[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
COMMERCE SECRETARY ROSS
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HEARING
BEFORE THE
COMMITTEE ON WAYS AND MEANS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
SECOND SESSION
__________
MARCH 22, 2018
__________
Serial No. 115-FC09
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Printed for the use of the Committee on Ways and Means
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
__________
U.S. GOVERNMENT PUBLISHING OFFICE
33-808 WASHINGTON : 2019
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COMMITTEE ON WAYS AND MEANS
KEVIN BRADY, Texas, Chairman
SAM JOHNSON, Texas RICHARD E. NEAL, Massachusetts
DEVIN NUNES, California SANDER M. LEVIN, Michigan
DAVID G. REICHERT, Washington JOHN LEWIS, Georgia
PETER J. ROSKAM, Illinois LLOYD DOGGETT, Texas
VERN BUCHANAN, Florida MIKE THOMPSON, California
ADRIAN SMITH, Nebraska JOHN B. LARSON, Connecticut
LYNN JENKINS, Kansas EARL BLUMENAUER, Oregon
ERIK PAULSEN, Minnesota RON KIND, Wisconsin
KENNY MARCHANT, Texas BILL PASCRELL, JR., New Jersey
DIANE BLACK, Tennessee JOSEPH CROWLEY, New York
TOM REED, New York DANNY DAVIS, Illinois
MIKE KELLY, Pennsylvania LINDA SANCHEZ, California
JIM RENACCI, Ohio BRIAN HIGGINS, New York
PAT MEEHAN, Pennsylvania TERRI SEWELL, Alabama
KRISTI NOEM, South Dakota SUZAN DELBENE, Washington
GEORGE HOLDING, North Carolina JUDY CHU, California
JASON SMITH, Missouri
TOM RICE, South Carolina
DAVID SCHWEIKERT, Arizona
JACKIE WALORSKI, Indiana
CARLOS CURBELO, Florida
MIKE BISHOP, Michigan
DARIN LAHOOD, Illinois
David Stewart, Staff Director
Brandon Casey, Minority Chief Counsel
C O N T E N T S
__________
Page
Advisory of March 22, 2018, announcing the hearing............... 2
WITNESS
Honorable Wilbur L. Ross, Secretary, Department of Commerce...... 6
QUESTIONS FOR THE RECORD
Questions from Ways and Means Committee Ranking Member Neal to
Secretary Ross................................................. 46
Questions from Trade Subcommittee Ranking Member Pascrell to
Secretary Ross................................................. 51
Questions from Representative Jenkins to Secretary Ross.......... 54
Questions from Representative Paulsen to Secretary Ross.......... 56
Questions from Representative Black to Secretary Ross............ 63
Question from Representative Higgins to Secretary Ross........... 65
Question from Representative Sewell to Secretary Ross............ 66
Questions from Representative Meehan to Secretary Ross........... 67
Questions from Representative Holding to Secretary Ross.......... 70
Question from Representative Jason Smith to Secretary Ross....... 72
Questions from Representative Walorski to Secretary Ross......... 72
Questions from Representative Curbelo to Secretary Ross.......... 77
SUBMISSIONS FOR THE RECORD
Alliance for Competitive Steel and Aluminum Trade (ACSAT)........ 81
Acuity Brands, Incorporated...................................... 83
American Fuel & Petrochemical Manufacturers (AFPM)............... 85
Air-Conditioning, Heating, & Refrigeration Institute (AHRI)...... 91
Amgraph Packaging, Incorporated.................................. 97
Morris, Manning & Martin, LLP, on behalf of Bekaert Corporation,
Kiswire America, and Tokusen USA............................... 99
Bemis Company, Incorporated...................................... 104
Berry Global, Incorporated....................................... 106
Electronic Privacy Information Center (EPIC)..................... 107
Flexible Packaging Association (FPA)............................. 110
Associations Dealing with the Energy Sector and Pipelines
including the Association of Oil Pipe Lines (AOPL), Interstate
Natural Gas Association of America (INGAA), GPA Midstream
Association, Energy Equipment and Infrastructure Alliance
(EEIA), Natural Gas Supply Association (NGSA), Center for LNG
(CLNG), American Petroleum Institute (API), and the Independent
Petroleum Association of America (IPAA)........................ 116
Learning Resources, Incorporated (LR)............................ 118
MillerCoors...................................................... 122
Precious Metals Association of North America (PMANA)............. 127
COMMERCE SECRETARY ROSS
----------
THURSDAY, MARCH 22, 2018
U.S. House of Representatives,
Committee on Ways and Means,
Washington, DC.
The Committee met, pursuant to notice, at 9:04 a.m., in
Room 1100, Longworth House Office Building, Hon. Kevin Brady
[Chairman of the Committee] presiding.
[The advisory announcing the hearing follows:]
ADVISORY FROM THE COMMITTEE ON WAYS AND MEANS
CONTACT: (202) 225-3625
FOR IMMEDIATE RELEASE
Thursday, March 22, 2018
FC-09
Chairman Brady Announces Hearing with
Commerce Secretary Ross
House Ways and Means Chairman Kevin Brady (R-TX), announced today
that the Committee will hold a hearing with Secretary of Commerce
Wilbur Ross on trade matters within Commerce's purview, particularly
the section 232 determinations on steel and aluminum. The hearing will
take place on Thursday, March 22, 2018, in room 1100 of the Longworth
House Office Building, beginning at 9:00 a.m.
In view of the limited time to hear the witness, oral testimony at
this hearing will be from the invited witness only. However, any
individual or organization may submit a written statement for
consideration by the Committee and for inclusion in the printed record
of the hearing.
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call 202-225-1721 or 202-226-3411 TDD/TTY in advance of the event (four
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Note: All Committee advisories and news releases are available at
http://www.waysandmeans.house.gov/
Chairman BRADY. The Committee will come to order. Good
morning. Today our Committee is honored to welcome Commerce
Secretary Wilbur Ross to testify on recent trade actions,
particularly section 232 determinations on steel and aluminum.
Mr. Secretary, thank you for joining us. And we look
forward to your testimony, which is very timely, with tariffs
set to take effect on aluminum and steel tomorrow.
Congress takes our constitutionally-mandated oversight role
over trade policy very seriously. I have had the opportunity to
exchange views with you, with President Trump, and other
Administration officials recently on our shared urgent priority
of addressing global over-capacity in aluminum and steel.
Several Members of this Committee addressed that point in
our hearing with Ambassador Lighthizer yesterday. We applaud
the President for his leadership in insisting that we address
this problem, and we know you have a key role. We are committed
to working closely with you and the President to make sure we
hit the target by dealing with the root problem of China's
persistent distortive policies, while minimizing collateral
damage to our economy.
Mr. Secretary, your vast experience in international
business, and particularly in the steel sector, have prepared
you well. You understand the complexity of modern supply chains
we must take into account when considering how any enforcement
action will affect every part of our economy.
As you know 108 House Republicans joined Chairman Reichert
and me in writing President Trump shortly before the
Presidential proclamations were issued to urge him to take a
targeted approach on any tariffs.
We continue to highlight several priorities: Keeping
tariffs targeted so they don't affect fairly traded products or
products that don't pose a national security threat; using a
process to allow U.S. companies to petition for and promptly
obtain exclusions for imports unavailable from U.S. sources or
that don't pose a national security threat; grandfathering
existing contracts so we don't unfairly drive up costs of
projects underway; reviewing tariffs on a short-term basis to
consider if a different approach would better serve the U.S.
national interest; and, of course, setting a termination date.
I welcome the President's commitment to flexibility and
cooperation to our allies that trade fairly. The exclusion of
Canada and Mexico is an important first step in such
flexibility, and one that we strongly support. We can't
jeopardize our ability to incentivize other countries to
cooperate on addressing our shared concerns with China. And we
don't want to encourage other countries to restrict our
American exports. Instead, we have to tailor these tariffs so
Americans have certainty as they continue to trade fairly, sell
American-made products to customers all over the world, and
hire more workers here at home.
I know you will be hearing from many Committee Members
today about specific improvements they want to the product
exclusion process to avoid risking jobs in their districts. In
particular, as these tariffs go into effect tomorrow, I urge
you to allow consolidation of petitions; retroactive
application of exclusions to the date the petition was filed;
and an exclusion period beyond the 1 year set out in your
rules.
I also oppose increasing tariffs on other products or
countries as exclusions are made. These tariffs should be in
place for the absolute minimum period, their effectiveness
should be constantly studied. They should be sunset after a
year. If they are not having the effect you intend, you should
assess whether another policy would be more effective than
continuing them.
Tariffs are taxes, plain and simple, on American job
traders and consumers. Their scope and their duration should
never exceed what is needed to accomplish their goal.
Along those lines I also want to address the potential for
section 301 tariffs. I am just as frustrated--I think we all
are--just as the Administration is, with China's blatant theft
of America's intellectual property, and increasingly devious
ways in which it steals or otherwise obtains our very best
technology.
But we need the right remedy, not one that punishes
American family, workers, and small businesses by putting new
taxes on the products they buy. We don't want to punish
Americans for China's misbehavior. At the very least, I urge
the Administration to provide a strong opportunity for public
comment, so the effect of tariffs on our economy can be
properly assessed. That would allow us to design our policies
to hit the right target, China, not Americans, who are
dependent on us to look out for them.
In 2015 Congress passed strong new trade enforcement tools.
I am very encouraged to see the President's dedication to
strict enforcement of trade rules by putting into action these
new enforcement tools passed by Congress, including by ensuring
U.S. industries can benefit from trade remedy laws, and we can
address circumvention and evasion of trade remedy orders.
Secretary Ross, I look forward to continuing our work
together on a pro-growth agenda that creates jobs and grows
paychecks. We have already had great success in improving the
lives of all Americans through tax cuts and balanced
regulation. We have to build on this success with an ambitious
pro-growth agenda that doesn't merely buy American; it allows
us to sell American all throughout the world.
Mr. Secretary, we look forward to your testimony.
And I will yield to the distinguished Ranking Member, Mr.
Neal, for the purposes of his opening statement.
Mr. NEAL. Thank you, Mr. Chairman.
Welcome, Secretary Ross. Today's hearing is an opportunity
for us to hear from you directly about the steel and aluminum
tariffs that are scheduled to go into effect tomorrow, and
details about the processes for exclusions and exemptions that
are still ongoing.
We know that the steel and aluminum industries in the
United States have been struggling for many years. We also know
that the situation is the direct result, in many instances, of
unfair practices from trading partners. China has been the most
flagrant bad actor. Many of their steel and aluminum companies
are really just extensions of the Chinese government that
benefit from massive government subsidies.
In 2000 China's steel capacity was just over 100 million
tons, roughly the same as the United States. Today, it is 1.2
billion tons, more than 10 times as high as U.S. capacity, and
more than the total capacity of the United States, European
Union, Japan, and Russia, combined.
Chinese industrial policies have led to massive amounts of
overcapacity in both steel and aluminum industries. Global
markets have been flooded and the price of both commodities has
dropped so low that firms playing by the rules can hardly
compete. The situation has put our workers and firms in an
unsustainable position. They deserve strong action and support
from our government.
In response to these issues, the Administration has
announced that it will impose a 25 percent tariff on steel
imports and a 10 percent tariff on aluminum products. These
tariffs are set to take effect tomorrow. I understand why our
steel and aluminum producers and workers are excited about the
tariffs. The tariffs represent relief that they have been
waiting for, in some instances, for years. We hope that it will
allow them to rebuild, restart, and, indeed, rehire.
