ewsba.se
WASHINGTON, May 5 (Reuters) - Domestic U.S. industries are urging the Trump administration this week to impose higher tariffs to curb the rising tide of exports from China and other countries with excess factory capacity, while import-dependent and agriculture groups want a more cautious approach to new trade curbs.
The U.S. Trade Representative's office on Tuesday launched a marathon, four-day hearing on its "Section 301" trade investigation into excess industrial capacity in 16 major trading partners, including China, the European Union, Japan, South Korea, Mexico and Vietnam.
Trade watchers widely expect the probe to lead to new import duties as the Trump administration seeks to rebuild tariff leverage lost when the Supreme Court struck down President Donald Trump's global tariffs invoked under a national emergencies law.
USTR and other agencies will hear testimony from nearly 150 representatives of companies, trade groups, foreign governments and think tanks through Friday, according to a USTR schedule. Last week, the Trump administration heard two days of testimony on a separate but parallel tariff probe into lax enforcement of anti-forced labor laws by some 60 countries.
U.S. Trade Representative Jamieson Greer has said he wants to complete both investigations by July, when a temporary global 10% tariff is due to expire. That puts the probes, launched in mid-March, on an accelerated time schedule.
He told reporters at the time that the probe would analyze capacity utilization and profitability in countries with large and persistent trade surpluses with the United States. USTR's official notice cited the automotive sector in China and Japan, saying that a growing number of companies in these countries were unprofitable or unable to meet interest payments.
The Center for a New American Security said in prepared testimony that U.S. actions should be focused on China, whose large and growing structural excess capacity, and plans to dominate key sectors such as legacy semiconductors, represent a "strategic problem" for the U.S.
Excess capacity in other economies does not threaten U.S. economic and national security interests in the same way that China's does, said Emily Kilcrease, a senior fellow at CNAS. Trump's past tariffs on Chinese goods primarily succeeded in shifting those exports to other markets.
"If one accepts that China's excess capacity is categorically different and strategically consequential, and that unilateral responses are inadequate, it is clear that a coordinated approach with U.S. allies is the path forward," Kilcrease said, arguing that allied countries should band together to build sufficient scale in strategic materials.
China has long denied that it has excess industrial capacity, and the China Chamber of International Commerce said in written comments that the U.S. narrative is "fundamentally flawed" and lacks a legal and factual basis because overcapacity is mentioned by the World Trade Organization only in terms of fisheries resources.
Brandon Farris, executive vice president of the Steel Manufacturers Association, said in prepared testimony for delivery on Thursday that more Section 301 curbs are needed "to confront the scourge of excess capacity, which threatens American jobs, undermines fair competition and erodes our manufacturing base."
Trump has already imposed 50% tariffs on global steel imports under a separate, national security statute. But the industry will still face import surges from China and other countries "unwilling to right-size" their steel sectors, Farris said.
While China is the main source of excess steel capacity, producing more than India, the U.S., Japan and Russia combined, other countries were propping up their steelmakers and contributing to a global steel glut, Farris said.
He singled out the European Union for having 85 million metric tons of excess steelmaking capacity, nearly matching the 89 million tons of U.S. production last year, adding that unused capacity in South Korea is about 18 million tons and in Taiwan, 10.2 million tons.
The American Soybean Association, which represents over 500,000 farmers slammed for years by Chinese retaliatory tariffs on U.S. soybeans, urged caution on any new duties as Washington and Beijing negotiate on a delicate trade truce.
The Section 301 probes will be among topics to be discussed by Trump and Chinese President Xi Jinping at a planned summit next week in Beijing.
"We are concerned that these additional Section 301 investigations could lead to remedies that will set back negotiations and lead to a reimposition of even higher tariffs against U.S. soybeans by the Chinese government," said Dave Walton, an Iowa farmer and ASA vice president.
Walton also urged USTR to exempt farm inputs such as fertilizers from any new tariffs and to not raise duties on countries such as Indonesia and Mexico, which are growing buyers of U.S. soybeans.
The Footwear Distributors and Retailers of America said in written comments to USTR that footwear imports, which already face average 12% tariffs, were driven by demand and that growing sourcing from Cambodia, Vietnam, Bangladesh and India was not hampering the Trump administration's efforts to rebuild the U.S. industrial base.
"Increasing this tariff burden, through new added 301 tariffs, will result in higher costs for hardworking American families at a time when they already face tremendous economic uncertainty," the group said.
(Reporting by David Lawder; Editing by Andrea Ricci )