to 

negotiate additional trade agreements; the president and the administration should work to implement 

more trade agreements to open markets. 

Lastly, policymakers should focus on continued relief from regulatory burdens, continue to reform and 

improve the tax code, and remove government barriers on individuals and businesses t o foster a robust 

economy that benefit s all companies and workers. 

### 

7 Bob Davies, "Trump Looks to Assuage Trade Critics With Farm Package" Wall Street Journal, Aprilll, 2018, 

https://www.wsj.com/articles/trump-looks-to-assuage-trade-critics-with-farm-package-1523453857 

s James Gwartney, Robert lawson & Joshua Hall, "Economic Freedom of the World 2017 Annual Report" The 

Fraser Institute, https://www. fraserinstitute .org/sites/default/fil es/economic -freedom-of-the-world-2017 .pdf 

3 
150 

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33810A.086

Freedom Partners Chamber of Commerce is o non-profit, non-partisan, chamber of commerce, 

representing a diverse group of loco/leaders, dedicated citizens and successful entrepreneurs, many of 

whom have achieved the American Dream from very modest beginnings. All supporters shore a deep 

commitment to America, promoting free enterprise, effective fiscal, monetary and tax policies, efficient 

and effective policies that promote and protect hardworking taxpayers, and genuine accountability in 

government. 

Americans for Prosperity is a non-profit, non-partisan, grassroots organization which educates, recruits 

and mobilizes citizens in support of the policies and goals of a free society at the local, state, and federal 

level, helping every American live their dream- especially the least fortunate. Grassroots activists shore 

a common vision for an America where truly free markets allow for a free and prosperous people and 

they work to educate friends, neighbors, and public officials on the issues shaping the American economy 

and building a culture of freedom. 

4 
151 


33810A.087

METHANOL 

INSTITUTE 

Methanol Institute 

Statement for the Record 

House Committee on Ways and Means 

" Effects of Tariffs Increases on the U.S. Economy and Jobs" 

April12, 2018 

The Methanol Institute (MI), the trade association representing the global methanol industry, thanks 

the Committee for the opportunity to submit this stat ement for the record. 

Ml would like to echo the testimony given by the American Chemistry Council's (ACC) President and 

CEO Calvin Dooley and others expressing support for the current Administration's efforts to resolve 

concerns in the U.S.-China trade relationship. Like the ACC, Ml feels strongly that it is not in the 

int erest of the U.S. economy, manufacturers or consumers to engage in a trade war with China. M l 

believes that concerns with the U.S.-China trade relationship should be resolved through constructive 

negotiation, rather than through tariffs. 

Ml strongly urges the U.S. and Chinese governments to come to a satisfactory and mutually beneficial 

agreement before the proposed tariffs go into effect. There is ample evidence that tariffs lead to 

higher costs for downstream producers, higher prices for consumers, fewer jobs in downstream 

industries, and less economic growth, investment, and innovation in the United Stat es. A trade war 

will also make cooperating on non-trade issues and real national security concerns of mutual interest 

that much harder. 

Driven by the shale gas revolution, the methanol industry is in the midst of a strong resurgence in the 

U.S., with many new production facilities either currently under construction, or in the planning 

stages. The imposition of such tariffs could have a deleterious effect, not just on the methanol 

industry, but on the broader chemical industry, and ultimat ely the country as a whole. 

Last year, Ml commissioned a report by ADI Analytics, which shows that a typicall.5 million metric 

tons per annum methanol plant in the U.S. drives capital spending of $1.1 billion, and an economic 

ripple effect worth $1.5 billion. In fact, by 2020, U.S. methanol plants will create roughly 2,700 direct 

jobs with an average yearly salary of $72,500, 2,800 indirect jobs, and 19,000 temporary construction 

jobs. The full report can be viewed HERE. 

The methanol industry's domestic expansion is an important driver for the U.S. economy, and Ml joins 

the ACC and other industry leaders in urging the President not to impose tariff or trade barriers that 

prevent our industry from continuing to contribut e significant growth and jobs to the economy. 
152 

f 


33810A.088

The Methanol institute (Ml) serves as the global trade association for one oft he world's 

most vibrant and innovative industries. Founded in 1989, Ml now serves its members in 

every corner of the globe from our offices in Singapore, Washington, D. C., Brussels and 

Beijing. 

Singapore: 10 A.n!.On Road, ~28-121nternational Pl.ala. Sing.apore 079903 •65 632S 6300 

Washington: J:lS Pet u:~kers lane, Su1te 205, Alexal"'dnil, VA 2231·1 USA ,..1 703 248 3636 

Brussels: Squ rE de M1 il .. 38/40 8·1000 Bru H-'1 8e-lglurr. +312 40161 51 

Beijing: -;11. Pa(tf St:l·TC' h 0 v1 opm"'nt Cf>nt r f' g Un,ve_r IV No 52 H 011n Road, 8111 n 1001171 Clll"' •8610 627S S984 
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33810A.089

April II, 2018 

The Honorable Kevin Brady 

Chairman 

House Ways & Means Committee 

1102 Longworth House Office Building 

Washington, DC 20015 

RE: 

Dear Chairman Brady and Ranking Member Neal, 

The Honorable Richard Neal 

Ranking Member 

House Ways & Means Committee 

1102 Longworth House Office Building 

Washington, DC 20015 

The undersigned organizations representing U.S. manufacturers, farmers and 

agribusinesses, retailers, technology companies, importers, exporters, and other supply chain 

stakeholders are writing to express our deep concern with potential impact of the 

Administration's decision to use tariffs to address China's unfair trade practices and its trade and 

investment relationship with the United States. We agree that China's ongoing intellectual 

property rights violations, forced technology transfers and state interventions harm U.S. 

companies, workers, consumers and our competitiveness. We are concerned that the proposed 

tariff list, and escalating tariff threats made by the Administration, however, will not effectively 

advance our shared goal of changing these hannful Chinese practices. 