I am also concerned, however, that the relief promised by
the tariffs will be watered down to the point of not being
effective. And I am concerned that the way this action was
rolled out will discourage cooperation from the international
partners that we need in the fight over China's capacities.
We have a lot of questions about how the Administration
will proceed in coming weeks and months. We posed many of them
already to Ambassador Lighthizer yesterday, and we understand
that you and your Department have a different role in these
investigations and in the administration of the exemption and
exclusion processes.
We are particularly interested in when the country
exemptions and product exclusion decisions will be made, and
when and where and how they will be made effective.
Once exemptions and exclusions are applied, we want to know
how the tariffs will be able to provide the promised relief,
and whether the tariff levels will be adjusted upward to
account for exemptions and exclusions.
I would also like to know what the Administration's plan is
for monitoring whether the tariffs are working, and how the
Administration would modify the relief to adjust for real world
effects.
We also would like to have you focus on what the
Administration's vision is for how the steel and aluminum
tariffs will contribute to a multilateral, coordinated strategy
for counteracting the global overcapacity crisis and,
certainly, how long the Administration envisions these tariffs
would need to be in place to address the national security
threat that your Department has found.
I hope you can provide, Mr. Secretary, clarity on these
issues over the course of our hearing this morning.
Thank you, Mr. Chairman.
Chairman BRADY. Thank you. Without objection, other
Members' opening statements will be made part of the record.
Today's sole witness is Secretary Ross.
Mr. Secretary, the Committee has received your written
statement. It will be made part of the formal hearing record.
You have reserved 5 minutes to deliver your oral remarks. Mr.
Secretary, you are welcome. We are pleased and honored that you
are here. You may begin when you are ready.
STATEMENT OF HONORABLE WILBUR L. ROSS, SECRETARY, DEPARTMENT OF
COMMERCE
Secretary ROSS. Thank you very much, Mr. Chairman, Mr.
Ranking Member, and Members of the Committee. I thank you very
much for the opportunity to speak with you today, and for your
input as we implement bipartisan trade policies that protect
and defend American families, American workers, and American
businesses.
This President has made it clear that his first priority is
keeping the American people safe. He has also made it clear
that he will not tolerate unfair trading practices that weaken
our internal economy to the point where they threaten to impair
our national security.
I initiated the steel and aluminum 232 investigations in
April 2017, and the President signed two memorandums that month
directing me to proceed expeditiously to conduct these
investigations and report my findings. I submitted my reports
to the President in January. The reports found that high levels
of import penetration are adversely impacting the economic
welfare of our domestic steel and aluminum industries. We have
seen plants closed or idle, with attendant loss of jobs,
skilled workers, and research and development.
The reports also found that global excess capacity is a
circumstance that makes it likely that continued high level of
imports would cause further closures. This all would place the
United States at risk of being unable to produce sufficient
steel and aluminum to meet demands for national defense and
critical infrastructure in an emergency.
For example, there is only one remaining U.S. producer of
steel used in electric transformers, a type of critical
infrastructure, and only one high-volume producer of armor
plate used in military vehicles and ships. Similarly, there is
only one high-volume producer of the high-purity aluminum
needed for defense and aerospace applications.
The problem is that products with national security and
critical infrastructure applications account for only a small
part of overall steel and aluminum consumption, and therefore
are not enough on their own to sustain healthy, innovative
steel and aluminum industries. Thus, I recommended that the
President take one of several different actions to curb
imports, and thus ensure the long-term viability of our
Nation's steel and aluminum industries.
On March 8th, President Trump exercised his authority under
section 232 of the Trade Expansion Act of 1962, as amended, to
impose a 25 percent tariff on steel imports, and a 10 percent
tariff on aluminum imports. The tariff actions taken by the
President are necessary to defend America's essential steel and
aluminum industries against imports that harm our domestic
industry to the point that they threaten to impair our national
security.
The President's 232 decisions are the result of a long and
well thought-out inter-agency process led by the Commerce
Department, where we studied the causes of the current
circumstances and the impacts of our actions. On March 23rd,
tomorrow, the U.S. Customs and Border Protection will begin
implementing the tariffs.
So where do we go from here? We have already announced a
process whereby domestic industry can be excluded from the
tariffs, based on national security concerns or a lack of
domestic supply of a quality product. Our intention is to
implement these tariffs in a way that minimizes undue negative
effect on downstream industries, while also weighing the
national security needs of our military and our critical
infrastructure.
The President has also announced that he is suspending the
tariffs for products from Canada and Mexico pending
negotiations that would yield satisfactory alternative means to
address the threatened impairment to U.S. national security.
We also intend to enter discussions with the EU on behalf
of their member countries and any country wishing to make such
an arrangement. The President also maintains further authority
to alter the tariffs at any time, based on national security
and other considerations.
As I said in the beginning, our top priority is the
security and safety of every American. And that will continue
to guide us, going forward.
That was just a brief overview, but I look forward to
getting into more specific questions and more detail as I
respond to your inquiries. Thank you.
[The prepared statement of Secretary Ross follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Chairman BRADY. Thank you, Mr. Secretary, for your
testimony. We will now proceed to questions. Due to the time
constraints this morning, we have agreed to limit questions to
3 minutes. And I will begin.
Mr. Secretary, we have to get the exclusion process right
for both products and countries. So we make sure our remedies
are narrowly tailored and U.S. jobs aren't harmed. If these
exclusions aren't provided in a workable and timely way, this
could cost us U.S. jobs.
So, in my district, there is a big impact on energy. And
just one example, Grant Prideco is this great manufacturing
success in my district in Navasota, Texas, population 7,500.
They make premium drill pipe that is used in some of the most
technically demanding oil field applications in the world.
They send steel briquettes from Corpus Christi, Texas to
Austria, which creates green tubes that meet exacting technical
specifications that aren't available here from U.S. suppliers.
Those steel tubes come back to Navasota, and those 500 workers
thread them and improve them. They sell them, about 60 percent
of them, to American energy companies so they can compete. And
40 percent they compete with and sell around the world. They
have fierce global competition.
So Grant Prideco was planning to increase their workforce
from 500 to 1,000 employees, as the energy market improves. But
now those plans are on hold, due to these tariffs and the
exclusion process. Worse, because they could, under a 25
percent tariff, lose half of their sales and potentially face
shrinking that workforce.
So I did a town hall recently in their manufacturing plant.
These are great workers who do an amazing job, and this plant
is so important to that community. So if that--their product
isn't excluded, what do I tell them? Do I----
Secretary ROSS. Well----
Chairman BRADY. Well, just a second. Do I tell them China
is cheating, so you need to lose your job? That just doesn't
seem right.
I know you care about these manufacturing jobs. I know
President Trump is just passionate about protecting those jobs.
So will the exclusion process protect American workers like
that?
Secretary ROSS. I believe so. And, as you know, we have
posted the basis for product exclusions on the Commerce
website. We did that the other day, and we have already gotten
in 100 or 200 inquiries, and are literally processing them as
we sit here this morning.
As to eligibility, any individual or organization that uses
steel or aluminum products identified in the proclamations may
submit requests for exclusion. Those parties must use the steel
or aluminum articles in business activities in the United
States, as was the case with the parties you identified in your
opening remarks. And those could be construction, they could be
manufacturing, or they could be supplying those products to end
users.
A foreign-owned entity with a facility here with U.S.
employees is also eligible to petition for an exclusion. A 90-
day intergovernmental review period will encompass the 30-day
comment period. And we hope not to take 90 days for the
intergovernmental review.
The way that the mechanics will work is there is a 30-day
comment period followed by 15 days for agencies to have--to go
through the interagency process and comment, and then up to 45
days for Commerce to analyze and make a final determination. So
we anticipate no more than 90 days, and hopefully a good deal
less.
If a product is excluded, the exclusion request will be
made case by case, based on the information specific to the
individual or organization. It may include a single or multiple
foreign source. However, a total volume of imports will be
authorized for a specific time period. We do have the
discretion to make broader exclusions available to all
importers of those particular products if we find the
circumstances warrant it.
We will be looking for a--in order to not grant an
exclusion, we will be looking for demonstrated manufacturing
capability meeting the technical parameters for the specific
article in question. This could include idle capacity that is
being brought back online as a committed thing--not as a
prospect, not as a possibility, but as a commitment by the U.S.
company, as well as we will include new expanded capabilities.
The determination as to whether to accept or deny an
exclusion will be made public, and on a rolling basis. There
will also be a process for companies to file confidential
information that will not be made public. There will be an
appeal process if a company is denied an exclusion.
So that is a brief summary of the basic terms of the
product exclusion process. Yesterday you had Ambassador
Lighthizer here. I believe that he gave you a real description
as to how he visualizes the country exclusion process to be
done. We also are playing a supportive role in that, so I could
address that if you wanted.
Chairman BRADY. Thank you. Mr. Secretary, you have the
discretion, if a product is excluded, to make those tariffs
retroactive so there is not a harm on those U.S. companies.
Will you consider that as part of the process?
Secretary ROSS. Yes, sir. We have actually made a formal
request to the Customs and Border Protection that they do what
we call an escrow account.
Chairman BRADY. Yes.
Secretary ROSS. This is quite commonplace between us and
the Customs and Border Protection in the context of anti-
dumping and countervailing duties. So, while the volume here
might be a little more, that is a process with which they are
familiar. We think it is only fair, because it shouldn't be
that, just because there is a 90-day process, any manufacturer
who is granted relief should not be stuck for the tariff during
that 90 days.
Chairman BRADY. And I agree, Mr. Secretary. Thank you.
Mr. Neal.
Mr. NEAL. Thank you, Mr. Chairman.
Mr. Secretary, details as to how the tariffs and exemptions
for countries and exclusions for company-specific products and
how they are to be determined is really going to be critical.
Diversified Metals, as a Department of Defense supplier
with a facility located in my constituency, has raised concerns
about the impact of these tariffs on its business. Diversified
Metals provides key alloys used by the U.S. Navy in its
submarine program. The Navy has only approved one hot-rolled
bar mill, which currently is located in England.
It is important for you to know that there is currently a
good deal of uncertainty and confusion as to how the tariffs
will affect the Department of Defense contracts. Companies are
concerned that they will be required to pay tariffs, even if
the Department of Defense mandates that they source their steel
or aluminum from a foreign facility.
Now, this is where I think that there is an opportunity for
more clarification, and it relates to multilateral strategy.
How will the announced tariffs, after exclusions and
exemptions, ultimately provide relief to U.S. workers and
industries? And I think I am picking up on a point the Chairman
made on that.
And what is the Administration's vision for achieving a
multilateral, coordinated strategy for counteracting the global
over-capacity crisis that has harmed the steel and aluminum
industries?
Secretary ROSS. Well, those are several questions. I will
try to respond to the ones that I can recall. And if my memory
is faulty, perhaps you can remind me.
As you have seen, the UK--and, for that matter, the whole
EU--I believe you have seen the release that Commissioner
Malmstrom from the European Commission and I put out jointly
yesterday. We have had very constructive discussions not just
on steel and aluminum, but on potentially a broader range of
topics. And our hope is that, just as we are in the midst of
negotiation with Canada and Mexico on steel and aluminum and on
other topics, our hope is that, for the first time, this will
bring collective action on the part of the world community to
deal with the ultimate problem, which is the over-capacity,
particularly in China, but not exclusively in China.
