Tuesday’s House Ways & Means Trade Subcommitteehearing saw every single Democrat attacking the Trump administration’s tariff policy, mocking his April 2 “Liberation Day” announcement, and calling tariffs a tax that will hurt middle class consumers. For many followers of these debates, the hearing sounded a bit like a broken record. The Republicans wanted more free trade deals. No one complained about the abundance of record-breaking imports and deficits. The only manufacturer, Harley Davidson, spoke about exports and reciprocity.
But there was one surprising standout from a witness: a cattleman named Rob Kirkland, who told members that retaliation was worrisome, but he understood the reasoning behind tariffs. He said farmers and ranchers were willing to take some slings and arrows, so long as it meant there would be some new markets for them along the way.
“We know there will be restrictions on our exports and we understand that there will be retaliatory tariffs,” said Kirkland, Chairman of the Texas Cattle Feeders Association. “We don’t like it, but we understand that for our next generation that’s coming up, we are going to have to go through a little bit of pain so a next round of trade is more prosperous for them than it has been for us.”
Reciprocity being a theme on the day, Kirkland complained about barriers of entry in other countries like the U.K. and its phytosanitary measures. Thailand charges U.S., Argentina and Brazilian beef a 50% duty for example. The U.S.’s big competitor there is Australia, which has a free trade deal with Thailand and as a result has come todominate the export market almost entirely. Two things are worth noting. One, U.S. frozen boneless beef exports to Thailand have grown by24% between 2018 and 2023, reaching 1,083 tons worth $5.8 million, despite tariffs. Their main competition is the Australians and No. 2 Argentina. But thanks to the dollar being overvalued against the Argentina peso and even a little stronger than the Australian dollar, theU.S. export price for frozen boneless beef is much higher. Therefore, it is unclear even if tariffs were reduced if the U.S. market share would grow versus its competitors.
The U.S. has a free trade agreement with Mexico and Canada but despite running surpluses on and off for many years, the U.S. has run a deficit with USMCA in beef and veal since 2014.
Every Country, a Hidden Tariff
Harley Davidson’s CFO Jonathan Root said that they are able to sell at a lower cost in Southeast Asia thanks to their factory in Thailand. Selling U.S. made motorcycles, where most Harleys are built, means you are facing a list of non-tariff barriers like regulations on engine size and luxury taxes that price them out. Europe is notorious for this.
“We believe you need a fair and equal tariff rate,” Root said. “Harley can produce in the United States and we can source parts in the United States. Around 95% of what we sell here is made here, so from our trade perspective, we do believe that for us the tariffs are a matter of fairness. If countries can enter our market with competitor bikes tariffed at zero or the usual 3.5% tariff rate while we have to compete against them in their country at much higher rates, we are not going to like that.”
Republicans wanted more free trade deals, with some lashing out against the Biden administration for not doing more on that. We don’t need more free trade agreements; we can barely deal with the biggest one we have on our border.
Yet, many Republicans on the House Ways & Means Trade committee think we should pull the U.K. away from Brussels politically and economically by offering them an FTA.
Global trade does not work when we have an average tariff rate of 3.4% and other countries have twice that or three times that rate. We cannot accept free trade without fair trade. That doesn’t mean there won’t be any pain. There was in Trump’s first term with the China and steel tariffs. But if I recall, he was successful with those and we were able to bring trade partners to the table.
Rep. Carol Miller (R-WV-1) talked about Asian trade. She lamented the fact that the Indo Pacific Economic Framework (IPEF) did not open markets in that region. IPEF has long been a trade aficionado’s favorite Asia project. It has been roughly three years of talking about commerce in nice hotels in Bali and San Francisco, with little noticeable agreements. Miller said China is taking advantage of Asian markets while the U.S. sits on the sidelines.
It makes sense for China to be big players in their own neighborhood. It would be helpful if someone on Capitol Hill said American companies should maintain their strength in their neighborhood, like in the Americas. Where is that argument? Instead, the focus is on exports to make sure American corporations remain market leaders in Asia instead of Chinese companies.
Root admitted that the reason theyinvested in a Thailand production facility was because of Thailand’s tariffs. Thailand’s tariffs got them a huge, foreign motorcycle factory.
“Asia Pacific is a big opportunity for us in the mid term and long term but many of our competitors are there and they are manufacturing like we are in Thailand,” Root said, adding that it was easier to sell in Asia from Thailand than it would be exporting to Asia from the U.S.
Rep. Don Beyer (D-VA-8), who was the third Democrat on the day to ridicule Trump’s “Liberation Day” pitch, also calling tariffs a tax, said he never heard any business complaining about foreign countries charging them a VAT.
A VAT is a value-added-tax levied on goods at each state of the supply chain and countries that charge it allow their domestic companies to claim credits. Is that an extra charge against Americans competing overseas, sort of like a non-tariff barrier?