We applaud the Committee for holding this hearing to specifically evaluate the impact of 

tariffs on U.S. companies, fanners, consumers and the economy. As required by the Constitution, 

Congress must play a strong role in quickly tnitigating this situation. We strongly encourage 

Congress to work together and with the Administration to develop and execute a strategic policy 

to effectively address the longstanding problems in China. This must include clearly defined 

objectives, deadlines and immediate negotiations with China, preferably in coordination with 

likeminded economies. The fundamental challenges with China are real and can best be 

addressed through aligned efforts. 

Congress must ensure that hardworking families in the United States arc not forced to pay 

the price for China's bad behavior. As Committee Members are aware, tariffs are hidden, 

regressive taxes that will be paid by U.S. businesses and consumers in the fonn of higher product 

prices. While the Administration has signaled that the proposed tariffs are intended to inflict 

maximum pain on China and minimal pain on the U.S. consumer, unfortunately that is not the 

case. Many of the products that are currently on the proposed U.S. tariff list are consumer 

goods. Even more troubling tlle proposed list includes machinery, parts, chemicals and 

components that U.S. manufacturers and their workers need to make American products. This 

will impact downstream industries who rely on these materials and will ultimately result in 

higher prices for consumers for essential everyday products. Higher costs for manufacturing will 

result in less production here in the U.S. If imposed, these tariffs will result in higher prices for 

American consumers and fewer jobs for American workers. 
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33810A.090

While the tariffs are not yet in effect, the possibility of imposition of tariffs on billions of 

dollars of goods, the as-yet-undefined potential investment restrictions and threats of a potential 

trade war create unpredictability across the business and fam1 community here in the United 

States, depress commodity prices, and have already harmed U.S. companies, farmers, consumers, 

and markets. China's threat of retaljation filrther exacerbates uncertainty as fanners and 

manufacturers rely on the ability to export their crops and products to China for their livelihood, 

yet they are targeted for potential retaliation. China's potential retaliatory measures would likely 

have broad, cross-industry impact aimed at constraining current U.S. operations in country and 

impeding any new market entrants. With no clear strategy to aid those businesses, fanns and 

workers impacted by the new tariffs, their livelihoods are at risk. 

The Administration's approach also does not adequately account for the role of the global 

supply chain in product production and assembly. These complex supply chains can take years 

to establish, and in some instances rely on suppliers who bring unique capabilities that cannot be 

replaced. Even in those instances where sufficient alternative suppliers may exist, supply chains 

cannot be shifted to different countries or faci lities without compromising contracts, compliance, 

quality and value for the consumer. U.S. businesses typically work with contracts anywhere 

from six to nine months in advance. Applying tariffs on imports from China will certainly 

disntpt those supply chains. Moreover, if U.S. companies had to try to shift production to 

different countries in concert, they would face capacity constraints and likely higher prices from 

suppliers in those countries. Such disntptions in supply chains would likely drive inflation up in 

the United States. 

The concerns also apply to U.S. fanners and exporters who may be subject to China's 

proposed retaliation tariffs. These businesses and fanners cannot easily fmd new buyers for their 

products. Once a market is lost, and a buyer shifts to a foreign competitor, even if only for a 

short period of time, future U.S. exports and sales likely will be lost as well. Subsidies and other 

govennnent forms of assistance are also not a solution. While they may provide short-tenn relief 

- depending on existing legal authorities - the long-tenn costs of losing a market will be 

exponential. 

The escalation of trade tensions with China could result in hann to all our member 

companies, member fanns, their workers, and thei.r consumers. The impact of a trade war and 

tariffs would be felt by businesses, workers, fanners and consumers throughout the U.S. and 

across industry sectors. Trus would hurt the economy as a whole, as well as jobs and consumers 

in every state. Everyone loses in a trade war. 

We appreciate the opportunity to submit our thoughts to the Committee. We stand ready 

to work with the COifllllittee, Congress, and the Administration to find effective solutions that 

promote and not punish U.S. fanners, workers, consumers, and businesses. 