So, we are hoping that there will be extensive
negotiations, bilateral or multilateral, as a result of this.
Mr. NEAL. Mr. Chairman, I just would emphasize as you
close, the multilateral aspect of this is really going to be
critical. Thank you. Thanks, Mr. Chairman.
Chairman BRADY. Thank you, Mr. Neal.
Mr. Johnson, you are recognized.
Mr. JOHNSON. Thank you, Mr. Chairman.
Secretary Ross, welcome.
Secretary ROSS. Thank you, sir.
Mr. JOHNSON. Let me begin by saying that I strongly oppose
the tariffs on steel and aluminum imports. You know my home
State of Texas leads all States when it comes to importing
steel and aluminum products. So it is a big deal for Texas.
As a combat veteran who fought in two wars, I am deeply
troubled that section 232, which is intended to protect our
national security, is being misused to advance a protectionist
agenda.
Mr. Secretary, there is simply nothing to suggest that the
imports pose a risk to our national security. Instead, these
tariffs pose a serious risk to our economy, they could trigger
a trade war, and they may damage our relations with key allies.
In the Department of Defense memo that Secretary Mattis
sent to you, he said--and I quote--``DoD does not believe that
the findings in the reports impact the ability of DoD programs
to acquire steel or aluminum necessary to meet national defense
requirements.''
Mr. Chairman, I would like to submit that memo for the
record.
Chairman BRADY. Without objection.
[The submission for the Record of Hon. Sam Johnson
follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. JOHNSON. Thank you.
Mr. Secretary, in light of this statement from the
Secretary of Defense, why did you and the Administration ignore
the view of Secretary Mattis and still go ahead with the
tariffs?
Secretary ROSS. Thank you, sir. The letter has many more
words than were described in the brief excerpt you made from
it. Let me read the part of it that is in the second paragraph:
``Regarding the December 15, 2017, reports on steel and
aluminum, Department of Defense believes that the systematic
effect of unfair trade practices to intentionally erode our
innovation and manufacturing industrial base poses a risk to
our national security. As such, DoD concurs with the Department
of Commerce's conclusion that imports of foreign steel and
aluminum based on unfair trading practices impair the national
security.''
Then he goes on to say about the immediate request that--
the difference in the paragraph you read and the paragraph I
read is simply this: The threshold under section 232 is whether
or not the imports threaten the national security. The
threshold is not that it actually impinges right now on
national security, sir. And that is why the Department of
Defense specifically said it concurred with our conclusion.
Chairman BRADY. The time has expired. Thank you, Mr.
Johnson.
Mr. Levin, you are recognized.
Mr. LEVIN. Welcome, Mr. Secretary. Welcome. I want to
review quickly what seems clear. There has been a steel glut,
also aluminum. China, the main source of it. China has used
steel and aluminum as an export platform. State-owned
enterprises, subsidization, has been the failure of action in
this country and abroad.
As far as I know, there has not been a single hearing since
the Republicans took over on steel. We wrote letters urging
action and the Administration in the past also settled for
talk.
Anti-dumping and countervailing duty--I went to Geneva to
save them years ago. They were saved, but they are not enough.
So the main victim has been the United States, our
companies, our workers. And there has been an impact--
potentially, at least--on national security.
So I want to press you. What, in view of these clear facts,
including inaction by so many of our colleagues on the
Republican side, what is the strategy? What is the main
objective? Is it the tariffs, or is it the tariffs to force
global action?
I assume it isn't NAFTA. As we have discussed, you have to
step up to the plate on NAFTA, and they are allowing Mexico to
use suppressed wages as a weapon to attract industry.
So briefly, with all these exceptions, is it a global
response that is your aim, essentially?
Secretary ROSS. It is, indeed. The reason that we need to
take this kind of action is several. As you may be aware, in
the normal course of events, the Commerce Department imposes
anti-dumping and countervailing duty actions on a variety of
products from a variety of countries. We, in fact, have 424
such orders outstanding right now, half of which, 212, relate
to steel. And of the 87 pending investigations, 38 also refer
to steel. A lot of the steel actions have been directly against
China.
And the end result of that is not quite what you might have
expected. Our direct imports from China have gone way down.
They are a fraction of what they were before all of these
actions were put in. But it is a little bit of a whack-a-mole
situation in that it suddenly appears from another country,
with or without some further transformation. And it appears,
either directly, or it appears because their over-production
dislodges domestic production from its own domestic market, and
that material is dumped independently by the other country into
world markets.
Chairman BRADY. Mr.----
Mr. LEVIN. So it is a global response that you are after?
Secretary ROSS. Yes, it is. Yes, it is.
Mr. LEVIN. Thank you.
Chairman BRADY. Thank you. Mr. Levin, time has expired.
Mr. Reichert, you are recognized.
Mr. REICHERT. Thank you, Mr. Chairman.
I thank you for being here, Mr. Secretary. I appreciate you
taking time to be with us today. I also appreciate the fact
that you have in your statement mentioned that you have
considered the undue negative effects downstream. But I know
you are hearing and I am hearing that businesses continue to be
worried about the negative impact of these tariffs on their
bottom line, and the timing and complexity of the exclusion
process.
And there is another issue, too. In sharing information as
they apply for the exclusions, they are concerned about
proprietary information that they are going to be sharing on
their applications that are too sensitive to share publicly.
Consumers are also worried, as you know. Families are
worried, who buy everyday goods and--that require steel and
aluminum, because they are anticipating that costs are going to
go up.
So there are a lot of issues I know that you are
considering.
These tariffs also set up the potential for retaliation by
our trading partners. And while I am especially concerned about
Washington State, I am concerned about the entire country.
While I agree that we must combat unfair trade practices, we
need to take a targeted approach and work in a partnership with
the global community on a solution.
And I want to touch on the question that Mr. Neal touched
on and give you the last minute and 30 seconds to hopefully go
into more detail. How does the Administration plan to
strengthen that relationship with countries now who are going
to be imposed with these tariffs that are not real pleased
about this process to create a coalition that is working
together to address the--really, the big problem is the tariffs
or--China over steel and aluminum.
So what is your plan, globally?
Secretary ROSS. Well, first, on the confidentiality
question, we do have our normal process. Any company that
wishes to submit proprietary information, it will be treated as
such and will not be disclosed publicly. So that is a normal
thing in AD and CVD that will apply equally here.
Second, as I believe Ambassador Lighthizer probably alluded
to yesterday, part of the discussion that we will be having
with countries for their exclusion is the very topic what will
they do to be cooperating with us against the global
overcapacity problem.
The problem is enormously severe. I will give you two data
points. China's excess capacity exceeds our total capacity.
China produces in 1 month about as much steel as we produce in
a year. So it is way, way out of proportion, when you consider
that they are the second-largest economy, but vastly the
dominant producer of steel in the entire world.
Chairman BRADY. Mr. Secretary----
Secretary ROSS. So it is a global problem, and it is also
illustrated as a global problem by the fact that, of our steel
orders, they are not all against China. They are against 34
different countries. So it is----
Chairman BRADY. Mr. Secretary, I apologize. The 3 minutes
goes so fast and we have so many Members who want to question.
Secretary ROSS. Sorry.
Chairman BRADY. Thank you.
Mr. Doggett, you are recognized.
Mr. DOGGETT. Thank you very much, Mr. Secretary. If I
understand correctly, you presented President Trump with three
alternatives to implement this policy on aluminum. One of them
was global, one of them was targeted. Is that correct?
Secretary ROSS. Yes, that is.
Mr. DOGGETT. Okay----
Secretary ROSS. The targeted one encompassed just China,
Hong Kong, Russia, Venezuela, and Vietnam.
Mr. DOGGETT. Right. And if that alternative had been
adopted, Russia, for example, would be paying three times as
much tariff as it will under the approach that was accepted.
Secretary ROSS. Yes. The targeted approach, had it been
adopted in its original form----
Mr. DOGGETT. And that is----
Secretary ROSS [continuing]. Would have put very high
tariffs on a very----
Mr. DOGGETT. Although five countries----
Secretary ROSS [continuing]. Small number of countries.
Mr. DOGGETT. And that really goes to a broader concern that
I have. That would have permitted other countries, our allies,
to maintain the quota of aluminum that they had last year.
Secretary ROSS. Yes, sir.
Mr. DOGGETT. Instead, President Trump rejected that
alternative that would have imposed higher tariffs on Russia
and these other four countries. Russia, of course, has the
second-largest aluminum producer in the world. That is headed
by someone who has repeatedly been denied visas to come to the
United States because of his connections to criminal
organizations.
And I just have to, frankly and respectfully, question your
comment that the President made clear that his first priority
is to keep America safe. I don't see anything indicating that
he is particularly interested in keeping our country safe from
Russia. Indeed, I have to concur with the comments that I am
sure you are familiar with that Barry McCaffrey, a decorated
four-star United States Army General, combat veteran from
Vietnam, recipient of three Purple Hearts, said within the last
few days: ``Reluctantly, I have concluded that President Trump
is a serious threat to U.S. national security. He is refusing
to protect vital U.S. interests from active Russia attacks. It
is apparent that he is, for some unknown reason, under the sway
of Mr. Putin.''
Now, I know you don't agree with that, but we have had--
since he made that very powerful statement from someone who is
clearly an American patriot, we have had President Trump
respond to the attempted murder in Great Britain and to the
continued Russian assault on our election system by calling and
congratulating President Putin. He has insulted people all over
this country, but the one person he has never a bad word about,
a questionable word about, is Vladimir Putin.
And it appears that Mr. McCaffrey, General McCaffrey, has
summed it up rather well, and that, if anything, the approach
taken with these aluminum and steel tariffs is very consistent
with the approach of always coddling Russia and never calling
it out for its attempt to steal our democracy.
Chairman BRADY. Thank you. The gentleman's time has
expired.
Mr. Roskam, you are recognized.
Mr. ROSKAM. Thank you, Secretary Ross. Getting back to the
232 process, it is my understanding that the product exclusion
request only allows an exclusion for one product at a time,
even if the only difference in that product is size, such as
the different diameters of steel wire.
I represent suburban Chicago, and we have a lot of small
manufacturers. And they will have--you know, one company, as
you know, will have hundreds and hundreds of products. How do
you contemplate that? That seems foolish, as it is presented
now. I would assume that there is more to this story, and that
you are not requiring a company to submit hundreds of
petitions.
Similarly, maybe you could also answer this. Surely there
is a way for industry groups to join together, you know, just
in terms of expediting this. Could you speak to that?
Secretary ROSS. Right. Well, first of all, we can grant
blanket requests, in that if it is pretty obvious from the
request that we have received that a particular item is
generally regarded as being unavailable, we can grant blanket
requests.
Now, that won't be the rule, but there will be situations
where we will. And we could do that based on the submission of
an individual company. So in the normal course, we think that a
lot of the requests will be extremely specific products that
are peculiar to a particular end use, and maybe one or two
companies needing the material. Ones that have broader impact
we do have the ability to deal with in a broader way.
But we need specificity, because in order to tell Customs
and Border Protection how to implement, we need the Harmonized
Code number of the individual product. That is the only way
that they can track it. So while I would have preferred a
somewhat less bureaucratic system, it is not an alternative
that we really have. It is the only mechanical way that we can
implement.
Mr. ROSKAM. I think that is something to take in. I mean,
the burden locally will be enormous if that is not spoken to
and remedied in some way. I am sure that is not lost on you,
but there were ashen-faced looks around the room recently at a
company that I was visiting not long ago when they were
thinking about this process. And it just seemed completely
overwhelming.
