Press Release | CPA Offers Cautious Support for ‘Phase One’ China Agreement

January 15, 2020

Continues to seek tariff increases, exchange rate fix

Washington. The Coalition for a Prosperous America (CPA) offered its initial support for the ‘Phase One’ China deal concluded today by the Trump administration. CPA’s members are cautiously supportive and believe the president’s use of tariffs and other leverage remains necessary to address China’s IP theft and other trade cheating. As such, CPA will continue to advocate for broader, permanent tariffs on all Chinese imports.

CPA Chairman Dan DiMicco, who attended a White House signing ceremony for the agreement, said, “President Trump has re-set the relationship with China. No previous administration has embarked on such a strong plan to stand up to Beijing. Past presidents certainly talked about China’s cheating. But this agreement makes clear that only hard action can actually bring Beijing to the table.”

The agreement addresses several key areas of friction between the two nations. Because the Phase One deal is merely an initial step, CPA notes that Beijing could still breach the agreement, or find other means to continue its trade cheating that do not directly violate the deal’s provisions. Such predatory behavior has been a hallmark of China’s trade strategy for more than a quarter of a century. 

As federal data shows, the administration’s tariffs have reduced the US trade deficit with China by more than 16 percent from the corresponding period in 2018. The US is outperforming most major economies while China’ growth slowed substantially. And US manufacturers have made investments in capacity and equipment—and hired new workers—on the assumption of continued tariff relief.

The agreement also includes strong enforcement mechanisms for the first time—something that US Trade Ambassador Robert Lighthizer had insisted on in negotiations.

CPA believes that tariffs on imports from China should be increased to 25 percent across the board, and made permanent. CPA research found that such an approach could boost US GDP by $125 billion over five years, with 721,000 new jobs created.

Said Michael Stumo, CEO of the CPA, “Beijing maintains a state-controlled economy that is subsidized more than any nation in history. Beijing has no interest in changing course, even as the world learns of such egregious human rights abuses as forced organ harvesting and concentration camp internment for millions of citizens. China remains a strategic rival and is funding its aggressive practices through trade profits earned by government-supported companies that export to US consumers.”

DiMicco added, “President Trump has demonstrated that China’s all-consuming rise to economic and military superpower status isn’t inevitable. The United States possesses clear leverage, and it’s important that we use it. Beijing knows this too—and can’t fund its geopolitical rise without access to America’s stable, lucrative consumer market.”

CPA urges ongoing vigilance with China, and will continue to press for permanent tariffs on Chinese imports. Additionally, CPA believes that realigning the overvalued US dollar should be the next step to equalize trade with China and the rest of world. CPA research has demonstrated that adjusting the dollar’s value by 27 percent could lead to 12 percent average annual growth in manufacturing exports over a five-year period. That would help America’s producers capture a larger share of domestic and global markets, yielding increased job quality and economic growth at home.

Click here for ‘Five Reasons to Take a Hard Line with China.’

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  • Jeffrey Sunnergren
    Personally, I have my doubts it will work. The Chinese written document has not been completed, only the English. Are the Chinese agreeing to the English document or are the Chinese waiting for the translation to see what and how they must comply. Second, based on an interview with Donald Trump on the Laura Ingraham radio show, I lost confidence in him. On that show he believed we should import the “best talent” from overseas. What that suggests is that a company from overseas may move a factory to the US but import workers to run it. It has been been done in the past. The question of best and brightest is normally a term for the cheapest. This is a common practice especially in IT. Bloomberg News had a article in 2019 about how Boeing fired much of it engineering staff and replaced it with Indian engineers being paid as little as 12 dollars per hour working out of Seattle Washington. This was the group that wrote the software that caused the Boeing 737 Max’s to crash. I visited a “Innovation Museum” for children in Allentown Pennsylvania. There Mack Truck had an exhibit and big display looking for hires. I was amused by the employment requirements for technicians and machinist Both wanted a four year degree in engineering with an apprentice program. This is a European model but not a US model. Because the management is Swedish “Volvo” this would be fine with them and because they would not be able to find US candidates they will import. The tech schools like Lincoln Tech are gone and companies that trained their machinists like Newport News Shipyard are dinosaurs. What engineering school has a machine shop and trains students in the skills of tool and die making? Trump like Bloomberg does not really understand manufacturing economists and only understand the stock market.