Sincerely, 

Agriculture Transportation Coalition 

Airforwarders Association 

American Apparel & Footwear Association (AAF A) 
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33810A.091

American Association of Exporters and Importers (AAEI) 

American Chemistry Council 

American Import Shippers Association 

American Soybean Association 

Americans for Fanners and Families 

Assoc iation of Equipment Manufacturers (AEM) 

Auto Care Association 

California Association ofWinegrape Growers 

California Retailers Association 

CAW A - representing the automotive parts industry 

Coalition of New England Companies for Trade (CONECT) 

Coalition of Service Industries (CSI) 

Colorado Retail Council 

Columbia River Customs Brokers and Forwarders Association 

Computing Technology Industry Association (CompTIA) 

Computer & Communications Industry Association (CCIA) 

Consumer Technology Association (CTA) 

Customs Brokers and Forwarders Association of Northern California 

Customs Brokers and International Freight Forwarders Association of Washington State 

Distilled Spirits Council 

Electronic Transactions Association 

Fanners for Free Trade 

Fashion Accessories Shippers Association (F ASA) 

Florida Retail Federation 

Footwear Distributors and Retailers Association 

Foreign Trade Association 

Furniture Shippers Association 

Gemini Shippers Association 

Georgia Retailers 

Global Cold Chain Alliance 

Halloween Industry Association 

Harbor Trucking Association 

Hardwood Federation 

Home Furnishings Association 

Idaho Retailers Association 

Indiana Retail Council 

Inforn1ation Technology Industry Council (TTl) 

International Association of Refrigerated Warehouses 

International Refrigerated Transportation Association 

International Wood Products Association 

Internet Association 

Juvenile Products Manufacturers Association 

Kentucky Distillers' Association 

Kentucky Retail Federation 

Los Angeles Customs Brokers and Freight Forwarders Association 

Maryland Retailers Association 
156 


33810A.092

Meat Import Council of America 

Michigan Retailers Association 

Midwest Shippers Association 

Minnesota Retailers Association 

Missouri Retailers Association 

Montana Retail Association 

National Association of Chemical Distributors 

National Council of Chain Restaurants 

National Customs Brokers and Forwarders Association of America 

National Foreign Trade Council 

National Marine Manufacturers Association 

National Retail Federation 

Nebraska Retail Federation 

New Jersey Retail Merchants Association 

North American Meat Institute 

North Carolina Retail Merchants Association 

NY/NJ Forwarders and Brokers Association 

Ohio Council of Retail Merchants 

Oklahoma Retail Merchants Association 

Oregon Dairy Fanners Association 

Oregon Wheat Growers League 

Outdoor Power Equipment Institute 

Pacific Coast Council of Customs Brokers & Freight Forwarders 

Pellllsylvania Retailers' Association 

Promotional Products Association International (PP AI) 

Retail Council of New York State 

Retail Industry Leaders Association 

Retailers Association of Massachusetts 

San Diego Customs Brokers Association 

Security Industry Association (SIA) 

SEMI 

SNAC International 

Snowsports Industries America 

Society of Chemical Manufacturers and Affil iates 

Software & Information Industry Association 

South Dakota Retailers Association 

Specialty Equipment Market Association 

Sports & Fitness Industry Association 

Tea Association of the U.S.A.,lnc. 

Telecommunications Industry Association (TlA) 

Texas Retailers Association 

The Fertilizer Institute 

The Household & Commercial Products Association 

The Toy Association 

Travel Goods Association (TGA) 

Truck & Engine Manufacturers Association 
157 

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33810A.093

U.S. Direct Selling Association 

U.S. Hide, Skin and Leather Association 

US Council for International Business 

United Egg Producers 

United States Fashion Industry Association 

Utah Retail Merchants Association 

Virginia Retail Federation 

Washington Retail Association 

Washington Trucking Associations 

WineAmerica 

Wyoming Retail Association 

Yankton Area Chamber of Commerce 
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33810A.094

April II , 2018 

l11e Honorable Kevin Brady 

Chainuan 

Comminee on Ways and Means 

Uuiled States House of Representatives 

Washington. DC 20515 

RESTAURANT 

ASSOCIA

NATIONATIO~ 

N • 

TilC Honorable Richard Neal 

Ranking Member 

Comminee on Ways and Means 

Uuited Stales House of Representatives 

Washington. DC 20515 

Dear Chainoan Brady, Ranking Member Neal, Cbainuan Reichen and Ranking Member PascreU: 

On behalf of 1he members of 1he Na1ional Restauram Association, we are deeply concemed about !he 

economic impacts of I he Admiuistratioo's recen11ariff armouncemeots and retal.ia1ory actions 1aken by 

the Chinese goverrmtent. While we suppon the Admiuistration taking action 10 enforce our rrade laws, 

we are concerned 1hese effons could lead to a rrade war be1ween China and 1he United Slates 1ha1 c.ould 

have devastating effects on our nation's restaurants and the millions of customers we serve. 

The National Restaurant Association is 1he leading business association for the restaurant and 

foodservice industry, representing more !han 15.1 million employees, nearly I 0 percent of the na1ion's 

workforce. With one ntillion loca1jons across the comnry, 90 percen1 of 1hose being smaU businesses, 

the $800 billion in sales from the restaurant industry makes up four percent of 1he U.S. ODP, making it 

a vital part of the U.S. economy. 

Res1aur.uns rely on global, irnerconnec1ed supply chains 10 provide meals 10 mi.llions of cus1omers 

daily. Any disruption to these supply chains could significantly impact the availability and price of 

agricultural products, equipment, and materials to res1aurants in every community. 

Tile restauranl industry also opera ~s on thin profilmargins and musl deal in real time with flncmalions 

in commodi1y prices. We are concerned !hat continued re1al.ia1ory actious between China and 1l1e U.S. 

will create volatil.ily and uncenainty in our supply chains, disnrptions to imemational and domestic 

markets, and hinder· economic growth and opportunily for our members. 