I have made my point; I yield back.
Secretary ROSS. Well, it is the best we could do, sir.
Chairman BRADY. Thank you. To balance this out, we are
going to go to two-to-one questioning.
Mr. Buchanan, you are recognized.
Mr. BUCHANAN. Thank you, Mr. Chairman, and thank you, Mr.
Ross, for being here today. And thank you for your leadership.
Let me ask you, talking about other topics, Florida, it is
about a $12 billion industry in terms of the economic impacts--
fruits and vegetables. I talked to a grower yesterday. You
know, in the last 2 years--I know we put an agreement in place
on anti-dumping. I think we are looking at another one. It has
impacted us, our business. The industry is down 22 percent.
Yes, we are down 22 percent, Mexico is up 14. That's a 34-point
spread. It has a huge impact, I will tell you, on jobs and a
lot of businesses throughout Florida. Fruits and vegetables,
but I am--in terms of tomatoes in my region, it is one of the
largest--we are one of the largest growers in that. And many of
them are going to have to close up--or that is what they claim,
anyway.
I was interested in your thoughts about what we are doing
on anti-dumping. I know we are talking about steel and
aluminum, my colleagues, but I am interested in this aspect of
it while we have you here today. And I will mention we have the
same growing season as Mexico, so we are very concerned as we
work through this NAFTA deal.
Secretary ROSS. Right. Well, as you know, before moving to
Washington, I was a Florida resident, and I met extensively
with the tomato growers and other growers there.
And it was partly at my suggestion that we included in the
NAFTA talks the question about seasonality of measurement, as
opposed to just annual measurement of the import situation of
those products. I don't know that that has been resolved yet in
the NAFTA discussions, but we are keenly aware of the problem
of seasonality, and the potential that that has to lead to
very, very disruptive end results for the growers. So we are
focusing on it.
Mr. BUCHANAN. Are you working on an additional anti-dumping
requirement or something? Do you know where that might be? I
know something got put in place a couple of years ago, but
people are concerned what was put in place is not working. And
under the current negotiation, is that something that is being
considered?
Secretary ROSS. Yes, at the request of the growers in the
States, particularly the Florida growers, we have initiated a
reset of discussions of the present arrangement with the
Mexicans.
Mr. BUCHANAN. Thank you, I yield back.
Secretary ROSS. And that is underway as we sit here.
Mr. BUCHANAN. Thank you.
Chairman BRADY. Thank you.
Mr. Kind, you are recognized.
Mr. KIND. Thank you, Mr. Chairman.
Mr. Secretary, thanks for being here with us today. I am
sure we are going to learn more--I am over here.
Secretary ROSS. Oh, sorry.
Mr. KIND. I am sure we are going to learn more about the
Administration's 301 decision against China later today, when
you make that announcement. And there is no question China has
not been a good actor in many of the rules of trade.
My problem, however, has been the unilateral approach. I am
not convinced that China, when they are mis-practicing trade
and not abiding by the rules, is only doing that to
discriminate against U.S. interests or U.S. companies. This is
on a global basis. And there is an opportunity for you, this
Administration, to work with us to try to build a multilateral
coalition to isolate China, which I think would have a more
meaningful impact, from China's perspective, rather than just
this Administration, this country taking action. So I encourage
you to explore that with us and work with us in order to do
that.
But back to the 232 national security decision on steel and
aluminum, you know, many of us have been concerned about the
whole process from the beginning, that it was ill-considered,
chaotic, confusing, the classic case of shoot, fire, aim. Now
we are trying to backfill exemptions for products and for
countries that are still ill-defined and confusing.
The one thing businesses in America hate most is
uncertainty. Many of them are complaining that the process is
going to be very narrow and tedious. Our friends and allies
that this may apply to are scratching their heads, wondering
why they potentially could be singled out.
And, again, it is the unilateral basis that this
Administration has decided to pursue with trade policy that is
very troubling. We do need friends and allies around the globe.
We need to be a leader in developing a rules-based global
trading system. Leading, rather than following or isolating, as
the case may be.
As an example, on 232 and the national security reason, I
and Representative Mike Coffman sent you, along with 44 other
bipartisan Members of Congress, a letter last year talking
about certain aluminum that has absolutely no national security
application to be exempted. The rolled can sheet, the primary
aluminum, I even had a conversation with you following up with
a letter, and I feel we didn't get an adequate response, even
though it is currently on the list.
And if this is the type of feedback or the type of
partnership that we are going to get from the Administration,
coming to us asking for a 3-year extension on TPA is going to
be a pretty heavy lift because of the lack of responsiveness.
And if we are going to go down this road of invoking 232
for national security implications, especially with products
that have absolutely no application, what is to prevent other
countries from invoking their own national security reasons to
exclude our exports?
I mean, I have heard arguments from Europe all the time to
justify trade barriers to our agriculture products because of
the food security system that they were trying to protect. And
this is an area of the world that knew massive starvation
during two world wars. So that is problematic, that other
nations now will see a door open to them to invoke national
security to erect protectionist measures. And it is something
many of us are deeply concerned about.
Secretary ROSS. Well, I----
Chairman BRADY. Thank you.
Mr. Secretary, I apologize. Time is expired.
Mr. Smith, you are recognized.
Mr. SMITH OF NEBRASKA. Thank you, Mr. Chairman.
Thank you, Mr. Secretary, for being here. I represent the
number-one agriculture district in the Nation, so it certainly
stands to reason that I would share the concerns of my
constituents on the tariffs, and the various impacts that may
take place.
As you know, Secretary Perdue has said--or he mentioned
that agriculture and ag products are always the tip of the
spear in any type of retaliatory action. And I--let me just
suggest that our agriculture economy is certainly not in a
position to absorb any spears at this point, given the
sensitive nature of and kind of the downturn in the ag economy
that has been in place for longer than we would prefer,
certainly.
Can you reflect a bit on assurances you can give us that
the Administration has considered rural communities, rural
economies, and their--and our interests in considering what
impact the tariff moves might have?
Secretary ROSS. Well, as you know, I work very, very
closely with Secretary Perdue, and worked very hard on getting
the beef exports going again to China, worked very hard on
trying to open up some of those markets in South America, and
worked hard to deal with the sugar problem from Mexico. So it
is not that there is any lack of focus on trying to help
agriculture.
I will also mention, in the context of the question of your
colleague from Florida, the work that we have done trying to
work on the seasonal, as opposed to annual, measurement of
agricultural imports.
We have also put a lot of pressure on about sanitary and
phytosanitary non-science-based constraints that other
countries put on our products.
So it really wouldn't be fair to say that the
Administration has neglected agriculture. Agriculture has been
a very important part of our activity----
Mr. SMITH OF NEBRASKA. Sure, and I would reflect--I mean, I
would agree that the Administration, I think, has worked hard
for agriculture. I am wondering if there is any sort of
analysis that exists that could point to that recent action or
actions to come which will not actually harm or set us back on
some of the advances we have made more recently?
Secretary ROSS. Right. Well, in terms of retaliation, there
is no way to forecast exactly what a given party would do. But
what I would say is--the rest of the world cannot feed itself.
We have--we all know that. They really need imports from those
countries like the United States that are very good at
agriculture.
What that means, if a country tried to impose restrictions
on a particular crop from the United States, it probably would
raise their own cost, because there isn't a country in the
world who pays us one penny more for any of our produce than
the lowest price that it could get from somewhere else. Nobody
does us a favor.
Chairman BRADY. Thank you. The time has expired.
Mr. SMITH OF NEBRASKA. Thank you.
Chairman BRADY. Ms. Jenkins, you are recognized.
Ms. JENKINS. Thank you, Mr. Chairman, and thank you, Mr.
Secretary, for being here this morning.
Last spring, in a similar hearing to this one, I voiced my
concern to Ambassador Lighthizer about using national security
as a basis for trade restrictions, since this action could lead
to retaliation if another nation follows suit and restricts its
imports of U.S. products, like sorghum and soybeans, using the
same rationale.
While it is a good step to implement an exemption process
that many Members here requested for our allies and trading
partners following the proposed steel and aluminum tariffs, my
concerns have only grown, especially since other nations are
indeed preparing a retaliation list targeting farm products.
Secretary ROSS. Right.
Ms. JENKINS. Now, Mr. Secretary, you have made comments
recently about farm families and ranchers who--I quote--
``scream and yell when their nerves get rattled by the
Administration,'' and you mentioned that they even go so far as
to write to their Member of Congress. You may not be aware,
however, that the State of Kansas just last week declared a
statewide drought emergency for all 105 counties, or that
blizzards roll through at a moment's notice, or that we have
had multiple years of large wildfires, some which have blazed
an area many times larger than the entire District of Columbia.
Kansans depend on selling their products abroad. The value
of all Kansas ag exports total $3.7 billion, even with a State
with a population of fewer than 3 million Kansans. Ag
represents 7 of the top 10 exported products from our State.
This includes wheat, which is one of the second-most valuable
international exports from Kansas, trailing only our plane
manufacturing. And prior to NAFTA, Mexico imported an average
of 11.5 million bushels of wheat from the United States. After
NAFTA, we have seen a nearly tenfold increase to 110 million
bushels.
And on the national scale, half of the wheat grown in the
United States is exported, so half of growers' market is
foreign consumers.
So my constituents' livelihoods depend on both Mother
Nature and foreign markets. So I am just curious. Why do you
think American farmers and the ag industry are so nervous when
it comes to NAFTA or sudden tariffs? And do you know how many
American agriculture heartland--how much they depend on these
exports?
Secretary ROSS. I will answer very briefly. First of all,
there is no sign that any of these other countries have
practiced restraint before we invoke national security. They
are doing what they wish to do. Every other country that I am
aware of is much more highly protectionist than the United
States. They all talk free trade, and they all practice very
protectionist activities.
Chairman BRADY. Mr. Secretary, the--I am sorry. Again, the
3 minutes goes quickly. The time is expired.
Mr. Pascrell.
Mr. PASCRELL. Thanks for coming today, Mr. Secretary. When
you look at any chart of how close we are linked with China, it
becomes quite obvious. The G20 countries, they--with China as
the top five export destination, this is something we can't
ignore. When you look at the relationship between the--our S&P
500 and the Shanghai Stock Exchange composite, they are not
going to get rid of us and we are not going to get rid of them.
We know that the central problem here, in many countries
besides China, is subsidizing their production.
Secretary ROSS. Right.
Mr. PASCRELL. No question about it. And we have to zero in
on that. I think you would agree with that.
Secretary ROSS. Yes, I do.
Mr. PASCRELL. The over-capacity and the flood of cheap
imports from countries sometimes like China needs to be
addressed very, very closely.
I and many Democrats in Congress have a strong record on
calling out China for their trade cheating. It is on the
record. And we have passed bills to hold them accountable on
currency and on steel dumping. Republicans have not done much
of anything up to now to confront this issue. In fact, what we
have done is paid corporations and subsidized the corporations
to get out of the country. It is written in our budgets. That
is unacceptable.
They, the Republicans, passed a tax bill that promotes off-
shoring. So we are talking out of both sides of our mouths
here. We want to defend the American worker, and at the same
time we are making it easier for companies and corporations to
move. I don't think that this works at all.
I strongly support enforcement of U.S. trade laws. There
has been a lot of discussion about how the 232 steel and
aluminum tariffs that the President imposed may start a trade
war. No one wins a trade war. But I know one thing. Under
article 1, section 8, this Congress and the very people in this
room should have the most to say about what direction we go in
in trade. It is very, very clear.
