After a year-long investigation, President Trump is poised to impose stiff tariffs on foreign steel and aluminum imports into the U.S. for national security reasons. The move prompted angry responses from global trading partners, drawing warnings of an international trade war.
But America has been in a trade war for almost two decades – most of us just didn’t know it. President Trump is the first president from either party to recognize that trade has become a weapon our adversaries – particularly China – have been using against us to enrich their countries while weakening our manufacturing base and eroding our prosperity and national security.
Nations such as China depress the value of their currency, while pushing the dollar higher, in order to gain a price advantage in global markets. The Chinese government also subsidizes key manufacturing sectors focused on exports, like steel, aluminum and cast iron. With these and other advantages, Chinese producers can “dump” their products in the U.S. market at prices below their cost. These predatory practices violate world trade law and destroy American jobs.
At Charlotte Pipe and Foundry, we’ve experienced China’s destructive trade practices firsthand. Over the years, we have seen cheap imports of cast iron pipe and fittings flood our market. Neither political party seemed willing to level the playing field – until now.
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So last July, we filed an anti-dumping and illegal subsidy case against Chinese foundries and importers of cast iron fittings. After extensive study and a public hearing at the International Trade Commission, it looks like we are finally going to get some relief.
On February 14, the Commerce Department announced a preliminary determination of antidumping and slapped duties ranging from 68 percen to 110 percent on Chinese fitting producers, on top of penalties for illegal subsidies ranging from 8 percent to 13 percent. This will level the playing field, allowing us to compete fairly and keep our 1,400 American associates employed.
Free trade is supposed to be a two-way street. But if you want access to China’s market of 1.4 billion people, you will have to transfer your company’s intellectual property to the Chinese government as a cost of doing business there – that is, if they are not outright stealing your intellectual property.
We’ve experienced that firsthand as well. Last year we discovered that a Chinese company, Yitai, had stolen our company’s logo and registered it in China. They put a Charlotte Pipe and Foundry sign on their building and the general manager is passing around Charlotte Pipe and Foundry business cards. Yitai manufactures competing products and uses the stolen Charlotte brand to sell across Asia. Do you consider this fair trade?
During the later stages of the Cold War, free and open access to U.S. markets was used as a foreign policy tool to prop up our allies and promote democracy. America led the liberalization of global free trade throughout the 1980s and 90s, culminating in the passage of NAFTA and the creation of the World Trade Organization, lifting billions of people out of poverty.
This approach was premised on the assumption that the extension of free markets would lead to global convergence to Western-style capitalism. The U.S. supported China’s entry into the WTO in 2001 hoping China would eventually embrace a market-oriented trade regime. But as Mr. Trump said recently, “it is now clear that the WTO rules are not sufficient to constrain China’s market-distorting behavior.”
In the post-Cold War era, trade has been weaponized by mercantilist adversaries to undermine us. The U.S. can no longer ignore the extent to which this has disrupted our economy. Our decades-long task of promoting and defending international free trade has failed us. In this century, America’s economic and national security concerns must come first.
Dowd is chairman of Charlotte Pipe and Foundry Company.