Pro-China Lobby Groups Lying in their Quest to End Tariffs on Chinese Imports

August 7, 2021

Let me begin with a question. The U.S. Chamber of Commerce is an agency of the U.S. Department of Commerce whose mission it is to aid U.S. businesses. True or false?

If you answered “true” to this question, as most people would, you’re dead wrong. The U.S. Chamber of Commerce is a lobbyist organization that promotes business interests and is funded by its member businesses – from the smallest of local businesses to global corporations. Naturally, the interests of those businesses that provide the lion’s share of their funding – global corporations – take precedence over all others. And they’re not above speaking out of both sides of their mouth in promoting those interests.

The subject of trade is a good example. Check out this “policy priorities“page from their web site. Click on the “Internation Trade, Investment and Regulatory Policy” link. Scroll down about half-way to the section on “International Trade, Investment and Regulatory Policy.” The third bullet item reads:

“Press for a China policy that seeks improved access to the Chinese market, advances structural reforms in China and tariff relief through new negotiations …”

Now, see the links to “Go Deeper” articles in the right-hand margin of the page. There you’ll find two conflicting articles. One is titled: “Two Big Wins for U.S. Trade: Completion of USMCA and the Phase 1 deal with China mean big things to American business.” The other, just above it, is titled “They’re Still There: Tariffs Weigh Heavily on U.S. Economy.”

Those tariffs on China – 25% on half of all Chinese imports – were the only thing that brought China to the negotiating table – and the threat of imposing them on the rest of all Chinese imports was the only thing that forced them to agree to big increases in their purchase of American products as part of the Phase 1 trade deal.

You can’t have it both ways. Either the Phase 1 deal was good for American business or it wasn’t. You can’t argue that it is and then complain that the very heart of the deal – the tariffs – is bad for American business. Yet, that’s exactly what the U.S. Chamber of Commerce does. To placate their small, local business members, they praise the deal. But, in the interest of big, global corporations, they complain that it’s a bad deal and what it terminated.

As further evidence, check out this article: Here’s the key excerpts:

“Nearly three dozen of the nation’s most influential business groups — representing retailers, chip makers, farmers and others — are calling on the Biden administration to restart negotiations with China and cut tariffs on imports, saying they are a drag on the U.S. economy.”

“In a Thursday letter to U.S. Trade Representative Katherine Tai and Treasury Secretary Janet Yellen, the business groups contend that Beijing had met “important benchmarks and commitments” in the agreement, including opening markets to U.S. financial institutions and reducing some regulatory barriers to U.S. agricultural exports to China.”

“The trade groups include some of Washington’s most influential big business associations, including the U.S. Chamber of Commerce …”

The claim that China has met its commitments and therefore qualifies to have the tariffs dropped is a flat-out lie. The Phase 1 deal set very specific goals for Chinese imports of American products. Meet those goals and the existing tariffs could be dropped. Fail to meet them and the tariffs would be extended to cover all Chinese imports. That’s the deal, stated in very clear terms. So far, through June, the most recent month for which trade data is available, China has failed to meet a single commitment.

In 2020, China fell short of its commitment for purchases of total U.S. goods by 33.5% or $62 billion. They fell short of their goal for the purchase of energy products by 64%. Among the four categories of goods for which specific goals were set – manufactured goods, energy goods, agricultural goods and total goods – they met the goal for agricultural goods only during the last three months of 2020, but fell far short for the year. Four categories of products. Twelve months in the year. That’s 48 opportunities to demonstrate a willingness to meet their commitments. They failed 45 out of those 48 times. In fact, for the year, they barely exceeded the 2017 baseline of the deal. In the all-important category of manufactured goods, they actually imported less than the 2017 baseline.

Six months into 2021, their performance is even worse. Their imports of total goods are 46% below their commitment. Their imports of energy products is 78% below. Even their imports of agriculture products, the category where they at least met the goal for the last three months of 2020, have collapsed in 2021, falling short of their commitment by 46% and even falling short of the 2017 baseline by $10 billion.