Christine Bliss, President of the Coalition of Service Industries, one of the five witnesses of the day, told Beyer that many of her members do complain about VAT. She singled out Mexico.
“Depending on how it is administered, it is a problem. In Mexico, it is a problem,” Bliss said. “And in Europe, (my members are) concerned about how the VAT is imposed and whether it is imposed on a level playing field.”
Chairman Adrian Smith (R-NE-3) also hinted that a VAT was an extra cost to exporters. “Locals in Europe can get a credit on the VAT and Europeans exporting to us can get a tax credit on the VAT, but we do not get a credit on the VAT selling to Europe from here,” he said.
Trade Enforcement Still a Problem
Rep. Beth Van Duyne (R-TX-24) was close to calling out Mexico on its breach of trade agreements but fell short. She only spoke broadly and gave no examples.
“We must hold our trade partners accountable,” she said, highlighting Mexico. She tried to get a panelist to list some trade agreements Mexico has not followed through on but got nothing.
Van Duyne seems to be interested in the USMCA’s many pitfalls.
“Mexico has ignored a lot of the trade agreements we had under USMCA,” she said, adding “We cannot allow China to exploit loopholes in that agreement at our expense.”
Trade committee Republicans were more understanding of tariffs, perhaps not wanting to get on Trump’s bad side or to give the financial press a new argument against him and his team. Even so, many Republicans keep insisting tariffs are a mere negotiating tool that will eventually, if not quickly, be removed in favor of low or no tariffs at all. No tariffs is a pre-America First trade policy. If the U.S. wants a manufacturing base that makes GPUs for AI data centers, and jet engines, trade and tax policies need to be used to encourage long term investment in the U.S. and to protect strategic segments of the economy. The global market is definitely big, and attractive. But the biggest and most attractive market of all is the United States. Every country knows this.
“I think one of the lasting impacts of Trump’s first term was his effort to rebalance trade. We have been very generous in letting foreign countries sell into our markets, but we face exorbitant tariff rates by our closest allies,” said Rep. Lloyd Smucker (R-PA-11). “The American First memo shows that Trump plans on doing more of the same for the next four years to make sure our workers and producers are treated fairly. Congress plays an important role,” he said, alluding to arguments by Trade Committee Democrats that Congress needs a bigger role in tariff talks with trade partners.
The last Republican President to sign multiple FTAs was George W. Bush. He signed 13 of them after negotiations were carried out and after Congress had its final say in how they would function. Trump would do the same. But there is no indication he is planning to sign any FTAs.
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
House Trade Committee: Partisan Attacks on Trump, “Reciprocal Trade” & Retaliation
Tuesday’s House Ways & Means Trade Subcommittee hearing saw every single Democrat attacking the Trump administration’s tariff policy, mocking his April 2 “Liberation Day” announcement, and calling tariffs a tax that will hurt middle class consumers. For many followers of these debates, the hearing sounded a bit like a broken record. The Republicans wanted more free trade deals. No one complained about the abundance of record-breaking imports and deficits. The only manufacturer, Harley Davidson, spoke about exports and reciprocity.
But there was one surprising standout from a witness: a cattleman named Rob Kirkland, who told members that retaliation was worrisome, but he understood the reasoning behind tariffs. He said farmers and ranchers were willing to take some slings and arrows, so long as it meant there would be some new markets for them along the way.
“We know there will be restrictions on our exports and we understand that there will be retaliatory tariffs,” said Kirkland, Chairman of the Texas Cattle Feeders Association. “We don’t like it, but we understand that for our next generation that’s coming up, we are going to have to go through a little bit of pain so a next round of trade is more prosperous for them than it has been for us.”
Reciprocity being a theme on the day, Kirkland complained about barriers of entry in other countries like the U.K. and its phytosanitary measures. Thailand charges U.S., Argentina and Brazilian beef a 50% duty for example. The U.S.’s big competitor there is Australia, which has a free trade deal with Thailand and as a result has come to dominate the export market almost entirely. Two things are worth noting. One, U.S. frozen boneless beef exports to Thailand have grown by 24% between 2018 and 2023, reaching 1,083 tons worth $5.8 million, despite tariffs. Their main competition is the Australians and No. 2 Argentina. But thanks to the dollar being overvalued against the Argentina peso and even a little stronger than the Australian dollar, the U.S. export price for frozen boneless beef is much higher. Therefore, it is unclear even if tariffs were reduced if the U.S. market share would grow versus its competitors.
The U.S. has a free trade agreement with Mexico and Canada but despite running surpluses on and off for many years, the U.S. has run a deficit with USMCA in beef and veal since 2014.
Every Country, a Hidden Tariff
Harley Davidson’s CFO Jonathan Root said that they are able to sell at a lower cost in Southeast Asia thanks to their factory in Thailand. Selling U.S. made motorcycles, where most Harleys are built, means you are facing a list of non-tariff barriers like regulations on engine size and luxury taxes that price them out. Europe is notorious for this.
