Rep. Matt Gaetz: Let's stop allowing foreign countries to impose nonreciprocal high tariffs on US exporters
{{#rendered}} {{/rendered}}Under the nonreciprocal rules of the World Trade Organization (WTO), foreign countries can impose much higher tariffs on American exporters than the U.S. can charge those foreign countries. Consider that under WTO “most-favored-nation” rules, the average U.S. applied simple tariff is 3.5 percent while Europe’s is 5.1 percent and China’s is triple America’s at 9.9 percent.
A poster child for this nonreciprocal trade problem at the individual product level is auto exports. While the U.S. tariff on foreign cars is a mere 2.5 percent, Europe’s tariff is four times that at 10 percent and China’s is a whopping 25 percent. Meanwhile, try to sell a U.S. motorcycle in India at a 100 percent tariff, or a motorcycle helmet in Brazil at a 20 percent. Good luck with that.
Of course, it’s not just manufacturing goods that get the cold shoulder of nonreciprocal tariffs. Agricultural products ranging from citrus and dairy to beef and chicken face stifling tariffs or nontariff barriers in many countries around the world.
{{#rendered}} {{/rendered}}TRUMP’S TOUGH STAND ON CHINA TRADE WILL BENEFIT AMERICA AND THE WORLD
The grim result of this rigged nonreciprocal trade game over the last several decades has been the export of millions of American jobs and thousands of American factories to foreign lands. Our farmers – the most productive in the world – have also been constrained from getting their products into the global market.
President Donald J. Trump rightly sees this world of nonreciprocity as an absurd situation and has reached out to Congress to come up with a solution that will provide U.S. manufacturers, farmers and ranchers with reciprocal treatment of their exports and equal access to foreign markets.
{{#rendered}} {{/rendered}}The proposed United States Reciprocal Trade Act (USRTA) now being circulated in the House of Representatives would provide Congress and the president with just such a solution.
The USRTA recognizes that the United States is the largest importer of goods even as it maintains, on average, the lowest combination of tariffs and nontariff barriers of any of its major trading partners.
The USTRA also recognizes that “to date, a number of United States trading partners have been unwilling…to reduce tariffs and eliminate nontariff barriers applied to United States exports.”
{{#rendered}} {{/rendered}}Finally, the USTRA recognizes that the president “should have a wide array of tools to open the markets of United States trading partners and encourage participation in negotiations” to lower tariffs and trade barriers.
To this end, here’s how the USRTA would work: If the president determines that a foreign country is imposing a tariff or nontariff barrier on a particular good that is significantly higher than the United States imposes, the president would have the authority, after full consultation with Congress, to negotiate with the foreign country to reduce or eliminate those barriers. If the foreign country refuses, the president would then have the authority – again, in partnership with Congress – to impose a tariff that would countervail or offset the nonreciprocal advantages of the foreign country.
Note that the goal of using this authority is NOT to raise tariffs. Rather, it is to provide the president and Congress with urgently needed leverage to encourage other countries to lower their tariffs and trade barriers.
{{#rendered}} {{/rendered}}The beauty of this approach is that it provides the United States with a powerful and targeted tool to bring foreign countries to the bargaining table. Right now, far too many foreign countries are, as President Trump has rightly noted, treating the United States like a piggy bank.
As these countries benefit from the tilted playing field of nonreciprocal trade, they have absolutely no incentive to negotiate with the United States under WTO rules. The USTRA would turn that absurd situation around on a dime.
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{{#rendered}} {{/rendered}}While the Washington swamp, which loves shipping American jobs offshore to make a buck or Euro, is already rising up against the proposed legislation, the USRTA is just plain common sense. Ask anybody on Main Street whether it makes any sense to allow foreign countries to charge higher tariffs than we charge them, and the answer will surely be a resounding “heck no!”
So I say let’s give the president a new tool to stop this nonreciprocal trade absurdity. That’s why I will be working closely with my colleagues on both sides of the partisan aisle to build support for the USRTA.