The US retail industry has backed the signing of two executive orders by US President Donald Trump aimed at cracking down on trade abuses and identifying the causes of America’s trade deficit.
At the signing of the orders on Friday (31 March), Trump said he hoped they would “set the stage for a great revival of American manufacturing.”
The first executive order concentrates on tougher enforcement of anti-dumping laws and increasing the collection of anti-dumping penalties and so-called countervailing duties. According to White House press secretary Sean Spicer, between 2001 and 2016, around US$2.8bn in import taxes went uncollected from companies in 40 countries.
The second executive order calls for the first-ever comprehensive review of America’s trade deficits and all violations of trade rules that harm the US and the workers of the US. The review will be led by Secretary of Commerce Wilbur Ross.
Figures released by the Commerce Department last month showed the US had amassed its largest trade deficit since March 2012. In January 2017, this was 11.8% higher as compared to January 2016, increasing from $43.4bn to $48.5bn.
“From now on, those who break the rules will face the consequences – and they’ll be very severe consequences,” Trump said at Friday’s signing. “We’re going to investigate all trade abuses and, based on those findings, we will take necessary and lawful action to end those many abuses.”
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By GlobalDataThe Retail Industry Leaders Association (RILA), which represents 200 retailers, manufacturers and services suppliers, welcomed the signing of the two orders.
“Global supply chains are essential for every American consumer. Open, global markets are key to supporting US businesses – saving customers millions of dollars while meeting American consumers’ demands for products anytime, anywhere. In addition, the movement of goods from shore to shelf is a tremendous driver of the US economy and supports millions of American jobs throughout the retail supply chain. That is why RILA has long-championed the benefits of international trade.”
It added that it is committed to working with the Administration and Congress to promote “sound trade policies” that help US retailers to continue to create domestic jobs.
“This includes the US adopting a prospective collection system to improve the collection of anti-dumping and countervailing duties, which would decrease supply chain uncertainty and enhance US competitiveness.”
The executive orders, however, may have rekindled fears Trump’s administration could set off new trade frictions with China. Late last week the President signalled that trade — and the deficit with China — would be high on the agenda at his meeting later this week with the Chinese President, Xi Jinping, in Florida.
In a tweet, he said: “The meeting with China will be a very difficult one in that we can no longer have massive trade deficits and job losses. American companies must be prepared to look at other alternatives.”
Some analysts have suggested a trade war between the world’s two largest economies could result. However, Alex Capri, an expert on international trade, told CNBC yesterday that such a trade war was unlikely, but that an increase in certain types of tariffs on Chinese products could happen.
Meanwhile, the US is preparing to renegotiate the North American Free Trade Agreement (NAFTA) with Canada and Mexico, putting the focus of any changes on trade with the latter country. On the southern border, Trump says the transaction has not been fair to the US for “many many years.”
The US had a $63bn deficit in goods with Mexico last year and Trump has regularly threatened to levy a border tax on companies that relocate US factories to Mexico to take advantage of lower labour costs.
Mexico, however, says a new free trade agreement with the European Union is of “paramount” importance to the country at present, as it prepares to hold a third round of negotiations this week to upgrade an existing accord dating from 2000. It is thought a deal could be struck this year. The EU is Mexico’s third largest trading partner after the US and China.