We urge you to work with the business community to fuUy tmdersland 1lte impac1s 1l1ese trade ac1ions 

could have on res1aurants and consumers. 

TI1artk you for your colllioued leadership on imematioual 1rade issues. We look forward to working willt 

you as these discussions continue. 

Laura Abshire 

Director of Sustainabili1y Policy & Oovemmelll Affairs 

Na1ional Restaur.un Associalion 

Enhanc:ing the quality of life fOf' all we .s.erw 

Restaurantor~ I _a;WeRRestaurants 

2055 l Street NW, Wasl\lngton, DC 20036 I (202) 331·5900 I (800) 424•5156 
159 

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33810A.095

Cc: 

The Honorable David Reichert 

Chainnau, Subconuu.ittcc on Trade 

Committee on Ways and Means 

The Honorable Bill Pascrell 

Ranking Member. Subconunince on Trade 

Cozmniltee on Ways and Means 

Enhanc:ing the quality of life fOf' all we .s.erw 

Restaurantor~ I _a;WeRRestaurants 

2055 l Street NW, Wasl\lngton, DC 20036 I (202) 331·5900 I (800) 424•5156 

RESTAURANT 

ASSOCIA

NATIONATION ~ • 
160 


33810A.096

The Honorable Kevin Brady 

Chainnan 

House Committee on Ways & Means 

1102 Longworth House Office Building 

Washington, DC 20515 

April II, 2018 

The Honorable Richard Neal 

Ranking Member 

House Committee on Ways & Means 

11 02 Longworth House Office Building 

Washington, DC 20515 

Dear Chainnan Brady and Ranking Member Neal: 

In advance of the House Ways & Means Committee's hearing on April 12, 2018 conccming the 

effects of tariff increases on the U.S. economy and jobs, I submit the attached statement for the 

record on behalf of the members of the National Association of Trailer Manufacturers (NATM). 

For 30 years, NA TM has served as the trade association for manufacturers of light- and mediumduty trailers and suppliers of products and services to the light- and medium-duty trailer industry. 

NA TM's membership consists of nearly 900 manufacturers and suppliers to the industry. Til<:sc 

companies utilize significant amounts of products which have been recently targeted for import 

tariffs. Thank you very much for your consideration of our views by including them in the 

Committee's hearing record. 

Sincerely, 

'tF~ Executive Director 

2420 S W 1 7th Stree t I Topeka . KS 6 6 6 04 I 7 85. 2 7 2 . 4 4 3 3 I Fax· ?85. 272. 44 55 I www.natm.com 
161 


33810A.097

Hearing on Effects of Tariff Increases on the U.S. Economy & J obs 

House Committee on Ways and Means 

April 12, 2018 

The National Association ofT railer Manufacturers (NATlvl) is pleased to provide this wrillen 

statemem in connection with the hearing in the Commillee on Ways and Means concerrung the 

effects of recent tariff increases on the U.S. economy and jobs. For 30 years, NA TM has served 

as the national trade association for manufacturers of light- and medium-duty trailers and 

suppliers of products and services for the industry. NATM's membership consists of 

approximately 900 companies producing a wide variety of products such as livestock, cargo, 

boat, and other trailers typically towed behind pickup trucks. The light· and medium-duty trailer 

industry employs approximately 425,000 Americans and contributes nearly $3 billion to the 

economy every year. In recent months, NATM's members have expressed great concern about 

the impact oft-ecent steel and aluminum tariff increases on their businesses. Since the Great 

Recession, the light· and medium-duty trailer industry has experienced strong growth, and the 

industry began 2018 hopeful that passage of tax reform would continue growth in the economy 

and particularly American manufacturing. These gains are being threatened by the recent tariff 

increases. 

Production of light· and medium-duty trailers requires significant usc of metals including steel 

and aluminum. NATM recently conducted a survey of its membership to de.tenninc how much 

steel and aluminum are being utilized, sources of those products by country, and experiences 

companies have faced over the last several months. Most notably of concern, many members 

report having significant price increases as well as a lack of stability in contracts including 

cancellation of existing contracts for both domestic and foreign sourced steel and aluminum. ln 

many cases, these challenges arc having a chill ing effect on the companies' abil ities to create and 

retain workers and serve customers without significant price increases of their own. 

Lack of Marker Sta blllty 

NATM members source steel and aluminum lor their products from a range of countries. Many 

utilize U.S. pmcluced steel and alumilllom, but report the domestic production capacity is 

insufficient for the industry's needs. Foreig,1 sources of steel and aluminum included Bmzil, 

Canada, China, France, India, Korea, and Vietnam. Over the course of the last severo) months, 

NATM members report both domestic and foreign suppliers of steel and aluminum have not only 

increased prices significantly, but also cancelled future contracts and begun utilizing shorter 

contmct t!:rms. In sever.~ I cases, companies have been forced to make purchases on spot markets 

which have rnuch higher costs than long-term contrdcts which enable manufacturers to plan for 

future consU'Uction. Titesc Sul>ply issues have already led to manufacturers slowing production 

2 4 20 S W 1 7th Street I Topeka, KS 66604 I 785. 272.4433 I Fax : 7 8 5.272.4455 I www.ne cm.com 
162 

f 


33810A.098

and planning increases in the prices of their 

decrease consumer demand for products. 

