Senate Finance Committee Members Increasingly Showing Support for China 301 Tariffs

Prior to 2018, tariffs were a dirty word on Capitol Hill. That is especially true for the powerful  Senate Finance Committee, which historically has advocated for more free trade deals and “market access”. While many Republicans on that Committee are still pushing for free trade deals and market access for their agricultural producers back home, one thing is clear: there is growing support for the Section 301 China tariffs. In six short years, there is now a strong, bipartisan consensus that trade with China is a serious issue that is harming our nation, workers, and producers.

The Trump administration first imposed the Section 301 tariffs on China. Those tariffs are now under review by the United States Trade Representative (USTR), led by Ambassador Katherine Tai.

Senate Finance Committee Chairman Ron Wyden (D-OR) told Ambassador Tai in a hearing on April 17 that he wanted the Section 301 tariffs to be “used in the maximum fashion possible, particularly with you all initiating because we gave you that power.” He also called on USTR to “use 301 more proactively to investigate and take action against China’s unfair subsidies.”

It was clear that the China issue is a main focus for Chairman Wyden. He started his questioning of Tai by saying there is “lots to cover on this China issue that you touched on at the end. Obviously, China is just throwing money at everything from solar panels to semiconductors, doing everything they can to drive American competitors out of business with a flood of cheap imports.”

Importantly, Senator Mike Crapo (R-ID), the Ranking Member of the Senate Finance Committee, also indicated that he was in agreement with Wyden’s concern about China and his support for the Section 301 China tariffs, saying he agreed with the Chairman’s opening statement. This is a stark change from 2022 when Senator Crapo sought to weaken the Trump-era China tariffs.

Read CPA’s reviews of the Senate Finance Committee hearing with USTR here and here.

Sen. Debbie Stabenow (D-MI) told Tai she wanted to see the Section 301 review completed so the market can get a sense of which tariffs will be extended, and which ones will be removed.  She said she was in favor of “either extending or increasing tariffs on Chinese goods.”

One of Stabenow’s main concerns was the auto industry. As the U.S. pushes for a post-fossil fuels transportation industry, the most important part of the EV – the batteries – are mostly all made by Chinese multinationals led by CATL. CATL has a partnership with Tesla and Ford to make the batteries that power their vehicles.

But Stabenow said the entire EV industry, including cars, pits the U.S. automaker up against heavily subsidized Chinese automakers.

“Allowing artificially low-priced Chinese EVs to flood the U.S. market would cost thousands of jobs and endanger our shared goal of ensuring that the electric vehicle transition is led by American workers,” she said, without saying American companies, which might be the real problem. CATL is not hiring Chinese workers. The U.S. has no EV battery companies making batteries for any of the big automakers, including Tesla.

The WSJ reported on Friday that the Biden administration was preparing to raise tariffs on Chinese EVs, EV batteries, and solar goods next week.

Sen. Sherrod Brown (D-OH) tweeted that “Tariffs are not enough. We need to ban Chinese EVs from the US. Period.” Brown also said that the administration should not only focus on the “green technology” goods that benefit from the Inflation Reduction Act, but “must keep the 301 tariffs in place and see an increase where necessary.” Brown mentioned steel, which faces tariffs under Section 232.

Brown said the Committee was “concerned about China’s cheating, and circumventing, and manipulating to get ahead, targeting our manufacturing base.”

During the hearing, Tai called the Section 301 tariffs an “important tool” to wield against China, or any other country to deal with trade problems. She added that tariffs were not the only tool to advocate for U.S. manufacturers who often find themselves on the losing end of global commerce, especially where China is concerned.

“I can assure you that with respect to China, especially, given the scope and scale of the challenge that Section 301 remains very much at the forefront of our minds,” Tai said.

Although not a member of the Finance Committee, nor a Democrat, Sen. Marco Rubio (R-FL) wrote in an essay published by The American Conservative magazine on May 9 that the “experts” who said China tariffs would lead to higher inflation and be an overall economic headwind were proven wrong. He targeted the free trade supporters explicitly, writing that “The free-trade dogmatists’ fantasy has nothing to do with the real world, where Chinese market distortion is rampant.”

“What’s surprising is that, six years later, people are still listening to them. The Washington establishment is fretting about former President Donald Trump’s plan to raise tariffs on all Chinese goods. The legacy media has responded to this proposal by running explainers on how Trump’s plan could kill jobs and worsen inflation. They cite economists who simplistically declare: The policy is very bad. Tariffs make consumers poorer. They shrink the economy,” Rubio wrote.

Rubio said tariffs can also be good for the economy because “they counteract market inefficiencies created by adversarial trade practices.”

One of those practices is China’s ability to produce more than it needs, not only surpassing local demand but often global demand, too. This is happening now with solar and EV batteries. China companies dominate the space. And now they have produced so much of it that it sits in warehouses waiting to be bought, driving down prices. China is the price setter in solar. And the price trend often puts U.S.-based competitors at a disadvantage.

“China’s anticompetitive tactics in particular give Chinese companies an unfair cost advantage over American companies, which unnaturally shifts business, production, and jobs out of the United States,” Rubio wrote. “Tariffs that respond to these tactics prevent or reverse offshoring, preserving America’s economic might and promoting domestic investment. With tariffs, we can prompt companies to think twice before pouring money into cutting-edge technology and advanced manufacturing equipment in China. Without tariffs, we remain vulnerable. Tariffs skeptics ignore the catastrophic cost of that vulnerability.”