China hasn’t met their commitments, as the U.S. Chamber of Commerce claims. It’s failed abysmally. Contrary to the Chamber’s claim that China has earned the elimination of tariffs on its products, it has blatantly thumbed its nose at the Phase 1 deal, believing (and rightly, so far) that the U.S. will continue its long-demonstrated practice of failing to enforce trade deals.

President Biden, don’t listen to these globalist lobbying organizations. They’re lying to you. It’s time – past time, actually – to declare China a failure and to enforce the Phase 1 trade deal by extending the 25% tariffs to all Chinese imports. Fail to act and the U.S. will continue to be the laughing stock at the trade table for all other countries for years to come. That’s certainly not in America’s interests.

A Perfect Example of What Killed American Democracy

January 13, 2021

No sooner did I publish yesterday’s post, in which I blamed the Supreme Court’s “Citizens United” decision in 2010 for the death of American democracy, when a perfect example of that emerged.

Before I get into that, I have a question for you. What do you know about the U.S. Chamber of Commerce and your own local chapter? Is it a branch of the U.S. Commerce Department? Is its purpose to promote commerce in America? The name of the organization would lead you to believe that the answer to both of the latter questions is “yes.”

You’d be dead wrong. The Chamber of Commerce is a French-based organization whose sole mission is the promotion of “free” trade. (Check out this post from 2009 for an explanation of this fatally flawed economic theory and how it has devastated America’s economy.) The U.S. Chamber of Commerce is that French organization’s American-based operation. Your local Chamber of Commerce reports to and funnels funds to the U.S. Chamber of Commerce. Here, it’s worth noting that in 2019, France – a nation whose workers enjoy benefits American workers can only dream of – enjoyed a trade surplus with the U.S. of $19.9 billion, despite being arguably the least productive nation on earth.

The U.S. Chamber of Commerce and its local chapters makes a show of lobbying in favor of American businesses when issues important to them arise like taxes, regulations, minimum wage, etc. However, the effect of all of those issues combined is trivial compared to the one trillion dollars per year of business that is robbed from them through the world’s trade surplus with the U.S. On that issue, I challenge anyone to show me one single instance in which the Chamber has spoken out against the trade deficit and in favor of changes to trade policy aimed at restoring a balance of trade. No Chamber of Commerce organization, not the U.S. Chamber of Commerce or any one of its thousands of local chapters, has ever uttered a peep of protest about the U.S. trade deficit. The Chamber of Commerce masquerades as a pro-business lobby, all the while concealing the fact that it is working against American business on the one issue that dwarfs all others.

Thanks to the “Citizens United” decision by the Supreme Court, this French-based lobbying organization is considered to be an American “person” under the constitution. Its money – all the money collected in the form of membership fees from hundreds of thousands of American businesses that it strong-arms into joining its local chapters – is considered “free speech” which cannot be constrained under the 2nd amendment.

With all of that said, check out this article which appeared on Reuters yesterday. The CEO of the U.S. Chamber of Commerce accuses Trump of undermining U.S. democracy. Scroll to the bottom of the article, and read this:

“… in a nod to Biden’s progressive agenda, he said lawmakers should fund “rapid training programs” to connect the unemployed with jobs in new sectors of the economy.

Donohue also said the Chamber will push for a new bill to boost legal immigration to help businesses deal with a shortage of workers.”

Pushing “training programs” is a classic pro-free trade gimmick used for decades to placate workers who have lost their jobs to off-shoring. And, incredibly, even in the midst of a pandemic when sixteen million Americans are unemployed, the Chamber has the audacity to suggest that we need to continue flooding the U.S. with immigrants “to help businesses deal with a shortage of workers.”

Earlier in the article, the Chamber CEO vows to cut off funding from Republicans who supported Trump. Is it Trump’s rhetoric that concerns him, or is it really the fact that Republicans began supporting Trump’s efforts at levying tariffs in an effort to fix our trade deficit?

This is a perfect example of the demise of our democracy. Our politicians are bought-and-paid-for by global corporations and foreign lobbying organizations. Your only choice is between two candidates who, on the most critical issues, take the exact same position – the position they’re paid to take. This isn’t democracy.