Can you please explain whether these tariffs could trigger
a trade war, as you perceive it?
Secretary ROSS. Well, as I indicated before, there is no
indication that the other countries have practiced any
restraint before we did the action that we are about to take.
Whether they will respond and, if they do, in what form, no one
really knows. But I don't think that, whether we call it
national security or something else, is going to have any
impact whatsoever on the nature of their response. They are
going to respond in whatever they think will be the most
politically hurtful way to us.
Mr. PASCRELL. Thank you, Mr. Secretary, for your
forthrightness.
Thank you, Mr. Chairman.
Chairman BRADY. Thank you, Mr. Pascrell.
Mr. Paulsen, you are recognized.
Mr. PAULSEN. Mr. Chairman, just to follow up on my
colleague, Sam Johnson, when he had his interaction with you,
if you read further on the memo--the Secretary of Defense--it
is very clear that the Department of Defense is concerned about
the approach that is being taken here. It says, ``Therefore,
DoD does not believe that the findings in the reports impact
the ability of DoD programs to acquire the steel or aluminum
necessary to meet national defense requirements. DoD continues
to be concerned about the negative impact on our key allies
regarding the recommended options within the reports.''
But let me go this way, Mr. Chairman and Mr. Secretary.
Look, I don't believe this is the right approach to implement
these tariffs. I can't stress enough, though, the importance of
making sure we are limiting the impact of these tariffs on
metal-consuming companies and their workers who, you know, in
the end could be very less competitive globally by higher
prices. And having an exclusion process that is fair, and
grandfathering in existing contracts, is critical.
I am hearing from small manufacturers in my State of
Minnesota. I have Harvey Vogel Manufacturing Company. They are
located in Minnesota. They specialize in metal stamping and
fabrication. And they say they are already seeing pretty big
price increases from their suppliers because of the threats of
these tariffs coming into place.
And they also say their customers now are worried about
what the future holds. And for them, they are a company that
says the tariffs are now even probably the top trade issue,
aside from the uncertainty that they have had around NAFTA. We
are a border State and we have a lot of trade with Canada and
Mexico, obviously.
And then, as I mentioned yesterday when Ambassador
Lighthizer was here, R&M Manufacturing, which is also a
Minnesota small business, they have set contracts. They clearly
say they will not be able to re-negotiate with their larger
customers, regardless of material costs, which are going up.
So I just have a strong concern about lost manufacturing
jobs, just as happened historically, if history is our guide,
back in the early 2000s, when this was done before.
But, Mr. Secretary, can you just briefly dive into this a
little bit about--and explain maybe? Has the Department really
analyzed the broader supply chain economic effects that the
tariffs could have in terms of job loss downstream in other
industries, or on consumer prices, in general?
Secretary ROSS. Yes, we have. In fact, we handed out, I
believe, to each of the Committee Members a series of charts
showing the interaction between steel prices and aluminum
prices, historically, on auto production, on recreational
vehicles, on construction, on a whole variety of industries.
And we also have done our own analysis and have studied
analytical reports by various other parties and have come to
the conclusion that there, in the aggregate, will not be
material damage inflicted. Indeed, this is a very small segment
of the economy. The total tariffs that we were originally
talking about before any exclusions for countries or products
is less than one-half of 1 percent of the economy.
Chairman BRADY. Mr. Marchant, you are recognized.
Mr. MARCHANT. Thank you, Mr. Chairman. Thank you for being
here, Secretary Ross. There have been quite a few press reports
about the pending section 301 action. And I was hoping that you
could shed some light on the process within the Commerce
Department with regard to that investigation.
Secretary ROSS. The Commerce Department supplied a lot of
the analytical materials, as well as specific comments on
specific aspects of the 301 to Ambassador Lighthizer. The U.S.
Trade Rep, as you are aware, is the lead on 301 investigations.
But we put in endless hours on various of these specific
remedies that you will hear being announced, and participated
extremely actively in the inter-agency process with Ambassador
Lighthizer and with other parts of the Administration.
Mr. MARCHANT. So has Commerce conducted an analysis of the
supply chains that will be affected by those tariffs?
Secretary ROSS. By the 301s? Yes, sir.
Mr. MARCHANT. And----
Secretary ROSS. We have looked at--and you will hear when
the announcement is made--I think you will get a flavor for
what it is--the remedies that are being sought. And then we can
have a very fulsome discussion.
Mr. MARCHANT. Okay. So we will be--at some point we will be
able to get those studies.
Secretary ROSS. Well, at some point the tariff--the 301
action will be announced, and it wouldn't be very surprising if
this Committee and others would request that we come and
explain it.
Mr. MARCHANT. Did the analysis include an evaluation of
available capacity in other markets?
Secretary ROSS. Well, I can't answer that in detail without
getting ahead of the President and his announcement. But I can
promise you there is a huge amount of analysis that went into
it.
Mr. MARCHANT. I am assuming that Commerce believes that the
proposed tariffs will have the effect of pressuring China to
change its policies.
Secretary ROSS. Our--the hope always in tariff imposition
is to modify people's behavior, yes.
Mr. MARCHANT. Okay. Thank you, Mr. Secretary.
Chairman BRADY. Thank you, Mr. Marchant.
Mr. Higgins, you are recognized.
Mr. HIGGINS. Thank you, sir. The United States produces
two-thirds of the steel it uses. Steel production today is no
longer labor-intensive, it is capital-intensive. It is through
innovation. Steel is being made that is cheaper, lighter,
stronger, and cleaner. China produces only about 2 percent of
the steel used in the United States. So I think this debate is
a small piece of a much larger problem.
Mr. Secretary, you are known throughout all the financial
journals as being a big global thinker. You are one of the most
influential global thinkers in America. And when you look at
the United States-Chinese economic relationship, it is a $600
billion relationship, annually. There are 275 Chinese students
who are studying in America, 25,000 American students studying
in China.
Last year, Chinese investment in the United States for the
first time exceeded United States investment in China. China is
number one in patent production, which is an important
indicator of future economic growth. But it is a place that
America held for over a century. We got overtaken by China. We
got overtaken by China.
China is moving from a manufacturing assembly economy to a
knowledge-based economy.
People here are always whining about China, Democrats and
Republicans. They cheat on their currency, they treat their
people poorly, they have a horrible human rights record. Their
water and air quality is deplorable. But you know what they do?
They invest in the growth of their own economy.
China just invested or is investing $1 trillion to open up
the Chinese economy to 60 countries in Europe, in Africa, in
Asia, and Latin America, $1 trillion. They are positioning
themselves for future economic growth. We have an
infrastructure bill that is $200 billion over 10 years. It is
equivalent to the amount that American taxpayers financed for
the rebuilding of Iraq and Afghanistan.
Sir, you have a global vision. Please admonish this
President and this Administration to do better to position the
United States to compete, because the United States can compete
effectively with any country in the world, so long as there is
a level playing field. What are your thoughts?
Secretary ROSS. It is not quite correct, sir, to say that
Chinese exports of steel and aluminum are as limited as you
indicated. As I mentioned before, they dislocate a lot of
production from other countries to us. They also veil the
exports to us through transshipment with or without
additional----
Mr. HIGGINS. Respectfully, sir, it is still a small part of
a much larger problem. But I respect your----
Secretary ROSS. Well, it is. The problem is huge. And the
232 actions are only part of a mosaic for dealing with it. You
will hear more about China--a lot more--in the 301.
Chairman BRADY. Time has expired.
Mr. HIGGINS. I yield back, thank you.
Chairman BRADY. Mrs. Black, you are recognized.
Mrs. BLACK. Thank you, Mr. Chairman.
And thank you for being here, Mr. Secretary. So much has
already been said about China, we all feel that way, that we
must--it is past time that we must do something about their
operation and the way in which they operate, unfairly
subsidizing state-owned enterprises and throwing barriers up
for American products.
And so I want to go back again to what has already been
talked a little bit about, and that was--or talked a lot about,
and that is the tariffs on steel and aluminum. In particular,
in my district, Electrolux has a plant in the district of
Springfield, which produces kitchen products. And this is a
rural part of Tennessee. The plant employs over 2,500 full-time
employees, which are drawn from all over the area. And the type
of manufacturing plant--jobs that this plant provides really
are sought not only by communities here in our country, but
also all over the world. So, in short, this plant is very
important to Springfield and the region that I represent in
Tennessee.
Earlier this year, Electrolux had announced that they were
investing $250 million into a Springfield plant. That $250
million represents a huge investment in our community. They
now, because of their concerns over the steel, have held up
that investment and are not moving forward.
So my question is what can I say to them, what can I say to
the leaders of Electrolux to help to allay the fears that they
have so they will once again invest in the community? And what
should be the process that I tell them, moving forward, could
help them allay those fears?
Secretary ROSS. Well, I certainly agree with you that fear
of the unknown is one of the worst fears that people can have.
And uncertainty about environment, the regulatory environment,
the tariff environment, is a huge concern to business people.
I think when you see the actual details of the President's
announcement, both on 232s and on the 301s, then you will be
able to see a much more clear picture of what is actually going
to happen. And I think it will clear the air a lot.
Mrs. BLACK. Well, that makes me feel a lot better because I
can tell you in these little rural communities it is very
important. And 2,500 full-time jobs is a huge loss in our
community.
Secretary ROSS. Surely.
Mrs. BLACK. Thank you, and I yield back the remainder of my
time.
Chairman BRADY. Thank you.
Mr. Kelly, you are recognized.
Mr. KELLY. Thank you, Mr. Chairman.
Mr. Ross, thank you so much for being here. In addition to
that, thank you for stepping out of a very successful and
comfortable life to come and serve your country. This is
incredible. Listen, I have great respect for everybody on the
dais, but there is nobody that has more depth and experience
and knowledge when it comes to steel and aluminum than you do.
One of the questions I do have for you--you referenced in
your opening remarks electrical steel, and we are down to one
producer of electrical steel in the country. I am very close to
that, and I mean within a half-mile of AK Steel. We produce the
finest electrical steel in the world and have thousands of
employees.
And the question comes up that, while that--the last
producer, in the product codes--and this is where I am trying
to understand them. You can help me with this, I am sure. You
know, AK is really--they are very supportive of the 232 remedy
that the President put in place, but they feel it has submitted
several product codes that are basically just allowing
electrical steel to be stacked, wound, and slit, and that
allows foreign producers to easily circumvent the 232 remedy.
So I know you are aware of these things, I just call it to your
attention. We would love to work with you on that.
The other point that I think we need to make is in
addition--many of us support the action the President took to
give Canada and Mexico special treatment. However, we can't
allow them or any future exempt country, for that matter, to
become a conduit for transshipment.
One of the other things--I know you are going to answer, we
have so little time to talk--thank you. I have sat here for 8
years and listened to everybody talk about what we should be
doing about this trade imbalance. You and the Administration
are the only ones that have actually done something. So actions
speak louder than words. Thanks for what you are doing. And I
really welcome any type of work we can do together to protect
that plant and make sure that we have electrical steel produced
in this country.
Secretary ROSS. Thank you. As you are aware, AK supports
our program.
Mr. KELLY. Absolutely, yes. I am. The only question I think
they have is on the stack steel, the electrical steel stack----
Secretary ROSS. Yes.
Mr. KELLY [continuing]. That can be slit and wound and
somehow put into the core of transformers.