“We believe you need a fair and equal tariff rate,” Root said. “Harley can produce in the United States and we can source parts in the United States. Around 95% of what we sell here is made here, so from our trade perspective, we do believe that for us the tariffs are a matter of fairness. If countries can enter our market with competitor bikes tariffed at zero or the usual 3.5% tariff rate while we have to compete against them in their country at much higher rates, we are not going to like that.”
Republicans wanted more free trade deals, with some lashing out against the Biden administration for not doing more on that. We don’t need more free trade agreements; we can barely deal with the biggest one we have on our border.
Yet, many Republicans on the House Ways & Means Trade committee think we should pull the U.K. away from Brussels politically and economically by offering them an FTA.
Rep. Carol Miller (R-WV-1) talked about Asian trade. She lamented the fact that the Indo Pacific Economic Framework (IPEF) did not open markets in that region. IPEF has long been a trade aficionado’s favorite Asia project. It has been roughly three years of talking about commerce in nice hotels in Bali and San Francisco, with little noticeable agreements. Miller said China is taking advantage of Asian markets while the U.S. sits on the sidelines.
It makes sense for China to be big players in their own neighborhood. It would be helpful if someone on Capitol Hill said American companies should maintain their strength in their neighborhood, like in the Americas. Where is that argument? Instead, the focus is on exports to make sure American corporations remain market leaders in Asia instead of Chinese companies.
Root admitted that the reason they invested in a Thailand production facility was because of Thailand’s tariffs. Thailand’s tariffs got them a huge, foreign motorcycle factory.
“Asia Pacific is a big opportunity for us in the mid term and long term but many of our competitors are there and they are manufacturing like we are in Thailand,” Root said, adding that it was easier to sell in Asia from Thailand than it would be exporting to Asia from the U.S.
Rep. Don Beyer (D-VA-8), who was the third Democrat on the day to ridicule Trump’s “Liberation Day” pitch, also calling tariffs a tax, said he never heard any business complaining about foreign countries charging them a VAT.
A VAT is a value-added-tax levied on goods at each state of the supply chain and countries that charge it allow their domestic companies to claim credits. Is that an extra charge against Americans competing overseas, sort of like a non-tariff barrier?
Christine Bliss, President of the Coalition of Service Industries, one of the five witnesses of the day, told Beyer that many of her members do complain about VAT. She singled out Mexico.
“Depending on how it is administered, it is a problem. In Mexico, it is a problem,” Bliss said. “And in Europe, (my members are) concerned about how the VAT is imposed and whether it is imposed on a level playing field.”
Chairman Adrian Smith (R-NE-3) also hinted that a VAT was an extra cost to exporters. “Locals in Europe can get a credit on the VAT and Europeans exporting to us can get a tax credit on the VAT, but we do not get a credit on the VAT selling to Europe from here,” he said.
Trade Enforcement Still a Problem
Rep. Beth Van Duyne (R-TX-24) was close to calling out Mexico on its breach of trade agreements but fell short. She only spoke broadly and gave no examples.
“We must hold our trade partners accountable,” she said, highlighting Mexico. She tried to get a panelist to list some trade agreements Mexico has not followed through on but got nothing.
Mexico has been in breach of its agreement with American tomato growers as well as its steel products agreement in 2018, which they agreed to in order to get an exemption from the Section 232 steel tariffs.
Van Duyne seems to be interested in the USMCA’s many pitfalls.
“Mexico has ignored a lot of the trade agreements we had under USMCA,” she said, adding “We cannot allow China to exploit loopholes in that agreement at our expense.”
Trade committee Republicans were more understanding of tariffs, perhaps not wanting to get on Trump’s bad side or to give the financial press a new argument against him and his team. Even so, many Republicans keep insisting tariffs are a mere negotiating tool that will eventually, if not quickly, be removed in favor of low or no tariffs at all. No tariffs is a pre-America First trade policy. If the U.S. wants a manufacturing base that makes GPUs for AI data centers, and jet engines, trade and tax policies need to be used to encourage long term investment in the U.S. and to protect strategic segments of the economy. The global market is definitely big, and attractive. But the biggest and most attractive market of all is the United States. Every country knows this.
“I think one of the lasting impacts of Trump’s first term was his effort to rebalance trade. We have been very generous in letting foreign countries sell into our markets, but we face exorbitant tariff rates by our closest allies,” said Rep. Lloyd Smucker (R-PA-11). “The American First memo shows that Trump plans on doing more of the same for the next four years to make sure our workers and producers are treated fairly. Congress plays an important role,” he said, alluding to arguments by Trade Committee Democrats that Congress needs a bigger role in tariff talks with trade partners.
The last Republican President to sign multiple FTAs was George W. Bush. He signed 13 of them after negotiations were carried out and after Congress had its final say in how they would function. Trump would do the same. But there is no indication he is planning to sign any FTAs.
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
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