U.S. Chamber Chief Dredges Up Smoot-Hawley Boogeyman

September 20, 2018

I’m surprised that free trade globalists haven’t done it sooner but, as reported in the above-linked Reuters article, the president of the U.S. Chamber of Commerce has dredged up the old Smoot-Hawley boogeyman to try to scare people into opposing the Trump trade agenda.

“No, I don’t think the tariffs will be permanent,” Donohue said, adding that this would “screw the economy” in ways similar to the 1930s Smoot-Hawley Tariff, referring to a protectionist law that raised thousands of U.S. tariffs and which many economists believe exacerbated the Depression.

My apologies to those who have followed this blog for a long time, as I’ve posted on this topic many times before.  But the message bears repeating anytime anyone resorts to this tired argument against tariffs.

The above quote would leave those unfamiliar with trade history with the impression that the Smoot-Hawley Tariff Act represented a turn away from free trade toward protectionism, triggering a global depression.  Nothing could be further from the truth.  Here are the facts:

  • From its founding, the U.S. relied upon tariffs to establish itself as the world’s preeminent industrial power.  In fact, until 1913 when the constitution was amended to establish an income tax, all federal revenue was derived from tariffs.
  • The Fordney-McCumber Tariff Act of 1922 was widely credited for the economic boom times of the “roaring ’20s.”
  • The Smoot-Hawley Tariff Act represented only a very minor tweaking of tariff rates – on average only a 2.7% change from the Fordney-McCumber Act.
  • Smoot-Hawley wasn’t enacted until June, 1930, a full seven months after the stock market crash of October, 1929 which caused the failure of thousands of banks.
  • At the worst depth of the Great Recession that followed the market crash, America’s exports had contracted by only $6.5 billion, while the economy, as measured by gross domestic product, contracted $33.1 billion.  It was actually the world-wide depression that caused exports to shrink, and not vice versa.  We saw exactly the same phenomenon during the “Great Recession” which began in 2008.  That came at the peak of free trade policy and yet trade contracted dramatically as the world sank into recession.

“U.S. Chamber of Commerce President Tom Donohue said on Wednesday that the Trump administration could still avoid a full-blown global trade war …”

It doesn’t seem to occur to Mr. Donohue that the Trump administration may not want to avoid a “full-blown global trade war.”  In fact, the U.S. has been in such a war since the signing of the Global Agreement on Tariffs and Trade in 1947, a war we’ve been losing badly because we weren’t willing to put up a fight.  The free-traders that gained traction in the wake of World War II had pulled the wool over our eyes.  Thankfully, we finally have a president who sees what a failure that approach has been.

U.S. Chamber of Commerce Betrays Its Membership

September 16, 2009

President Obama finally makes one small foreign trade policy move in support of American business and workers, imposing tariffs on Chinese tires in an attempt to prevent the complete collapse of the American tire industry, and the U.S. Chamber of Commerce is all over him.  As reported in the above-linked Reuters article,the Chamber takes Obama to task not just for the tire tariffs, but for keeping Mexican trucks off our roads and for not rubber-stamping free trade deals with Colombia, Panama and South Korea. 

In every case, the Chamber has sided with foreign countries eager for access to the American market, all in the belief that we are missing out on huge increases in American exports.  This, in spite of the fact that our trade results for the past three decades have proven that free trade with overpopulated nations only erodes business for American companies by surrendering our domestic market in greater measure than is ever recovered with exports.  It boggles my mind that, when it comes to trade, American economists, business leaders and organizations see no value to our domestic market, eager to give it away, while every other nation on earth salivates at the opportunity to sell their products here.

“A major surge in exports is our best path out of a recession, out of double-digit unemployment and the exploding deficits we’re now experiencing,” Donohue (Chamber President) said.

The emphasis is always on exports, never accounting for imports.  The Chamber would have us believe that only exports create sales opportunities for American businesses, and that no business is lost to imports.  Such inability to perform the most simple math stretches credulity, and one can’t help but believe there’s something more sinister going on here – that perhaps the U.S. Chamber of Commerce has become a puppet of foreign countries eager to prey on the American market.  There’s simply no other explanation. 