Secretary ROSS. And that raises a good question. One of our
intentions is, as we locate potential sources of circumvention,
to bring separate actions against those. Because, as you know,
we have waged a lot of wars against circumvention already.
I am well aware it isn't just the steel, it is the end
product----
Mr. KELLY. Right.
Secretary ROSS [continuing]. Of the transformers that can
be the big problem, and subcomponents within it. And I promise
you we will not ignore that.
Mr. KELLY. Okay. And anything we can do to help, please let
me know. And I will give you the data that AK has given me, but
you probably had it long before I did.
But thank you so much for your service. Again, this is very
refreshing to have somebody that actually knows something about
this product and what is going on in the world, as opposed to
people who run for office who don't have a clue of what is
happening. Thank you.
Secretary ROSS. Thank you, sir.
Chairman BRADY. Ms. DelBene, you are recognized.
Ms. DELBENE. Thank you, Mr. Secretary, for being with us
today. I have an aluminum smelter in my district that almost
had to close, so I am definitely well aware of the issues of
Chinese over-capacity and how that has depressed global--the
global market and prices and undercut American workers and
businesses.
It is clear that something needs to be done to address the
problem of over-capacity. But, as many of my colleagues have
noted, it is extremely important that any action the
Administration takes is targeted specifically to the source of
the problem--in this case, definitely China.
In order to truly address the problem of Chinese over-
capacity, we need to work with our allies like the EU, Japan,
and Korea, and use multilateral fora such as the G20, the G7,
and the OECD, to develop a coordinated strategy. Do you agree
with that?
Secretary ROSS. I believe we do have a coordinated
strategy. I believe I have tried to describe it. The exclusion
process is intended to do the fine-tuning that is necessary to
make sure that we minimize any unintended consequences.
Ms. DELBENE. But you met with Commissioner Malmstrom from
the EU recently. And would they feel like there is a
coordinated strategy happening?
Secretary ROSS. Yes. I think the actions we have taken will
produce coordination with other countries. You probably saw the
press release that she and I put out after our meeting and the
one that we put out the day before, jointly with my counterpart
from Germany. We think that the EU, in a whole variety of
different ways, is part of the problem.
Steel that comes in in the form of an automobile from
Germany is every bit as much a problem as steel that comes in
as steel.
Ms. DELBENE. A couple of quick questions. I have a
technical question for you. The President ultimately decided on
tariffs at 25 percent for steel and 10 percent for aluminum.
Will the Administration be updating those numbers, based on the
number of country and product exclusions that might come out,
and the impact that those have?
Secretary ROSS. As it becomes more clear what is the extent
of exclusions, both country and exemptions and product
exclusions, we will present to him the consequences of those
exclusions for the steel and aluminum industries, and he will
decide whether it warrants imposing further tariffs on the
countries that are still hit and on the products that are still
hit.
Ms. DELBENE. Thank you. And one quick question. Will there
also be an exclusion process on 301, similar to 232?
Secretary ROSS. I really don't want to get ahead of the
President on 301. He will be making an announcement in the
relatively near future, very near future. And that is the time
when we should have discussion.
Ms. DELBENE. Thank you.
Thank you, Mr. Chairman.
Chairman BRADY. Thank you, Ms. DelBene.
Mr. Renacci, you are recognized.
Mr. RENACCI. Thank you, Mr. Chairman, and Secretary Ross,
thank you for being here and for your testimony today. I would
like to tell you about one of the many great companies in my
district and their specific concern.
The MK Morse Company is a family business that consumes
steel in its manufacturing of saw blades. All of the
manufacturing is done in Canton, Ohio, by their 485 employees.
When possible, they source their raw materials domestically
because of freight costs, currency risk, lead time, and their
commitment to U.S. manufacturing. However, in many cases they
must rely on foreign sources for their high-speed, steel-edged
wire, steel strip back, or carbon steel strip, and hardened and
tempered steel.
Morse is one of the few saw blade manufacturing companies
remaining in the United States, but they do not produce enough
volume to attract the interest of U.S. steel companies. So they
are required to source some of their steel from our foreign
allies, whose steel mills focus on the saw blade industry, and
therefore are capable of producing materials to exacting
quality requirements.
Secretary Ross, my question for you is President Trump's
steel proclamation includes reference to chapters 72 and 73 of
the Harmonized Code, which are steel only. Saw blades are in
chapter 82, and are not referenced. This is why Morse believes
their competitors manufacturing outside the country will not
incur the tariff when they export their steel-based product to
the United States. And, frankly, I am concerned that companies
and positions similar to Morse may be incentivized to move
their manufacturing operations outside the country.
So, in your conversation with U.S. manufacturers, how are
you addressing the effect that these downstream implications
could have on U.S. manufacturers?
Also, what steps might the United States take to prevent
the potential issue from becoming a real problem?
And, finally, is there any message you would like to relay
to all the concerned manufacturers back in Ohio who make up the
State's largest sector by GDP?
Secretary ROSS. Well, as you know, I have been in a variety
of manufacturing businesses during my private-sector life. So I
am keenly aware of the problems at the various different levels
of the chain of supply. And those that are in the kind of
circumstance that you describe probably are the ideal
candidates, in concept, for exclusion.
I also mentioned that we are mindful that taking product to
another level of manufacture is one of the favorite ways that
people circumvent our activities. We intend to deal with those
in separate proceedings, anti-dumping and CVD proceedings.
So this is not the last that you will hear about our
solutions to the steel and aluminum problems, or any other
problem.
Mr. RENACCI. Well, thank you, Secretary Ross. And I, too,
want to thank you for stepping out of the private sector and
taking the position you are in. Thank you for your service.
Secretary ROSS. Thank you, sir.
Chairman BRADY. Thank you.
Mr. Meehan, you are recognized.
Mr. MEEHAN. Thank you, Mr. Chairman.
Mr. Secretary, I give you credit for taking on the issue of
Chinese dumping. But, of course, the implications of how you do
that affect a lot of American-based businesses. American Keg is
a developer of steel kegs, or aluminum kegs, the last in the
United States. It competes against foreign imports. The problem
is that its finished goods are not subject to tariffs, it is
just the raw materials coming in. So they are now at a
competitive disadvantage.
I was intrigued by your comment about an automobile that
comes in with finished steel or manufactured steel as another
way of getting into the country. Are we going to be able to
deal with companies that are going to be impacted like this,
like American Keg, who will--are looking at laying off workers
because a foreign keg can come in now at a disproportionate,
you know, cost?
And let me ask, as well--one more that is just
industrywide. I have Ball Manufacturing, another steel company
in my district that uses the sheet aluminum to make beer cans.
Now, they will be one of a number of companies, but that
industry alone could be looking at 1,500 applications to you
just for can manufacturers.
How can we simplify it so we can do it by industries or
things like that, so that you have the capacity to be able to
contemplate these and help create a level playing field for
all?
Secretary ROSS. Well, as I mentioned in response to an
earlier question, we have to go by Harmonized Codes, because
that is the only way the Customs and Border Protection can
implement. So, unfortunately, we have to go number by number.
And, literally, some of these codes are 10 digits long. But
that is what they need for their computer system to be able to
implement.
On the specific question of----
Mr. MEEHAN. Well, can trade associations and others talk
for similarly situated businesses, so a determination could be
made that then could be applicable to other kinds of similar
businesses?
Secretary ROSS. Well, as I mentioned, if we get an
individual request from an individual company that is truly
representative of an industrywide problem, we can deal with it
on a broader basis. The powers delegated under the proclamation
are quite broad.
As to beverage cans themselves, as you are aware, it is my
view that these tariffs, even forgetting the exclusions and
exemptions, will have a trivial effect, a fraction of one penny
on a can of Campbell's soup, on a can of Budweiser, on a can of
Coca Cola. And it is similarly small increments on many other
things.
So that doesn't answer all the problems, but I think we
need to put it into perspective. The total metal content of a
can is two or three pennies, depending on the can size and the
particular material used. So putting a tariff on a portion of
that, it really is relatively small in the overall scheme of
things.
Chairman BRADY. Thank you, Mr. Meehan.
Ms. Chu, you are recognized.
Ms. CHU. Secretary Ross, I am going to drastically change
the topic here, and ask a question that has been asked of my
office nearly every day, and that is about the census.
The Census Bureau, of course, is under your purview, but it
has been reported that the Department of Commerce is
considering asking--adding a citizenship question to the 2020
Census. And there is a lot of worry by immigrant stakeholders
that adding this question will create a lot of fear, that many
immigrants will fail to respond to the entire questionnaire,
fearing that their legal status will come under scrutiny. There
are many that argue that the numbers reported from the census
will be more inaccurate, and that it will be more difficult to
provide benefits and resources for low-income communities who
are afraid to be counted.
In fact, I have heard from many entities, including the LA
County Board of Supervisors who unanimously wrote to Congress,
urging opposition to the inclusion of the citizenship question,
highlighting that LA County already faces great challenges in
counting minorities, immigrants, and hard-to-survey
populations.
And in the 2010 Census, more than 113,000 Latino children
in California and 47,000 Latino children in LA County were not
counted, according to one survey that was done.
So these inaccuracies make it hard and difficult for our
government to administer important Federal safety net programs,
such as WIC, SNAP, and TANF. Can you tell me whether the
Department of Commerce plans to include the citizenship
question in the 2020 Census?
Secretary ROSS. The Department of Justice, as you know,
initiated the request for inclusion of the citizenship
question. We have been talking on the phone and received
written correspondence from quite a lot of parties on both
sides of that question. There are many, many subquestions about
accuracy, about suppression of responses that we are taking
into account.
We have not made a final decision as yet, because it is a
very important and very complicated question. We will make a
decision by March 31st, which is the date on which we are
required to report to the Congress the final questions for the
2020 decennial census.
Ms. CHU. And I understand that this question has not been
tested, which is usually the tradition with the Census Bureau
also. I wanted to know whether you have factored in the
additional cost of adding this question, this untested
question.
Secretary ROSS. The cost is one of the considerations. The
comparison with the American Community Survey and annual
sampling, which does ask the question, is another
consideration. There are probably 15 or 20 different, very
complicated issues involved in the request. Because it is from
the Department of Justice, we are taking it very seriously, and
we will issue a fulsome documentation of whatever conclusion we
finally come to.
Chairman BRADY. Thank you. Mr. Secretary and Members, we
have 2 minutes left in the first of four votes. This is an
important hearing. We will reconvene, Mr. Secretary,
immediately after votes. Thank you for your patience.
The Committee stands recessed until immediately after
votes.
[Recess.]
Chairman BRADY. The Committee will come to order.
Thank you, Mr. Secretary, for your patience during the vote
series. We will resume with the questioning by Mrs. Noem.
You are recognized.
Mrs. NOEM. Thank you, Mr. Chairman, and thank you, Mr.
Secretary, for taking the time to be with us today.
In South Dakota we have a lot of pride in handling tough
situations. We are pretty remote, so our transportation costs
are pretty high. We consume a lot of energy, because we don't
have a lot of options. And we also deal with a lot of tough
weather. And so we know, when it comes to agriculture, which is
our number-one industry in this State, that it provides 20
percent of our State's jobs. And it explains why so many of my
constituents are really concerned about the tariffs in section
232, and what retaliatory measures could be taken against our
American goods.
But, Mr. Secretary, their biggest concern--because I am a
lifelong farmer and rancher, and so these are my people and my
family and my community members, everybody across the State--
what concerns them is what appears to be a lack of concern on
your part about what these measures--how they could impact the
ag economy.
