Engaging with Allies: From Tariffs to Addressing Shared Challenges

The United States would do well to turn a fresh page with its traditional allies in 2021. Treaty allies such as Britain, Canada, Germany, Japan, and Korea—and other strategic partners such as India, Mexico, Brazil, and Saudi Arabia—are top markets for U.S. companies. The vast majority of the overseas earnings of U.S. companies comes from these countries—including export revenue, earnings from foreign investments, and royalties on intellectual property.

However, the imposition of Section 232 tariffs on steel and aluminum imports from nearly every country around the globe produced new tensions in these vital commercial ties. Many countries retaliated against U.S. exports in a targeted manner, imposing additional costs on American workers, farmers, and companies. Adding to the strain, the underlying statute utilized states that tariffs may be imposed when it is determined that imports “threaten to impair the national security,” a contention that NATO countries and other allies understandably find offensive. Further, analysts broadly agree that overcapacity in steel and aluminum production in China—not U.S. allies—is the fundamental challenge facing metals markets worldwide.

The new administration should terminate these tariffs and abjure further “national security” tariff threats against America’s allies. Doing so would not only remove a significant commercial irritant and potentially allow U.S. exports to grow, it would enhance the administration’s ability to work cooperatively with allies to address shared concerns globally. In the long term, Congress may wish to consider creating a role for the U.S. International Trade Commission to evaluate what constitutes a national security threat to a given industry.

Congress should also renew the Generalized System of Preferences (GSP)—which expires at the end of 2020—to foster market-based growth in developing countries. The program also provides leverage for the United States to press for market openness, intellectual property protection, respect for worker rights, and other traditional U.S. priorities. Other trade preference programs also merit support.

In a similar vein, Congress should fully fund the U.S. International Affairs budget, which supports American diplomacy and development programs worldwide. The so-called “Function 150” account supports foreign assistance programs that provide technical advice and build stronger political, legal, and economic policy regimes in developing countries that help these nations to become reliable trading partners. At a time when export opportunities represent a lifeline to the U.S. economy and a motor for domestic job creation, these international programs are more important than ever.

ACTION: The Chamber urges the administration to rescind the Section 232 tariffs, which have not advanced the U.S. national security objectives at the heart of the underlying statute; and also urges Congress to renew GSP and fully fund the U.S. International Affairs budget.