China has been cheating on trade, but the remedy must be implemented carefully

I recently traveled to Mexico City as part of a delegation of congressional Democrats and Republicans attending the seventh round of negotiations to determine the future of the North American Free Trade Agreement (NAFTA). I have opposed NAFTA since its inception and am working to improve it.

On the eve of our trip, Donald Trump haphazardly announced he would impose tariffs on steel and aluminum imports. His declaration came in response to investigations by the Commerce Department into the impact of excess steel and aluminum imports, which have hurt American manufacturers. Given several options to address this threat, Trump chose the most punitive reaction: a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports.

There can be no question: the overcapacity problem that plagues us has been caused by the Chinese. For years, China has been gaming the system and bilking America. Unlike our capitalist structure where private companies must sink or swim on the tides of the market, Chinese manufacturers are artificially propped up by their government.

China continues to overproduce steel and aluminum to keep growing its economy and employing millions of Chinese workers. Their cheating has led to a flood of cheap steel and aluminum coming into the U.S., putting our own producers out of business.

And China’s bad behavior isn’t just a problem for America, but for the whole world as Chinese overcapacity poisons the marketplace and harms other nations, including our close partners.

Taking action to stand up to China is long overdue. While previous administrations have imposed countervailing duties on dumped steel, as well as conducted international dialogue on confronting China, neither of these approaches has borne fruit. Stronger measures are needed. We have many tools in our toolkit and tariffs are one of them.

Targeted tariffs on the biggest offenders could go a long way in creating leverage to bring China and others to heel to reduce the overcapacity problem. But an across-the-board tariff against all nations – friend and foe alike – is an antidote stronger than the poison.

In promulgating global tariffs, the Trump White House has demonstrated the same qualities that have been its hallmarks: recklessness, incompetence, confusion, and more than a whiff of outright corruption – none of which will help solve this problem or help American workers.

At last week’s NAFTA talks, representatives from Canada and Mexico expressed fear to me that tariffs would harm their economies and our trading relationships. Canada and Mexico are not the cause of the Chinese overcapacity problem. While I am open to tariffs, I’m concerned that Trump’s approach will imperil reforming NAFTA to make a better deal.

A broken clock is right twice a day, but the clock is still broken. Laughing off a trade war as Trump did is cavalier stupidity. A trade war could increase prices on a myriad of consumer goods and services and lead us into an inflationary spiral. As I emphasized in Mexico City, we must stop spooking our closest partners. The chaos in the White House is making our economy and world markets less stable.

And while Trump has talked a big game on winning victories for the American worker with one hand, with the other he has signed into law billions in tax cuts to the Republican donor class at the expense of those same workers.

Tariffs and trade generally are critical issues that should be paramount importance to all of my Democratic colleagues. Donald Trump’s fake populism was nothing but scaffolding over a trojan horse of bigoted cultural resentment and Koch-sponsored plutocracy. But it was effective.

This is a lesson that many Democrats must reckon with. Our top priority must be promoting existing good-paying American jobs and creating new ones. This is what I am trying hard to achieve in NAFTA renegotiations.

Tariffs may be a partial remedy for the American steel and aluminum industries, but they should be implemented carefully. We need a permanent and multilateral solution to get China to play by the rules, and we need broader, comprehensive policies to support domestic manufacturing and the dignity of work.

If Trump wanted to do so, he could strengthen worker protections rather than gutting them at every opportunity. He could champion fairer trade policies and labor standards in our trade agreements.

If reforming NAFTA to our benefit is the number one priority as Trump claims, he must remember that it is Congress that ultimately oversees trade and work with us. And the Trump chaos must end.

Pascrell represents New Jersey’s 9th District and is ranking member of the Ways and Means Subcommittee on Trade.