And just this last week you said that we should judge
results, instead of looking at theories. But I want to point to
an example which proves that my constituents aren't just scared
of theories.
On January 22nd the Administration announced new tariffs on
washing machines and solar panel technology. Then, on February
4th, less than 2 weeks later, after the Administration's
announcement, China launched an anti-dumping and anti-subsidy
investigation into imports on American sorghum.
Also, the Wall Street Journal reported yesterday that China
is already targeting soybean and live hog exports for their
next action. And it is not just happening with China. The
European Union also is featuring agriculture in its draft
retaliation measure list for the section 232 tariffs.
And with soybeans being 27 percent of my State's economy,
we also know that it is $1.3 billion of exports out of South
Dakota in 2016, but Brazil and Argentina, they had less than 15
percent of the export market worldwide back in 1980. Now they
have over half. We know they are ready and standing, waiting to
take up any kind of market space that opens up. And that is
what the big concern is for a lot of my producers.
So with all of these new tariffs that are being put into
place, I would really like to know whether or not there is a
lot of time being spent by the Administration, by you, and by
your individuals that are--serve under you on what kind of
impacts this could have on agriculture, considering we are
already in a devastating commodity market, we are already
facing huge challenges in agriculture. And now, if we have some
of these measures going forward from other countries, I don't
know if we will survive.
Secretary ROSS. Well, we are well aware of the potential
problem. It is something we are giving great consideration to.
And you will be hearing a little bit later today more about the
actual exemptions, the exemption process for countries from
232, and you will be hearing later today more details about the
301. So pretty soon some of those questions will be answered.
Mrs. NOEM. Okay. I would encourage you to keep agriculture
in the forefront of your consideration, considering----
Secretary ROSS. We certainly are----
Mrs. NOEM [continuing]. They are in such tough times.
Secretary ROSS [continuing]. And if I lapse at all in
thinking about it, Sonny Perdue is very aggressive at making
sure I pay attention.
Mrs. NOEM. Thank you. I appreciate that, and I yield back.
Chairman BRADY. Thank you.
Mr. Holding, you are recognized.
Mr. HOLDING. Mr. Secretary, thank you for being here, and
thank you for your service.
We all know there are products that are unfairly traded,
and the Administration is right to target those unfairly traded
products. On the other hand, there are products that are traded
fairly, and which pose no national security risk. And I would
hope the process is as efficient as possible in exempting these
products. And I commend the Administration for trying to tackle
unfairly-traded goods, but we need to be careful in that
fairly-traded goods aren't caught up in the mix and subject to
increased tariffs.
And there was one particular instance on a product that you
and I have spoken about before. We get some specialty steel
from the United Kingdom that is used in our nuclear submarine
program. And even though the 232 investigation was initiated
under a national security argument, this is a case, this UK
steel nuclear submarine case, where it would actually, I
believe, harm our national security to have that product
subjected to higher tariffs.
So, I just call upon you to comment on this case. I believe
you are familiar with the factory in the United Kingdom that
produces this specialized steel, and I believe you are aware of
how it is used in our submarine program. And if you can,
comment how the process that you have envisioned, that you are
laying out, could possibly apply to a situation like this.
Secretary ROSS. I am quite familiar with the steel
situation in the UK. As you may be aware, when I was in the
private sector I tried to buy the company----
Mr. HOLDING. Yes, sir.
Secretary ROSS. I am quite familiar with its product line.
I think you are also aware I issued a joint press release
with Commissioner Malmstrom yesterday outlining that we had had
very constructive discussions, and I am optimistic that the EU
will turn out to be a negotiated solution. And you will hear
more about that a little later on today.
Mr. HOLDING. Well, I thank you. And the--I appreciate the--
working with the EU. And I would also like you to keep in mind
that once the United Kingdom leaves the EU, that it will be our
finest and best bilateral relationship on every level, from
economic to military.
Secretary ROSS. Well, we are keenly aware of the special
relationship between the United Kingdom and the United States,
and it is not my intention to do anything to disadvantage them
in the context of Brexit.
Mr. HOLDING. Thank you, Mr. Secretary.
Chairman BRADY. Thank you.
Mr. Smith, you are recognized.
Mr. SMITH OF MISSOURI. Thank you, Mr. Chairman.
Secretary Ross, thank you for being here, and thank you for
your thorough--your great deal of work on the 232
investigations.
As you may remember, I was with you back in the spring of
last year, when the President signed the Executive order to
look into the 232 investigations for aluminum. And after
looking through your report, it followed through with what I
had been asking for a couple years. And the Obama
Administration refused to even look at it.
In 2000, as your report also noted, we had 22 aluminum
smelters, 22. And just here recently, we have two fully
operational ones, and only one of those uses the high purity
aluminum that is needed for our defense, for our naval vessels,
for our aircraft, to protect Americans. And that is what your
report provided, and I appreciate that.
But I also want to tell you that, the day after that, our
President issued these protections. I was able to stand in the
Bootheel of Missouri, where an aluminum smelter had closed in
March of 2016, and where we lost hundreds of jobs because they
couldn't compete with the illegal practices of China, to
announce that, because of the President's actions and other
actions, 450 new jobs--with the possibility of up to 900--in a
district that the median household income is $40,000, and the
jobs will average $64,000 a year.
So thank you, Secretary Ross, for doing what is right.
And I don't want to operate like some other Members of
Congress by broadcasting my biggest concerns of how other
countries may retaliate against us. That is the worst possible
thing that we can do. But what I will ask you to do is to look
into some countries, such as India, where they over-subsidize
their agriculture products, like rice and other grains, that
definitely is to the detriment of our farmers. I believe in
free trade, but it has to be fair trade. And in order to make
sure we have free trade, we have to punish those people who are
in breach of contracts.
And I appreciate your Administration in working forward,
and I just want to say thank you. I am not going to target you,
I just want to say thank you, Secretary Ross.
Secretary ROSS. Well, thank you. I am pretty familiar with
the Indian situation. I had an office there for 6 or 8 years in
Mumbai. So I understand quite a bit about India.
Chairman BRADY. Thank you.
Mr. Rice, you are recognized.
Mr. RICE. Mr. Secretary, again, thank you for being here
today. And thank you, sir, for taking on this job. Your
experience and your intelligence in pursuing this is certainly
to the benefit of our country and to the American middle class.
You see, I focus on American competitiveness and on the
middle class. And it is obvious, when you look at the numbers,
that the American middle class has shrunk, and makes about the
same amount of money today as they did in 1990. And I think
that a lot of that problem is because we allowed our country to
become a competitive--our tax code. We have worked on that. Our
trade policy, and you are working on that. And so I applaud you
for it.
I know there are people who are concerned about the effects
of these tariffs, and they should be. And it is complicated.
But I am glad you have taken it on, because nobody denies that
the American middle class hasn't suffered because of unfair
trade practices.
So I just wanted to give you the floor to talk about how
you think, in the big picture, that this will affect the
American middle class. I have two steel mills in my district.
One of them closed, and they are reopening partially because of
these proposed tariffs. And I have other people who are
affected in other ways. Uncertainty, as you said, is a big
fear. So it is important to clear that up. I wanted to give you
the floor to talk about those things and how you think this
will affect the American middle class.
Secretary ROSS. Well, a lot of the purpose of our trade
practices has been to encourage companies to stay in the United
States or come back, or foreign companies to come in. And when
I was in Davos, the finance ministers of a number of the
European countries were actually complaining about our new tax
thing, saying they think maybe it is an unfair trade practice
that we are cutting our taxes.
And I said, ``Well, maybe you should follow suit.'' And it
was not well greeted, because the particular ministers were not
of a mind to cut taxes.
The Administration is doing everything it can to reassure
and to assure current American manufacturers. And I am
heartened by the fact that, while there was a lot of
controversy over the solar panel 301 decision, reality is
plants are reopening here, the sky has not fallen, and we have
to take some risks in order to change the terrible practices
from before.
Many of these other countries have been able to victimize
us for too many years, and it is taking a little while to
adjust to the fact that it is not the same relationship
anymore.
Chairman BRADY. Time has expired.
Mr. Schweikert, you are recognized.
Mr. SCHWEIKERT. Thank you, Mr. Chairman.
Mr. Secretary, the joys of trying to do this in 3 minutes.
So my first item is just an inherent concern--and you see it in
the Wall Street Journal and others--is that as tariffs move
toward the bulk commodity side, that the fabrication side gets
done offshore. And being from Arizona, where we do lots of very
specialized fabrication for aerospace, for technology, allay my
concerns.
Secretary ROSS. Right. Well, I handed out some charts to
the Committee showing the trends in commodity prices of steel
and aluminum versus output in the consuming industries. And I
think you will see there is relatively little correlation
between the two.
Mr. SCHWEIKERT. Mr. Secretary, in having looked at the
charts, I respect the concept saying, hey, the input cost did
not change much, but that does not change the incentive for the
country that we believe is cheating by central planned over-
capacity, or what it may--saying, fine, we will just do the
finished product here, instead of shipping the bulk product.
I mean, it is a legitimate concern. I would love to just
find a much more elegant way to allay that concern that
cheating doesn't change to we will just finish the product and
send it to you that way.
Secretary ROSS. Right. Well, as I mentioned in response to
a question earlier, we are fully prepared, if someone
circumvents this by upgrading the product to a higher state of
manufacture, we will bring trade actions against it. We have
been very vigilant against circumvention.
Mr. SCHWEIKERT. And you just moved to my--in a brilliant
way, my second question. We are party to a number of bilateral
trade organizations, some that have authority over a pursuit of
over-capacity, you know, industrial policy, and we have
international agreements to dial that back and penalize that.
We have the WTO.
What is happening in our bilateral trade agreements also as
coupled with what we are doing unilaterally?
Secretary ROSS. Well, the WTO--there is the global steel
forum that has now met, I think, something like seven times.
But, unfortunately, as is so often the case with big public
fora, it has become a debating society without reaching any
conclusion. We think that, historically, a lot of time has been
wasted debating, rather than acting. This Administration will
be activist.
Mr. SCHWEIKERT. I will beg of you, even though it--the
system doesn't completely allow it--maximize transparency to
avoid disruptions and--in pricing and commodities. And my fear
is I spend a lot of time looking at futures, and I have seen a
lot of weird things. Whether it be individual profiteering, it
does create a cascade effect----
Secretary ROSS. Right.
Mr. SCHWEIKERT [continuing]. Throughout the--we will call
it the specialized fabricators.
Secretary ROSS. Well, the last way to help the steel and
aluminum industries would be to destroy their customers. So we
are very, very mindful of that.
Mr. SCHWEIKERT. Thank you, Mr. Secretary.
Chairman BRADY. Thank you. Time has expired.
Mrs. Walorski, you are recognized.
Mrs. WALORSKI. Thank you, Mr. Chairman. It is an honor, Mr.
Secretary, to have you here. I want to talk about the graph
that you referenced earlier. And I am grateful that you
included the RV industry in this.
You say this chart says that the RV industry will be fine.
With all due respect, this chart cannot speak. But the RV
manufacturers in my district can. What they and other
manufacturers in my district have been telling me over the last
year is that, while tariffs take effect tomorrow, the mere
threat of tariffs has been felt already.
One RV manufacturer told me the same model is 8.5 percent
more expensive, compared to last year. A trailer manufacturer
has had to raise prices 25 to 30 percent. He told me on the
phone, ``I am livid. We are getting destroyed.'' He said the
tariffs haven't started, but they have been felt.
