President Donald J. Trump has opened a new front on trade with China, Mexico, Canada and the EU, and others. These actions will hopefully result in advantageous trade agreements for the United States. The upcoming new round of tariffs is an opportunity for more pressure on these nations to do better.
While many are raising concerns over tariffs raising prices on consumers, it is important that President Trump ensure any new tariffs, along with those he implemented seven years ago in 2018 on China, don’t inadvertently end up advantaging Chinese producers over American companies. If it is found that Chinese companies can undercut American companies within the U.S. market somehow, particularly through CCP or PRC support, then President Trump should come to the aid of these American firms. While I agree with his use of a tariff stick to reshore domestic production over the long term, the president should also use his tariff carrot in the short term when appropriate to protect American companies first and foremost.
As the Chinese government subsidizes and supports Chinese companies in their quest to best their American competitors, the Trump Administration should offer ways to rebalance the competitiveness of American companies with their Chinese competitors. This includes offering American companies some tariff relief while the Chinese competitor pays up. This will result over time in reductions in the volume of Chinese products being imported and, facilitated in part by the savings realized from tariff relief, the reshoring of production by American firms at U.S.-based factories.
The goals of President Trump’s implementation of new tariffs on Chinese imports are laudable. If there are measurable increases in domestic production of goods and new jobs, the economy benefits. The idea of tariffs to encourage more domestic production is one that is held by many in the Trump administration, therefore it is important that the USTR China 301 tariff system be thoroughly reviewed to ensure there are no loopholes that Chinese firms can exploit and that American firms aren’t disadvantaged. The incoming team at USTR should make this a top priority.
Tariffs should be temporary, targeted and crafted in a way that they can be removed when the country getting hit with the tariff complies with a demand. In this case of the tariffs the President is threatening to impose, the demand is rooted in national security - stopping the import of fentanyl.
A serious problem not addressed by the tariffs is that some Chinese companies may be able to strategically absorb the cost of the duties thanks for government or state-owned entity support, versus pass them along in the form of higher prices. When they do that, these Chinese companies can undercut competitors on price and eventually capture the American market. One such example revealed a few months ago is Milwaukee Tool that, surprisingly is no longer an American company but rather based in Hong Kong and is foreign owned. According to the Wall Street Journal and many other media outlets, the company was sued over allegations that it used Chinese forced prison labor to manufacture work gloves for the tool company. Fortunately, U.S. Customs and Border Protection blocked the Milwaukee Tool products from entering the country. Some activists even called for retailers to stop carrying Milwaukee Tool products on their shelves in response to these allegations.
While the company may engage in practices some consider unethical in the U.S., the Trade Alliance to Promote Prosperity last year called on Congress to investigate allegations against the company. When any Chinese managed company is situated like Milwaukee Tool allegedly is, with support from the CCP and state owned entities to offset the costs of import duties, it can gain an advantage in America regardless of the tariffs. Recently, despite past China tariffs, the imposition of a recent 10% China tariff, and an additional 10% coming in the next few days, isn’t it curious that the company issued a business update in February announcing “the company estimates an immaterial impact to results in 2025” as a result of tariffs. This is a problem that must be fixed.
An America First policy not only applies to the President exercising his power to implement tariffs under emergency circumstances, but also to the President ensuring the integrity of the tariff system and the protection of American companies getting sabotaged by their Chinese competitors right here on American soil
The bottom line is that America should be advantaged by executive actions and there should not be policies that inadvertently disadvantage American consumers, workers and companies.
Peter Mihalick is former legislative director and counsel to former Reps. Barbara Comstock, Virginia Republican, and Rodney Blum, Iowa Republican.