In fact, the article offers some confirmation that that is exactly what’s going on here, with the Chamber’s position formulated by an international trade consulting firm :

Trade Partnership Worldwide, an economic consulting firm that specializes in estimating the impact of trade policies, prepared the report for the business group.

Throughout the article, the Chamber wrings its hands over the potential for others to cut off imports from America in response to any move by the U.S. to preserve domestic market for our own manufacturers.  Never does it consider that we too could retaliate out of proportion and cut off even more of their imports.  Do they not understand that, in this game of tit-for-tat, the nation with the huge trade deficit – the U.S. – holds all the cards? 

A trade war in manufactured goods is nothing to fear.  We can just as easily manufacture any and every product here as anywhere else.  And, while a trade war in natural resources certainly would be something for the U.S. to fear, it’s no coincidence that we don’t rely on the same nations who prey upon our markets for manufacturing jobs as a source for our natural resources. 

The exclusive use of unfettered free trade is stupid trade policy, as proven by thirty-three years of consecutive trade deficits.  The backing of such policy by a powerful and prestigious organization like the U.S. Chamber of Commerce doesn’t confer legitimacy upon it.  Rather, it only makes the Chamber look stupid as well.  The hard-earned money spent by member companies for the purported benefits of this organization would be far better spent with other organizations who understand the value of balance  in trade deals and who demand that others buy as much from us as we buy from them.

Clumsy Trade Policy

January 31, 2009

I originally began this post as merely criticism of the U.S. Chamber of Commerce for opposing the “buy American” provisions in Obama’s economic stimulus package. But I soon realized that there’s a bigger issue here – that clumsy trade policy at both ends of the spectrum has its costs, whether it’s foolishly placing blind faith in “free” trade or a heavy-handed application of protectionism that threatens all trade.
Let’s begin with the left end of the spectrum – the U.S. Chamber of Commerce’s position. At first glance, it seems hard to believe that they would oppose “buy American” provisions in Obama’s plan.

The U.S. Chamber of Commerce stepped up efforts on Friday to kill a popular “Buy American” provision before it reaches President Barack Obama‘s desk as part of an mammoth economic stimulus bill.

But it’s not surprising. I’ve constantly warned of the consequences of the trade deficit and the method used to finance it – a sell-off of American assets – and this is one of them: that with ownership comes control. Many of the members of the Chamber of Commerce are actually global corporations, largely foreign owned and controlled, with little allegiance to America, and have major stakes in foreign operations that would be jeopardized by any move toward restoring a balance of trade.


“Some have slammed the U.S. Chamber for opposing “Buy American” provisions, calling our position ‘economic treason,'” the group’s president Thomas Donohue said in a statement.

“Try economic patriotism. Such provisions would cost American jobs, trigger retaliation from our trading partners, slow economic recovery by delaying shovel-ready infrastructure projects and cede our leadership role as a longstanding proponent of free and fair trade and global engagement.”

Yes, actually, the Chamber’s position is rather treasonous. Throughout history, traitors have assuaged their consciences by convincing themselves that what they did was actually for the good of the country. Mr. Donahue doesn’t explain how “buy American” provisions would “cost American jobs.” That’s makes absolutely no sense. Only a worsening of the trade deficit would cost American jobs. Anything that reduces the trade deficit, as “buy American” provisions clearly would, creates American jobs. It’s as simple as that. And would “buy American” provisions result in “delaying shovel-ready infrastructure projects?” Possibly, but the delay would be time spent ramping up American manufacturing, creating even more jobs. Isn’t that the whole idea?
But the linked article goes on to raise an important issue:

In Canada, the main opposition Liberal Party called on Conservative Prime Minister Stephen Harper to raise the issue with Obama when he visits on February 19 if the United States has not made clear that Canadian iron and steel will be welcome.

“I presume the prime minister will make this a very important issue when President Obama is here, because it has huge implications for the steel industry obviously but Canada-U.S. relations overall,” Liberal House leader Ralph Goodale told reporters in Parliament.