I can tell you how many manufacturers have told me about
steel and aluminum shortages already. I can't tell you how many
manufacturers who already source their steel and aluminum
domestically, who we shouldn't want to hurt, but have seen the
price of their inputs increase, anyway.
Again, the tariffs start tomorrow, but they have already
been felt in these industries. I have heard from manufacturer
sources from--I have heard from manufacturers that source from
abroad not because they want to, it is because they are forced
to. The domestic suppliers simply refuse to make the input for
their specifications. Whatever happened to the customer is
always right?
Well, those business owners are now worried that the very
same supplier that refused to make their product to specs in
the last year now only needs to say that they could make it to
prevent an exclusion, hurting these industries further.
Here is the thing. The RVs, boats, and trailers
manufactured in my district are price-sensitive. An 8.5 percent
increase in the price of an RV is real money to real people. A
couple looking at that increase may say, ``Well, we are going
to wait,'' or, ``We will simply go spend the money on something
else.'' For pontoon boats, a $.10 increase in aluminum
increases the boat cost by $750. So a company that normally
sells 2,000 pontoons would only be able to sell 400 with that
increase, and pontoons are already on the EU retaliation list.
Elkhart County saw 20 percent unemployment during the
financial crisis. It was devastating for workers, families,
companies, and communities. But they have rebounded. And
unemployment is around 2 percent right now. But they are
worried that the momentum that they worked so hard to claw back
is about to be reversed.
What your chart does show, Mr. Secretary, is that steel and
aluminum prices have spiked in the last year, and what RV
manufacturers are telling me that means for them is that where
they once expected 10 percent growth this year, they are now
hoping for flat growth.
So I appreciate your charts that are trying to educate me
on what is happening in my district, but I am telling you that
simply is not the case.
Secretary ROSS. I think it is unfortunate that there has
been a lot of speculation on the part of people withholding
inventory, people jacking up prices. If you look at the price
movement, it actually is well in excess of any possible impact
that the tariffs might have. So there has been a lot of
speculation going on.
I think you will see things adjusting, once people
understand what the real situation is. I think it is very
unfortunate that speculators tried to take advantage of the
consuming industries during recent months.
Mrs. WALORSKI. This is about jobs in my district. And we
have seen the price increases in the last year. So what starts
tomorrow I would have to see proven wrong pretty quickly,
because this is a danger to jobs.
Chairman BRADY. Thank you. All time has expired.
Mrs. WALORSKI. Thank you, Mr. Chairman.
Chairman BRADY. You bet.
Mr. LaHood, you are recognized.
Mr. LAHOOD. Thank you, Mr. Chairman, and welcome, Secretary
Ross.
I have to tell you, Secretary Ross, I disagree with your--
the Administration's approach when it comes to trade and
tariffs. And what is a bit frustrating is last year we passed
once-in-a-lifetime tax reform. We hadn't done that in 31 years.
It is having real effects on the economy. You look at
regulatory relief, and in almost every sector of our economy we
have had tremendous regulatory relief.
And then I look at what the Administration is doing on
trade, the tariffs, what is going on with NAFTA, the fact that
we are 14 months into this Administration and we don't have one
bilateral trade agreement. We talked about having a lot of
those. And I think we are shooting ourselves in the foot when
it comes to the economy as it begins to take off, with the low
unemployment we have in this country.
So I tell you that. And then I will just tell you a little
bit about the district that I represent. Agriculture is the
number-one industry in the State of Illinois. Many of the
constituents in my district supported the President. Many in
rural America did. And I look at what is going to happen
because of your policies when it comes to trade, comes to
tariffs. And the word that comes up all the time with my
farmers is retaliation.
You look at what has happened in the past. And the largest
importer to China of soybeans is the United States. And that
is--farmers are worried about that, and that retaliation. What
can you tell my farmers to assure them that they are going to
be okay?
Secretary ROSS. Well, I think the real fear is the fear of
the unknown. They all know that there is a potential
vulnerability. I believe that the actual outcome of all this
will be far less severe than things that people are worried
about.
The substitution of products from other countries into
China, for example, displacing us will, for the most part,
reopen those markets to American exports. So it will not be a
one-to-one match, and it will not necessarily be simultaneous.
But it is not an easy thing to substitute.
I promise you, if China thought they could get the material
as cheaply from Brazil or Argentina, they would be doing it
right now.
Mr. LAHOOD. And let me just switch subjects. I want to
quote something from the Tax Foundation. The title of this
article is ``Lessons from the 2002 Bush Steel Tariffs.'' ``The
effects of higher steel prices, largely a result of steel
tariffs, led to the loss of nearly 200,000 jobs in the steel
consuming sector, a loss larger than the total unemployment of
187,000 in the steel-producing sector at the time.'' Can you
comment on that?
Secretary ROSS. Yes. Those jobs that were lost were mostly
lost in the months before the steel tariffs were put in by
President Bush. So it is an inaccurate total, it is not due to
that.
Second, a large portion of the reasons why the steel
industry didn't gain more jobs is we worked a new contract with
the Steel Workers Union. We cut 32 job descriptions down to 5.
We made changes in work rules, so that people could be running
more efficiently.
I would be happy on another occasion to go into much
greater detail, but the ITC in fact found that the ultimate
effect of steel range is somewhere between 65 million positive
to the economy and 135 negative, and that it was such small
numbers relative to the economy that you really couldn't
pinpoint the difference.
Chairman BRADY. The gentleman's----
Secretary ROSS. So those alarmist things that you have seen
in the paper do not have statistical support.
Mr. LAHOOD. I look forward to----
Chairman BRADY. All time has expired.
Mr. LAHOOD [continuing]. A followup conversation. Thank
you, Mr. Secretary.
Chairman BRADY. Thank you, Mr. LaHood.
Mr. Bishop, you are recognized.
Mr. BISHOP. Thank you, Mr. Chairman, and thank you, Mr.
Secretary, for your time today.
You faced a myriad of questions and issues. I would like to
take this opportunity, as a Michigander, to sound the alarm on
behalf of the American manufacturing industry.
I represent Michigan. Our tool and die makers face every
day Chinese tool and die makers who continually dump their
product and undercut American prices, and now dominate the
market for tools used by American automakers to produce major
body sheet metal stamping. These companies in Michigan are
desperate. They face extinction.
And they personally told me the problem with competing
China is more than just low wages. The Chinese government
subsidizes stamping and die shops in many other ways. They have
export credits, which refund up to 30 percent of the cost of
tools. Their government builds elaborate, state-of-the-art tool
and die shops filled with modern machinery and equipment before
the company even moves in, and then they never ask for
repayment. The government also subsidizes all kinds of training
and--for their die makers. As a result of all of this, the
business is going away.
Prices for Chinese--Chinese prices are so low that American
suppliers cannot afford to buy their major dies from anywhere
else. Since no work exists here, in the United States, the
industry has lost approximately 70 percent of the companies,
and 80 percent of its skilled jobs.
One Michigan company, before the Chinese onslaught, advises
me that they employed 350 people--this is a major company, one
of the last remaining--they now only have 127 employees left in
the arsenal of democracy.
There is clearly a long-term component to Chinese strategy.
The--when China controls the cost and delivery of the tools
needed to produce major automotive parts, they will exert
control over the world's production of major equipment, tools,
automotive supplies, even defense equipment. So this issue is
far bigger than the economy. It goes all the way to national
defense.
I know we only have 3 minutes, but I would be remiss in not
raising this issue to your attention. I hope that I can work
with you and your Department to address this issue on behalf of
not just the American automakers, but on behalf of our country,
who are--we are caught flat-footed right now in a world that is
stealing our manufacturing industry. And it behooves all of us
to do whatever we can to work together to find a solution.
So thank you for being here, and any thoughts you might
have in your--sorry--you have only 24 seconds. I appreciate it.
Secretary ROSS. Thank you very much. We are trying very
hard to fix these problems. And the tragedy is that they
weren't dealt with sooner. It would have been a lot easier to
do it sooner, because these malefactors have been spoiled by
getting away with it for far too long. We intend to stop that.
Mr. BISHOP. Thank you, sir.
I yield back.
Chairman BRADY. Thank you.
Mr. Curbelo, you are recognized.
Mr. CURBELO. Thank you, Mr. Chairman.
Mr. Secretary, thank you so much for your time here today.
I want to commend the Administration's efforts to hold the
Chinese accountable. I think it is clear to everyone that they
undermine our economy, they undermine our workers. And holding
them accountable is certainly the right thing to do.
I would also ask the Administration to try to do right by
our friends and allies throughout the world: The Europeans;
here in the Americas, the Argentinians are concerned. These are
countries that are trying to do right by the United States and
by their own people, and I strongly encourage you to do
everything you can to accommodate them so that we can continue
building those important alliances and friendships.
And I agree, I think trade is best conducted--business is
best conducted with people with whom we share values. And I
think, as long as the Administration's policy fits that idea, I
think it can be successful. But there are some very obvious
risks that you have heard repeated here numerous times today.
I want to bring a separate issue, but one that is very
important to the farmer community in my district. South Florida
is home to the largest ag--is one of the largest ag-producing
areas in the State of Florida. The warm weather in South
Florida allows our farmers to grow crops there, year-round.
Despite a long-standing suspension agreement designed under
U.S. trade laws to eliminate the injurious effect of the dump
imports, Mexican tomatoes, Mr. Secretary, continue to surge
into the U.S. market, impacting the domestic tomato industry.
Lack of enforcement and circumvention of these agreements since
put in place in 1996 has intensified, as within that period--
one of the most recent suspension agreements alone--2014 to
2016, imports from Mexico have risen 21.5 percent, while U.S.
production has fallen 14 percent.
This comes on the heels of a 303 percent increase in
Mexican tomato imports over the last 25 years, with Mexico
supplanting the United States as a dominant supplier in the
U.S. market, all with supposed anti-dumping trade remedies in
place. This is threatening the future of Florida and the larger
domestic tomato industry.
So, Mr. Secretary, I understand you were negotiating for a
new anti-dumping suspension agreement with Mexican tomato
exporters. Can you assure the Committee that you will work with
the U.S. tomato industry to get an agreement that will
eliminate the injury dumped Mexican tomatoes are inflicting on
the domestic tomato industry?
Secretary ROSS. Well, I have spent a lot of time, as you
know, with the Tomato Growers Association in Florida, and at
their request we reopened, with the consent of the Mexicans,
the suspension agreement. It really has not worked the way that
it was intended to. And that is, unfortunately, true of many of
the trade agreements this country has had. We are trying to fix
it.
Mr. CURBELO. Thank you, Mr. Secretary. I yield back.
Chairman BRADY. The gentleman yields back.
Mr. Secretary, clearly, there is a pretty consistent
message here: Support for cracking down on China's theft of
intellectual property and our technology, and strong support to
make sure that American workers and families aren't punished
for China's misbehavior. Your exclusion process is key to that.
We encourage you to use all your resources and thoughtfulness
in applying that exclusion process in a good, positive way.
I also want to echo what other Members have said, which is
we thank you for your service, your experience, your insight.
It will make you the perfect person for this discussion at this
time.
With that, I would like to note Members of the Committee
have 2 weeks to submit written questions to be answered later
in writing. Those questions and your answers, Mr. Secretary,
will be made part of the formal hearing record.
With that, the Committee stands adjourned.
[Whereupon, at 11:43 a.m., the Committee was adjourned.]
[Questions for the Record follow:]
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