Price Increases 

both of which are expected to 

Since the rumouncement by the Department of Commerce that it would self-initiate Section 232 

eases on aluminum and steel imports, NA TM 's members report large increases in the prices they 

are paying for both domestically produced and imported aluminum and steel. In several cases, 

members who previously utilized only U.S. produced products were quickly working to secure 

imported products due to the cost increases, an outcome that seems diametrically opposed to the 

stated goal of the tariff increases of protecting American manufacturing. 

For the majority of light- and medium-duty tra.iler manufacturers, mcta.l sheeting and coil are 

among the most significru1t raw material costs. As noted above. due to the sharp increase in 

those costs, many manufacturers are raising prices to consumers and cutting back on plans lor 

!,'TOwth until there is more clarity on the tariff situation. This will greatly depress productivity 

levels and jobs in the industry. 

Conclusion 

The companies that comprise NATM's membership, many of whom are small businesses, 

n-'])rescntthe epitome of American manufacturing- over 400,000 workers welding, painting, 

affixing safety devices, and undertaking the myriad of other tasks necessary to transfonn tons of 

metal into products used by consumers every day. A f\er entering 2018 with significant optimism 

that the industry would continue to experience growth as it has in recent years, NATM's member 

companies are troubled that implementation of the tariff increases, as well as retaliatory 

measures that may be taken by America's trading partners, will cause contraction in the market. 

Increased production costs and lowered consumer demand will inevitably lead to reduction of 

jobs across the industry. NATM applauds the Committee's interest in this matter and urges the 

Commillee to ex.ercise the necessary steps to mitigate the implementation of increased tariffs on 

steel and aluminum imports. 

2 4 20 SW 1 7 th S~reet I Top e k8, KS 6 6 604 I 7 85. 2 72 . 4 433 I Fe x· 7 85.272. 4455 I www. netm . com 
163 


33810A.099

ProAmpac Intermediate, Inc. 

Statement for the Record 

House Ways and Means Committee 

HeaJ·ing on the Effects of Tariff Increases on the U.S. Economy a nd Jobs 

Thursday, April 12,2018 

ProAmpac Intermediate, Inc. ("ProAmpac") submits this Statement for the Rec<>rd in connection 

with the hearing held on April 12, 2018 by the House Ways and Means Committee examining 

the effects of tariff increase on the U.S. economy and jobs. 

ProAmpac is a leading global flexible packaging company providing flexible packaging 

solutions in the food, medical, pharmaceutical, and other consumer and industrial markets. 

ProAmpac is headquartered in Cincinnati, Ohio, with executive offices in North Hampton, New 

Hampshire. The company now has 22 United States manufacturing locations and employs over 

2,500 people in the United States. 

While the subj ect of the Hearing was primarily aimed at the I 0% tariff imposed on 

aluminum products pursuant to Section 232, the Committee is also aware that the International 

Trade Commission ("ITC") has imposed anti-dumping and countervailing duties ("AD/CVD") 

on Chinese aluminum foil that in some cases exceed 140%. The effect of these duties, on top of 

the 10% tariffs imposed under Section 232, has negatively impacted, and will continue to 

negatively impact, ProAmpac's U.S. manufacturing operations. 

Until the imposition of anti-dumping and countervailing duties ("AD/CVD") on 

aluminum foil sourced from China, the Company imported u.ltra-lhin gauge aluminum foil fwm 

various c.ountries, including China, for use in its U.S. manufacturing operations. The Company 

imports ultra-thin gauge aluminum foil into the United States, and then laminates the foil to 

various backings and substrates in its United States manufacturing facilities primarily for use in 
164 


33810A.100

packaging applications. Products that incorporate ultra-thin gauge aluminum foil include food 

packaging (such as potato chip cans and juice boxes) and packaging lor medical supplies. 

Since the imposition of AD/CVD on Chinese aluminum foil, the Company has attempted 

to source all of its requirements for ultra-thin gauge aluminum foil from U.S. producers and 

producers from other countries, including South Korea, South Africa, Greece, and others. 

However, there is virtually no U.S. production of ultra - thin aluminum foil in the U.S., and the 

available supply of ultra - thin gauge aluminum foil from countries other than China is not 

adequate to satisfy ProAmpac's need for such material. 

The Section 232 Request fot· Exclusion P .. ocess is Cumbe .. some and Flawed 

ProAmpac was pleased to see that the Section 232 proclamation includes a process for 

requesting exclusions from tariffs "if the steel or aluminum articles are determined not to be 

produced in the U.S. in a sufficient and reasonably available amount or of a satisfactory quality 

or based upon specific national security considerations." As set fonh below in this statement, the 

ultra - thin aluminum foil used by ProAmpac is, for all intents and purposes, not produced in the 

U.S. However, after reviewing the reg11lations setting forth the procedures for requesting an 

exclusion from the Section 232 remedies, we believe the process is unduly burdensome and 

cumbersome. As an example, the foil used by ProAmpac is imported in various thicknesses and 

widths, and under the current process, each product requires a separate application. Moreover, 

separate applications must be filed for each country not excluded from the tariffs, and for each 

importer of record. Under the current process, ProAmpac expects to file approximately 150 

separate requests for exclusion of aluminum foil products. We expect that other importers will 

have similar numbers of requests. If the exclusions for certain countries from Section 232 are 

- 2-
165 


33810A.101

not made permanent, ProAmpac would likely need to ftle many more requests in the coming 

weeks. ProAmpac is concemed that this excessively bureaucratic approach to requests for 

exclusions will substantially delay the approval process, and caLtse further damage to its business 

and the flexible packaging industry. The negative impacts are happening now. ProAmpac 

cannot wait for an uncertain period of time for its requests for exclusion to be accepted or 

rejected. 

