CPA Conference Day 3: Yes, Tariffs Worked

Once hated, tariffs have staged a comeback in the Trump years. Now, it’s clear they’re sticking around in the Biden years too, as Commerce Secretary Gina Raimondo recently said in regards to steel tariffs. “They’ve been effective,” she said.

While Secretary Raimondo wasn’t on hand for day three of the CPA Annual Conference, panelists led by CPA CEO Michael Stumo said that tariffs were an integral part in negotiating trade with other nations, and that Congress can’t be afraid about irking allies. If the policies don’t work, you just go back and make another one. But gone are the days where free trader economists and their financial pundits in the press sing the praises of Made in Asia goods at the expense of a wide swath of the American labor force.

“DC economists never really liked things like rules of origin, even if it meant a whole bunch of China parts were coming in through Mexico, but everything was a matter of price to the business. It wasn’t until 2016 when economists realized that China trade had cost several thousand U.S. jobs,” said International Trade Commission chairman Jason Kearns. In recent years, economists in DC have had to change their thinking on the impacts of trade.

Stumo said that Kearns is at the ITC at an interesting time in U.S. trade history. “I’m glad you’re there,” he said. In his opening remarks in the morning, Stumo highlighted two headlines we think CPA members might like: 1) Financial Times: The U.S. Needs to Rediscover the Meaning of Investment – which focused on investments in the real economy, not the stock market; and 2) The Wall Street Journal: China’s Rise Drives an Experiment in U.S. Industrial Policy

Those headlines alone are like the framework for what today’s trade panel agreed to be key to manufacturing strength.

Panelist Marty Davis, CEO of Cambria, makers of quartz countertops, knows the importance of trade policy. For years they invested in the U.S., only to watch China come to town and strip them of their market share. The Bush presidency wasn’t worried about it. That’s what happens in free trade globalization.

“By 2010 we started seeing a surge in housing and we innovated a variety of product lines that were unique and allowed us to penetrate the marketplace at a more accelerated level,” he said, live streaming from his office. “In 2016, we had invested over $400 million in fixed assets (plants and equipment), but then the Chinese had begun to observe what we had done and they grew their market share starting from zero in 2017. We lost. China obtained 65% of the marketplace in five years. We were in a decline along with other domestic quartz companies.”

In the Trump era, Cambria was awarded a dumping charge on China after trying for many years.

“We had good paying jobs that would have been lost without those dumping charges,” he said, adding that they are now investing $120 million in a new factory in Minnesota and he is aware of at least two local competitors doing the same.

Stephen Vaughn, a partner on the international trade team at Washington law firm King & Spaulding, said the U.S. shouldn’t be roped into the World Trade Organization’s line of thinking anymore. “The U.S. can make its own trade policy,” he said. “There’s been a lot of talk over the years about populism and how to get beyond that. The best way is to create policies that enhance the middle class.”

Register for the final day of the CPA Annual Conference here.

Tomorrow’s guest speaker will be Dennis Shea, the Former Deputy USTR and Chief of Mission to the WTO (from 2018 to 2021) and a keynote address from Senator Gary Peters (D-MI), Chairman of the Homeland Security and Governmental Affairs Committee.

Our two panel discussions will focus on Customs Enforcement, led by our trade council Charles Benoit, and a China Policy panel which counts on the attendance of Senator Marco Rubio and his Florida counterpart in the House, Representative Bill Posey, to weigh in on that. CPA Vice-Chairman Dan DiMicco joins forces with Roger Robinson of RWR Advisory in Washington alongside Rubio and Posey.  Clyde Prestowitz, author of “The World Turned Upside Down” closes out the event.