This illustrates the hazards of the far right in the spectrum of trade policy, a clumsy, sledge hammer application of protectionism. Why would we want to anger Canada? Canada is our number one source of oil and is a country with whom we have a balance of trade in manufactured goods. We have a very beneficial trade relationship with Canada. But our overall trade deficit, a composite of trade deficits in both oil and manufactured products with many other countries, is a serious problem – the root cause of our financial collapse.
Our biggest deficit in manufactured goods is with China, simply because theirs is such an enormous country with one fifth of the world’s population. We’d like to reduce our deficit with them, but what rationale would we use to justify protectionist measures? Do we simply tell China “sorry, but we don’t want to trade with you any more?” Or do we try to couch it in some logic, perhaps blaming them for currency manipulation? That hardly seems fair either. Is it their fault that the dollar soars any time there’s the least bit of positive news on the American economy?
And what about Saudi Arabia? How do we reconcile “buy American” provisions with our thirst for cheap, imported oil? Do we exempt them from the provisions? The whole thing starts to sound rather arbitrary, doesn’t it? And we really don’t want the more powerful of these nations to start feeling that they’re being treated arbitrarily and unfairly.
The problem is that we’ve held fast to our free trade policy for decades, in spite of the mountain of evidence that something is wrong – culminating in global financial collapse, without ever questioning why. We’ve taken the 18th century theories of Adam Smith, David Ricardo and others, fathers of free trade theory, at face value without ever researching factors that may limit their application – like population density, for example. And without an understanding of what makes free trade work in some instances while producing horribly skewed results in others, we then have a tendency to lash out at all trade. At least the blunt force application of protectionism would restore a balance of trade, but the U.S. Chamber of Commerce is correct in warning of backlashes.
A trade policy rooted in an understanding of how trade really works and how disparities in population density skew the results could restore a balance of trade while avoiding unwanted consequences. A tariff structure on manufactured goods, indexed to population density, is the answer. Leaving natural resources free of tariffs, oil suppliers like Saudi Arabia, Venezuela, Canada and Norway would have no reason to retaliate. And these same countries, along with many others, would be free of tariffs on manufactured goods because of their low population densities. Protectionist tariffs would be focused like a laser on the real problem – overpopulated nations like Korea, Japan, Germany and China. They may not like it, but at least there would be a consistent and logical rationale behind the policy.  They may like to retaliate with their own tariffs but would probably think better of it, since it would only further jeopardize their exports.
Any policy that moves us toward a balance of trade and restores manufacturing jobs is better than what we have now, but an elegant approach that’s rooted in logic can avoid the unnecessary collateral damage of a trade war that would only buttress arguments for a pendulum-like swing back to the opposite end of the clumsy trade policy spectrum.


Author Opposes Free Trade with S. Korea

January 11, 2008

S. Korea has a population density of 1257 people per square mile, compared to America’s 83 per square mile.  It is almost four times as densely populated as China and 50% more densely populated than Japan.  As predicted by the theory presented in Five Short Blasts, free trade with such a country will be a sure-fire loser.

I’m neutral regarding free trade with Panama and Columbia.  They are slightly more densely populated than the U.S. – between 100 and 110 people per square mile.  These countries are no threat to American workers. 

“Tom Donahue, president of the U.S. Chamber of Commerce, told reporters earlier in the week that business will work to get approval of the agreements, rejecting suggestions of any type of trade moratorium.  ‘We are the largest exporting nation in the world,’ Donahue said. ‘The suggestion that we back off trade agreements, trade expansion, is to suggest that we stop providing opportunities for American workers and American communities to participate in the global economy.’”

This is a common tactic used by blind traders.  They focus only on exports.  He ignores the fact that we are also the biggest importing nation in the world, importing much more than we export.  The net result is a huge subtraction from our GDP and a huge loss of jobs.  He speaks of our trade policy as an “opportunity” for American workers and American communities.  It is, in fact, just the opposite.  It has paved the road to our bankruptcy.