The United States Does Not Presently Have Sufficient 

Production Capacity to AUow fo1· Reliance on Domestic P1·oduction. 

Until 2014, ProAmpac sourced most of its ultra - thin gauge aluminum foil through 

United States based manufacturers, primarily JW Aluminum and Norandal USA, Inc. (now 

Granges). fn 2014 and 20 15, however, JW Aluminum determined to reduce its manufacturing 

capacity for ultra-thin gauge aluminum foil, choosing to move their capacity into heavier gauge 

products more suitable to the capabilities of their existing equipment. Norandal also exited the 

production of ultra-thin gauge aluminum foil prior to JW Aluminum and shut down these assets. 

ProAmpac does continue to source some of its heavier gauge aluminum foil used in foil lidding 

(" lidstock") from JW Aluminum, but JW cannot provide all of the lidstock ProAmpac requires. 

For all intents and purposes United States - based aluminum foil manufacturers have virtually 

abandoned the production of specialty ultra-thin gauge aluminum foil, and there is no current 

prospect for United States producers to resume such production in the next two or three years. 

ProAmpac and other flexible manufacturing packaging manufacturers therefore have had no 

choice but to rely on foreign production of ultra-thin aluminum foil and lidstock to satisfy United 

States manufacturing demand. 

- 3 -
166 


33810A.102

The Import of Ultra-thin Gauge Aluminum has No Impact on National Securitv. 

The clear intent of Section 232 is to protect national security interests by ensuring the 

availability of sufficient domestic materials to meet the ongoing demands of such security 

interests. Ultra-thin gauge aluminum foil is not used in any goods or services that relate to 

national security and defense requirements. Imposing additional tariffs on ultra - thin gauge 

aluminum foil will have an unintended consequence forcing United States-based downstream 

manufacturers like ProAmpac to reduce or eliminate domestic manufacturing operations. As 

re-cognized in the DOC's Section 232 investigation report, ultra-thin gauge aluminum foil is a 

distinct product from other forms of aluminum foil products. Given the properties of ultra-thin 

gauge aluminum foil, it cannot be used interchangeably for other aluminum products. As a 

result, it cannot be used for constn1ction of infrastructure or other products necessary tor national 

security. Additionally, ultra-thin gauge aluminum foil is not used in the production of military 

arms and could not be used for such a purpose. Therefore, there is no national security interest 

that would be impacted by the continued import of this product. 

The AD/CVD and Proposed Tariffs Under Section 232 

Will Have a Significant Negative Effect on United States Manufacturing 

The AD/CVD and the Section 232 tariffs will negatively impact the ability of 

downstream manufacturing users of ultra-thin aluminum foil to manufacture product in the 

United States. Foreign downstream manufacturers with access to ultra-thin aluminum foil free of 

tariffs and duties will have a significant cost advantage over United States manufacturers, as 

customers move to lower priced packaging materials. 

-4-
167 


33810A.103

Without access to affordable ultra-thin gauge aluminum foil due to ihe imposition of tariffs and 

duties, ProAmpac is at a competitive disadvantage, and is sustaining, and will continue to 

sustain, heavy tinanciallosses. ProAmpac's competitors with access to offshore manutacmring 

facilities will be able to import converted aluminum foil packaging into the United States without 

being subj ect to either the AO/CVD or the Section 232 tariffs. As a direct result, the Company 

has temporarily shut down production lines, laid off employees, and will be forced to eliminate 

jobs and potentially close a significant number of its United States facilities. The United States 

flexible packaging industry may lose up to 2,000 jobs nationwide. 

Reliance on Domestic Supplv 

ProAmpac has consistently maximized its source of supply from the United States in all 

areas of procurement. ProAmpac is headquartered in the United States, and has minimal 

operations outside of the United States. Nearly 90% ofProAmpac's S 1.3 billion in sales and 

2,500 employees work within the United States. This is unique for a flexible packaging 

company ofProAmpac's size. The overwhelming majority of ProAmpac's vendors, except 

recently for aluminum foil, are based in the United States. Specifically, ProAmpac has four main 

substrates that must be purchased and are critical to keeping operations running in the United 

States. These include paper, resin, film, and aluminum foil. 

Paper is sourced entirely within the United States from suppliers such as Expera 

Specialty, Twin Rivers, and Domtar. Resin is sourced entirely within the United States from 

vendors such as Chevron Phillips, ExxonMobil, and Westlake Chemical. Film is sourced 

entirely within the United States from vendors such as Berry Plastics and Charter NEX. The 

- 5-
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inevitable effect of the AD/CVD and Section 232 tariffs will be to shift flexible packaging 

production outside the United States. This shift will have significant ripple effects on 

J>roAmpac's domestic suppliers. 

