New Op-ed: TRUMPS’ 3-PRONG STRATEGY TO COUNTER CHINA’S AGGRESSION
TRUMPS' 3-PRONG STRATEGY TO COUNTER CHINA'S AGGRESSION
President Trump promised to take on China’s economic aggression against American workers and businesses – and he is fulfilling that promise.
The president has shown he will not capitulate to the aggressors in Beijing despite the cries from merchant bankers and C-suite executives demanding, “We must have a deal no matter what.”
Even the appeasers’ lap-dog economists are beginning to understand what the president has understood all along: Our innovation-based economy will not survive if it’s married to a serial abuser that does not respect private property, intellectual property and private enterprise.
President Trump has three powerful tools to counter China’s economic aggression: tariffs, currency and export financing backed by the full faith and credit of the United States.
The administration imposed tariffs on thousands of Chinese products, from pharmaceuticals to LEDs, after a thorough investigation by the U.S. Commerce Department determined Chinese companies are receiving illegal subsidies from their government and dumping these products in America at below-fair market value.
This is one tactic in Beijing’s war to drive American industry into extinction, and it has been going on for decades. Previous presidents would beg the thieves to “please stop stealing” – then do nothing when they doubled down on their larceny.
China is now paying for the tariffs President Trump imposed. That is the simple fact, despite what the so-called experts who spend more time looking at textbooks than the real world say.
The owner of a company that sources its product from China explains how – and why – China is bearing the cost of the tariffs: “Chinese factories don’t want us to walk away because then they will miss their monthly shipping quotas. For the Chinese government, shipping quotas are more important than profitability. When a factory’s managers realize that they must reduce prices to maintain output levels, Beijing comes to the rescue with subsidies to prop up their margins.”
And China should fear losing customers: Five of China’s top 10 exports to the U.S. are also available from Mexico.
In its fight to take down our economy, China has weaponized its currency, the yuan. It devalued the yuan by 10 percent this week.
That translates to a 10 percent price cut on everything made in China – another way the China cartel seeks to undersell American producers.
President Trump wasted no time in officially calling out China for illegally manipulating the value of its currency – but the president has more than strong words at his disposal.
New guidance from the Trump administration will for the first time allow the U.S. to impose a fine on Chinese merchandise equal to the amount Beijing hopes to gain by cheating on its currency.
Tariffs bring billions in revenue into our Treasury, and valuing our dollar properly against foreign currencies curbs the flood of imports from China.
But wait, there’s more.
In addition to direct subsidies and undervaluing its currency, China also provides sweetheart financing to its companies so they can gain an advantage over American competitors in world markets.
The Chinese Communist government is the world’s largest provider of export subsidies, and it is using them to outmaneuver the U.S. in Latin America, Africa, Asia and even Europe.
In 2009, it handed out over $174 billion in export subsidies to help its national champions win lucrative contracts selling everything from infrastructure to big-ticket items such as power plants.
The Trump administration is not taking this threat lying down. It is meeting the challenge by strengthening the Export-Import Bank.
Ex-Im, as it’s commonly known, is the export credit agency of the U.S. government, facilitating the export of U.S. goods and services by providing American businesses with the financing necessary to compete for global sales.
Unlike most government undertakings, Ex-Im actually turns a profit, returning billions to the Treasury as exporters repay their loans.
China and some 85 other countries have export credit agencies to help their national champion companies win contracts – and jobs.
Unilateral disarmament on our part is not an option.
U.S. Trade Representative Robert Lighthizer – the point man in the fight against Communist China’s economic aggression – says the lack of a functioning Export-Import Bank “is having an impact – and it is way beyond China and is costing us jobs, and there is no excuse for it.”
A bipartisan bill introduced in the Senate would renew the bank’s charter for 10 years.
We face a protracted struggle with an adversary bent on taking over the world, economically, militarily and culturally. We can’t let them succeed.
Washington must put politics aside and stand up to China’s existential threat to our nation and future.
The 2020 Democrats – and all politicians – need to stop lying about tariffs. Americans aren’t paying the bill, China is.
And Congress needs to reauthorize the Export-Import Bank now.
-Curtis Ellis is Senior Policy Director for America First Policies.