Dump Trump’s Trade Policy

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After “a thorough, transparent, and data-driven investigation,” the U.S. Commerce Department has determined that American companies should pay higher prices for imported tin mill products, which, of course, will be passed on to consumers.

Although the Constitution authorizes the federal government (Art. I, Sec. 8, Par. 18) “To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes,” the Commerce Department was not created until 1903, when it was called the Department of Commerce and Labor. It became just the Department of Commerce in 1913. Its mission is “to create the conditions for economic growth and opportunity for all communities.” The department

  • works to drive U.S. economic competitiveness, strengthen domestic industry, and spur the growth of quality jobs in all communities across the country.
  • serves as the voice of business in the Federal Government, and at the same time.
  • touches and serves every American every ay.
  • fosters the innovation and invention that underpin the U.S. comparative advantage.

But the department is also committed “to remedying unfair trade practices.”

Like dumping.

This is a trade practice in which a product is exported at a price that is lower in a foreign market than it is in the exporter’s domestic market.

The basis for antidumping laws in the United States is the Antidumping Act of 1921, which was incorporated into the 1930 Tariff Act and amended by the Trade Acts of 1979, 1984, and 1988. Antidumping laws were originally intended to prevent foreign companies from selling cheap goods “with the intent of destroying or injuring an industry in the United States.” Then the “predatory intent” requirement was dropped. Antidumping duties could now be imposed “if an investigation determined that 1) they were sold in the United States at less than ‘fair value’ (i.e., the price charged by the exporter in its home market) and 2) were injuring the U.S. industry making the same product.” Now the standard is simply price discrimination between the foreign and domestic markets.

The Commerce Department recently announced in a press release that “imports of tin mill products from the People’s Republic of China, Canada, and Germany are being unfairly priced, that is, dumped, into the U.S. market, as part of its antidumping duty (AD) investigations.” The investigation also determined that tin mill imports from Korea, the Netherlands, Taiwan, Turkey, and the United Kingdom were not being dumped into the U.S. market.

The remedy for dumping is usually antidumping duties on foreign imports to “protect” domestic businesses from “unfair” foreign competition, but the truth is that dumping is the most ridiculous justification for protectionism that has ever been proffered. Not only are the methods the Commerce Department employs to determine whether dumping has occurred complex, arbitrary, and subjective: Antidumping laws are also an assault on American consumers who benefit from lower prices of imported goods.

Yet, antidumping laws are part of Donald Trump’s trade policy.

In a recent interview on a Fox Business show, Trump said that “when companies come in and they dump their products in the United States, they should pay, automatically, let’s say a 10 percent tax.” Even worse, Trump also said that he wants a “universal baseline tariff” of 10 percent on virtually all imports into the United States.

What Trump is proposing is nothing short of a massive tax increase on the American people. He believes that via “unfair” trade practices, other countries are stealing the wealth of America.

Trump completely misunderstands the nature of trade. Trade is not a national game in which some countries win and others lose. Trade does not take place between countries but between producers and consumers, and it is not a zero-sum game in which one side gains at the expense of the other. Instead, trade is always a win-win proposition. In every exchange, each party gives up something it values less for something it values more. Each party anticipates a gain from the exchange, or it wouldn’t engage in commerce with the other party.

If some foreign company wants to “dump” products on the American market — for whatever reason — then the more, the merrier.

All forms and levels of protectionism require government central planning, including antidumping laws, which presuppose that the government is capable of calculating the “right” or “correct” or “fair” price on a particular good. But it is not. Free and unfettered trade is always the best policy, and it is Trump’s trade policy that should be dumped.

The post Dump Trump’s Trade Policy appeared first on The Future of Freedom Foundation.


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