ProAmpac would prefer to source ultra-thin gauge aluminum toil from United States 

manufacturers. Current production within the United States, however, will not allow this 

alternative. A significant amount of time and re,sourccs would need to be invested by United 

States aluminum producers in order to bring the currently available domestic infrastructure up to 

acceptable levels. Even if domestic aluminum foil producers determined to invest in 

manufacturing capacity for ultra - thin gauge aluminum foil, the wait time for having such 

infrastructure, online is likely more than two years. In order to save American jobs and keep its 

manufacturing facilities operating, ProAmpac and other downstream manufacturers require a 

reliable source for ultra - thin gauge a luminum foil now. Two years will be too late. 

ProAmpac appreciates the opportunity to submit this statement. 

- 6 -
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• \ 

Austin 

Chamber 

A C G10NI4 1.. 

CHAM81!. ~ ,._ .. ro•••cu••tt I' C:l tlltiiUct 

April 26, 2018 

The Honorable Kevin Brady 

Chairman, Committee on Ways & Means 

U.S. House of Representatives 

Washington, DC 

The Honorable Richard Neal 

Ranking Member, Committee on Ways & Means 

U.S. House of Representatives 

Washington, DC 

Dear Chainnan Brady, Ranking Member Neal, and Distinguished Members of the Committee: 

On behalf of the undersigned chambers of commerce representing some of Texas' largest metro 

regions, we urge you to oppose any actions that would increase barriers to trade, such as tariffs 

on intennediate goods. On March 8, President Trump issued a proclamation to impose a 25 

percent tariff on steel imports and a I 0 percent tariff on aluminum imports, both intem1ediate 

goods that are heavily utilized in the production process. Tariffs on intennediate goods disrupt 

existing successful trade relations, increase the cost of domestic production, and open the door to 

retaliation from other countries. The tariffs on steel and aluminum are no exception and will 

harm the U.S. economy. 

Texas trade relies on the strong relationships built with our international partners and Texas is by 

far the biggest exporter of goods and services in the U.S. Totaling $232.6 billion in 2016, the 

volume of Texas exports was larger than that of the second largest exporting state by nearly $70 

billion. According to the U.S. Census Bureau, Texas leads all states in the amount of steel and 

aluminum it imports. These in1ports, in part, allow Texas to contribute almost $1.5 trillion to the 

national GDP ammally, as it did in 2016. This economic success depends on our trade 

relationships. Country-specific exemptions to the steel and aluminum tariffs end May I, with no 

fonnal process to negotiate further exemptions. Our companies rely on certainty in trade 

negotiations, and open-ended disruption to our international supply chain j eopardizes our ability 

to trade. 

Tariffs on steel also increase the cost of domestic production. A large percentage of Texans who 

work in the energy, commercial construction, and manufacturing industries rely on fair trade and 

affordable access to steel and aluminum to stay competitive in a global marketplace. The U.S. 

Chamber of Commerce reports U.S. manufacturers consuming steel employ 40 to 60 times more 

U.S. workers than facilities producing steel. The most recent steel tariffs in 2002 led to a loss of 

200,000 jobs in the steel-consuming sector resulting in nearly $4 billion of lost wages, according 

to the Trade Partnership Worldwide. Now is not the time to repeat those losses. 
170 

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• \ ll) OAL..LAS ..... ~ .... Fort Worth 

Austin :::·:::J ~~ ")4HAH8Ej;i 

Chamber ~~ u• .t.•to•t• CUIILU• 

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Page 2 

Chairman Brady, Ranking Member Neal, and Distinguished Members of the Committee 

April 26, 2018 

Tariffs also invite retaliation. On April I, China announced tariffs on 128 U.S. goods totaling $3 

billion, citing the steel and aluminum tariffs as the cause. China is Texas' third largest export 

market for goods, totaling $16 billion in 2017. We recognize that certain Chinese practices with 

respect to teclmology transfer, intellectual property, and market access need to change - we also 

believe these issues can best be addressed in an atmosphere of mutual respect between our 

countries. Escalating retaliation will hurt all parties involved. 

As representatives of the Texas business community, we oppose any barriers that would prevent 

our members from staying competitive in a global economy, and result in a net loss for the 

economic health of our regions, state, and country. 

Thank you for your consideration and for your service to our country. 

Regards, 

Dale Petroskey, President and CEO, Dallas Regional Chamber, 2018 Metro 8 Chair 

Mike Rollins, President and CEO, Austin Chamber ofConunerce 

Michael Jacobson, President and CEO, Arlington Chamber of Commerce 

Cleo Rodriguez Jr., President and CEO, United Corpus Christi Chamber of Commerce 

David Michael Jerome, President and CEO, Greater El Paso Chamber of Commerce 

Bill Thornton, President and CEO, Fort Worth Chamber of Commerce 

Richard Perez, President and CEO, San Antonio Chamber of Commerce 
171 


33810A.107

April26, 2018 

The Honorable Kevin Brady 

Chairman 

Ways and Means Committee 

United States House of Representatives 

II 02 Longworth House Office Building 

Washington, DC 20515 

Re: Section 232 Steel and Alumjnum Tariffs 

The Honorable Richard Neal 

Ranking Member 

Ways and Means Committee 

United States House of Representatives 

II 02 Longworth House Office Building 

Washington, DC 205 15 

Dear Chaim1an Brady, Ranking Member Neal and other Members of the Committee, 

On behalf of the members of the RV Industry Association (RVIA), we are writing to express our 

grave c-oncerns with the Section 232 steel and aluminum tariffs that President Tmmp enacted on 

March 8~' and which were discussed in the Committee's April 12m hearing. 

