The proposition that trade policy should represent the interests of as many Americans as possible shouldn’t be difficult to accept. However, current U.S. law fails to achieve this low bar. To understand why, consider the case of proposed import duties on tinplate, a thin steel sheet coated with tin. Manufacturers use this material to create a variety of consumer goods including beverage cans, food containers, and canisters for products like spray paints, deodorants, and household cleaners.
The U.S. International Trade Commission (USITC) is currently considering a petition to impose tariffs of up to 300 percent on imported tinplate steel from eight countries. The petition, which was submitted by steel company Cleveland-Cliffs, threatens nearly 40,000 union and non-union manufacturing jobs and could increase the cost of canned foods and products by up to 30 percent.
Under Antidumping and Countervailing Duties (AD/CVD) statutes, the USITC determines whether a specific industry has been materially injured by "unfair" imports. However, they don’t have to consider costs from any other industry besides the so-called “injured” party. As described by the Government Accountability Office:
“AD/CVD law contains no provision for USITC to consider potential negative economic effects of AD/CV duties on downstream purchasers (i.e., industries, retailers and consumers) when determining injury to domestic producers.”
If this rule seems shortsighted, that’s because it is. Current law completely disqualifies downstream producers (companies that use one product to make another, such as tin cans out of imported tin) from making their case. The same goes for the interests of the public at large, who shoulder the increased cost of goods.
The proposed tariffs on tinplate steel would increase production costs for U.S. manufacturers and trigger price hikes for consumers. According to a study by the Trade Partnership for the Consumer Brands Association, for every steelmaking job that might be protected by higher tinplate tariffs, more than 600 U.S. manufacturing jobs will be put at risk. To mitigate cost hikes, companies will likely decrease tinplate imports used for U.S. manufacturing and increase imports of empty cans and finished food products, increasing America’s reliance on China, Mexico, and other countries for those products.
Learning from Other Countries
Other countries account for the national interest in determining whether or not to impose new tariffs. Canada, for example, allows the consideration of whether proposed anti-dumping duties “would not or might not be in the public interest.” It has not needed to be widely invoked, but in the rare cases that it’s been brought up, the clause has been successful.
The European Union includes a public interest test based on examination of “all the various interests taken as a whole, including the interests of the domestic industry and users and consumers.” Many other countries have similar provisions, including Brazil, Colombia, Mexico, and Chile. The United States is far behind the curve on this important policy that saves domestic consumers and downstream producers from price hikes.
Conclusion
U.S. trade law should ensure that decisions are designed to benefit the national interest. The proposed tinplate duties, if implemented, would be a blatantly protectionist maneuver aimed at benefiting a single American company at the expense of consumers and downstream producers nationwide.