China Must Be Stopped from Cheating Trump’s Trade Rules

A key pillar to President-elect Donald Trump’s economic prosperity plan for America involves helping American companies better compete with Chinese competitors in ways that he hopes will ultimately lead to a resurgence in making and manufacturing more in the United States.

The plan is supported with tariffs his first administration implemented in 2018 on billions of dollars worth of Chinese imports. Many goods fully or partially made in China are subject to these duties to enter and be sold in America.

While these tariffs are mandatory, and both Chinese and American companies are required to pay what is applicable, there are indications that some Chinese companies may not be paying what they owe.

Congress and the Office of U.S. Trade Representative should therefore ensure that President-elect Trump’s plan is not being undermined by any company, not the least of which are Chinese companies that appear to be propped up by the Chinese government and skirting the rules to gain a competitive advantage over American companies.

If and when a Chinese company cheats, its American competitor could be unfairly disadvantaged.

Over time this leads to financial loss, layoffs, factory closures, and even going out of business. It’s not always obvious which brands might be Chinese and which are not.

Iconic American brands such as Smithfield Foods, GE Appliances, and American Multi-Cinema (AMC Theatres) have come under Chinese ownership, control, or influence, which has various effects on their operations, pricing, and adherence to ethical standards.

Unfortunately, some of these foreign-owned brands operate under trade practices that may exploit regulatory loopholes or undermine U.S. economic interests.

Milwaukee Tool is one of the examples of this trend, and it is now part of the same Chinese company as Hoover, Dirt Devil, and Oreck — all vacuum companies that many may presume are still American.

Though Milwaukee Tool retains a name synonymous with America, being named after an American city, it is owned by Techtronic Industries, a Hong Kong-based conglomerate with ties to the Chinese government.

This ownership raises concerns about market competitiveness and ethical practices, especially with several news outlets reporting that the company is being sued for using forced prison labor in its manufacturing facilities in China. This allegation, if proven, implies a clear economic advantage over companies abiding by fair labor standards.

Data analyzed by Trade Alliance to Promote Prosperity suggests that TTI’s Milwaukee Tool might use transshipment tactics to avoid U.S. tariffs, potentially undercutting American companies paying full tariffs on Chinese-made goods.

In an analysis of over 2,200 commercial records, TAPP researchers found that 91 percent of Milwaukee Tool/TTI shipments by value were not subject to Section 301 tariffs.

Further, the analysis found that 7 percent of imports were from Taiwan, despite what appears to be the absence of a manufacturing footprint.

This pattern suggests possible transshipment of Chinese goods through other countries, possibly avoiding the costs that American-owned companies face. This is why TAPP has called on Congress to launch an investigation to determine if there is fire where we smell smoke.

Milwaukee Tool is not alone. Recently, Reuters reported on a 12-year campaign by Chinese solar firms to avoid the reach of U.S. tariffs by moving aspects of manufacturing to non-tariff countries, including Vietnam, Cambodia, and Thailand.

The Chinese government’s policy to push Chinese firms to avoid U.S. tariffs, allowing them to offer lower prices than American-owned competitors, is the heart of the issue.

These companies, bolstered by state support, can operate with advantages that U.S. firms may find challenging to match, leading to unfair competition in both pricing and availability.

The issue goes beyond economics; potential national security concerns arise with foreign-controlled brands involved in sensitive technology. For example, Milwaukee Tool’s previous export violations involving thermal imaging cameras– products controlled for national security reasons — illustrate how these foreign-owned brands may pose security risks.

This risk intensifies with China’s Military-Civil Fusion strategy, where commercial technology could be leveraged for military purposes.

To safeguard U.S. interests and to ensure the integrity of President-Elect Trump’s tariff regime, Congress should investigate whether accused companies adhere to trade and security standards.

Recently, TAPP called on the House Select Committee on the CCP and the Congressional-Executive Committee on China to open an investigation into Milwaukee Tool for potential Section 301 violations related to their import practices.

Addressing these concerns goes beyond protecting American businesses: It’s about upholding the integrity of U.S. trade policy and ensuring that companies benefiting from American consumers are also respecting American rules.

In the United States, we expect companies to play by the rules. Congressional oversight and enforcement will help ensure they do, protecting American values, fair competition, and, ultimately, national security.

Kent Kaiser, Ph.D., is the Executive Director of Trade Alliance to Promote Prosperity

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