RVIA is the national trade association representing nearly 300 manufacturers and component 

manufacturers of family camping vehicles, including motorhomes, travel trailers, fifth wheel 

trailers, folding camping trailers, park model RVs, and tmck campers, collectively known as 

recreation vehicles (RVs). The RV industry contributes almost $50 billion annually to the U.S. 

economy and supports over 285,000 full-time jobs.' Our members are proudly leading the 

economic recovery of their communities from sea-to-sea and throughout tbe American heartland. 

We appreciate the opportunity to comment on the tariiTs and to highlight three troubling results. 

First, the tariffs will have a significant adverse impact on domestic manufacturers who use steel 

and aluminwn through increased production costs. We understand the need to respond to trade 

policies and practices employed by China such as market access barriers, state-directed 

investment policies, and state-subsidized industries. Indeed, China's history of predatory trade 

behavior adversely impacts U.S. businesses. However, the Trump Administration's efforts to 

ensure American businesses can c-ompete in an international market via imposition of a 25 

percent taritT on imported steel and a I 0 percent tariff on imported aluminum has had the 

perverse effect of hurting downstream domestic manufacturing industries who utilize steel and 

aluminum in their products, such as the RV industry. 

As vehicle producers, our members have built their businesses on an integrated global supply 

chain. Domestic R V component part suppliers depend on a complementing balance of American 

and foreign steel and aluminum providers to provide highly specialized parts. For example, an 

Indiana supplier who manufactures trailer hitches told us that their price on domestically sourced 

steel has already increased 30 percent since the start of 2018. If costs stay this high, they will 

have to consider moving production overseas and bringing the finished products in at a much 

lower tariff rate. 

1 Recreation Vehicle Industry Association 2016 Annual Report. Page 7. 

http://www.rvia.org/UniPop.clm?v=2&010=9435&CC=42176 
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33810A.108

The Honorable Kevin Brady 

The Honorable Richard Neal 

April 25, 2018 

Page2 

Another supplier who manufactures heating and cooling systems for RVs sources his steel and 

aluminum from domestic mills. This supplier received a letter a couple of weeks ago infonning 

him that prices were going up I 0 percent immediately. The letter a lso said that prices were 

expected to rise another 10-15 percent in May. He too mentioned the possibility of shifting 

production offshore and importing finished products. Forcing U.S. manufacturers to move 

production overseas to counter the laritTs certainly is not the result sought by policymakers, but it 

is the reality some of our members are facing. 

Second, the domestic c-omponent price increases impact the consumer price and, ultimately, 

product sales. l11e effect of the enacted tariffs has been to raise the cost of production inputs, 

leading to an increase in costs at all levels of our members' businesses. To compensate for 

increased production costs, our members have been forced to raise the price consumers pay for 

their products. l11ese artificially raised prices depress RV sales and lower domestic economic 

output. 

Prior to this next round of tariff increases (the 301 tariffs), prices to the consumer on the same 

RV models at retail are up around 8.5% versus the same lime last year. l11is price trend was 

verified with the industry's largest retailer earlier this month. l11e 8.5% increase does not take 

any potential interest rate hikes into consideration. 

The impact on the industry from material increases already incurred, those anticipated to come, 

along with interest rate hikes they expect this year, is going to potentially take the industry to a 

" flat" status regarding shipments. Lf this pricing trend continues it could push us into a negative 

position compared to last year's numbers as an industry. 

Third, in addition to raising production costs for domestic companies and impacting sales, the 

Section 232 tariffs indirectly subsidize our member's foreign competitors. As foreign-based 

competitors are not operating under similar tariffs, these companies now have a built-in price 

advantage over American companies. By paying less than our domestic businesses for steel and 

aluminum-based supply inputs, a foreign firm can export finished products to U.S. markets at 

substantially lower costs than American businesses. Our domestic manufacn1rers, who are forced 

to pay 25% more for steel-based imports, catmot match the lower prices offered by foreign 

competitors without substantial cuts to other operating expenses. To continue business in this 

scenario, domestic manufacturers will be forced to cut overhead and operations expenses such as 

employees and employee salaries and benefits. The Section 232 steel and aluminum tariffs have 

placed foreign competitors operating in NAFT A and other countries in a unique position to 

expand their market share at the direct expense of American businesses. 

Tariffs can be an effective tool when properly designed and narrowly focused. The scope of the 

steel and aluminum tariffs that are currently enacted is far too broad to have the intended effect. 

Instead of placing pressure on nations employing predatory trade practices to change their 
173 

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33810A.109

The Honorable Kevin Brady 

The Honorable Richard Neal 

April25, 2018 

Page 3 

behavior, the tariffs as currently designed will only create new challenges for American 

businesses to the benefit of foreign competitors. 

We thank you for your continued leadership on trade issues and encourage the Committee to 

work with the Administration to prevent rapid escalation in this trade dispute. 

Sincerely, 

Jay Landers 

Vice President, Govemment Affairs