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Trump signs twin executive orders targeting trade 'cheaters'

By Lalit K Jha
April 01, 2017 08:49 IST
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United States President Donald Trump has signed an executive order seeking a comprehensive review of the massive trade deficit totaling more than $500 billion per annum with 16 countries, including China and India.

He also signed a second order that seeks to strictly enforce anti-dumping laws. It would ensure that the US fully collects all duties imposed on foreign importers that “cheat”, Trump told reporters in the Oval Office.

The announcement, which comes just days ahead of Trump’s first meeting with his Chinese counterpart Xi Jinping, is widely seen as targeting China, even though US officials have insisted that it does not single out that country.

“They’re cheaters. From now on, those who break the rules will face the consequences and there will be very severe consequences,” Trump said without naming any country.

The first order directs the Department of Commerce and the Office of the US Trade Representative to examine the factors causing the trade deficit that totals more than $500 billion per annum and submit a report within 90 days.

The review of the factors and violations behind the trade deficits will be led by Commerce Secretary Wilbur Ross, Trump said.

“We’re going to investigate all trade abuses, and based on those findings, we will take necessary and lawful action to end those many abuses. I’m not beholden to any political or financial interest. I don’t care. I’m here to do a job,” he said while insisting that he was acting for the “American worker”.

White House Press Secretary Sean Spicer said the Department of Commerce and US Trade Representative will submit a “comprehensive report” to the president on the causes of the “unduly large deficit” within 90 days.

Spicer also said countervailing duties were put in place to address the problem of other countries “dumping undervalued goods” into US markets, which makes it “impossible” for homegrown businesses to compete with “artificially low prices”.

“This is especially a problem in countries whose governments subsidise exports into our country. So to discourage this practice, the US Customs and Border Protection Agency has a mechanism for assessing these type of transactions and imposing financial penalties, known as countervailing duties, when it’s determined that this kind of malicious dumping has occurred,” he said.

Since 2001, the US Customs and Border Protection Agency has not collected over $2.8 billion in these duties, he said.

“We could do a lot by maximising this enforcement power for our country. So we need to do a better job on behalf of the American worker. If a foreign company, often due to its being partly or entirely government-run or subsidised, is able to flood American markets with an artificially cheap steel, for example, they price American companies out of the system,” Spicer said.

The announcement says the US must address the challenges to economic growth and employment that may arise from large and chronic trade deficits and the “unfair and discriminatory” trade practices of some of their trading partners.

Talking to White House reporters, Commerce Secretary Wilbur Ross insisted that the executive orders were not just about China.

A day earlier he had identified 16 major countries with which the US has significant trade imbalances, while noting that the communist nation was the number one source of the deficit. Ross also named India down the line with a trade deficit of $24 billion.

The US has a massive trade imbalance of $347 billion with China, followed by Japan with $68.9, Germany ($64.9), Mexico ($63.2 billion), Ireland ($35.9 billion)
and Vietnam ($32 billion).

Other countries mentioned in the list were Italy, South Korea, Malaysia, Thailand, France, Switzerland, Taiwan, Indonesia and Canada.

Responding to questions, Ross said there is no need to take any action on some of the trade deficit countries.

“For example, some of our deficit comes from the fact that we import a lot of oil. Well, even now with the shale oil, we are not self-sufficient. So that portion of our imports is real, it has nothing to do with any bad behavior,” he noted.

“Also, there are some products that are just not made in the United States, so it’s a little bit hard to say that something is an evil-doer, because they’re providing a product we can’t. And, in some cases, it will simply be that they are better at making the product or can do it far cheaper than we can,” Ross said.

The review will represent the first systematic analysis of what are the causes behind the imbalances, country by country and product by product, he said, adding that it will form the basis for “measured” decision making by the administration.


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Lalit K Jha
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