[Congressional Record Volume 165, Number 29 (Thursday, February 14, 2019)]
[Senate]
[Page S1358]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
GOVERNMENT FUNDING
Mr. GRASSLEY. Mr. President, today I want my colleagues to listen to
some ideas that I have about tariffs, generally, and where we are on
tariffs and where we might be on tariffs in a couple of weeks,
depending on what the Secretary of Commerce says, because in a few
days, that Secretary is expected to provide the President a report.
This report will detail his Department's findings in the
investigation of whether imports of automobiles and auto parts pose a
national threat to the United States. Common sense tells me it doesn't.
Let me repeat that because I think it is important for us to understand
whether the cars that everyday Americans rely on to get to work, to
drive their children to schools, to visit their families--whether or
not the importation of those automobiles threatens national security.
Now, having said that, you might think that I disagree with the
President--and I don't--that we must have fair and enforceable trade
agreements that benefit Americans. Sometimes we have to make hard
decisions in order to get and have fair and enforceable agreements. I
do not agree that we should alienate our allies or jeopardize the
health of our economy to achieve the good outcomes of fair and
enforceable agreements.
The Tax Foundation has found that a 25-percent tariff on auto imports
would amount to roughly a $73.1 billion tax increase. According to the
Center for Automotive Research, a 25-percent tariff on auto imports
would also result in the loss of 700,000 jobs and raise the price of an
average car by nearly $7,000.
Dealers would see a decline in annual sales by as many as 2 million
vehicles. Consumers would face up to a 10-percent increase in the cost
of repairs and replacement parts. In short, raising tariffs on cars and
parts would be a huge tax on consumers who buy or service their cars,
whether those cars are imported or domestically produced. Make no
mistake, Americans will be paying those taxes.
Tariffs are a tax paid at the time of import. Historically, they have
been a protectionist tool intended to prop up domestically produced
goods by making foreign goods more expensive. Tariffs are not a long-
term solution, and nobody wins with the producing of tariffs.
While they may provide short-term protection for domestic industries,
they do so at the expense of ordinary consumers and industries
increasingly dependent on a complex global supply chain. On the whole,
I think this all adds up to damaging the economy. For an
administration, including this Senator and most Republicans on this
side of the aisle, who have been crowing about the benefits of the tax
bill of late 2017 and the jobs it has created and the good it has done
for workers, why would you want to put on a $73 billion tax increase
through tariffs that would undo a lot of good that we say and the
President says the tax bill has done. Let me repeat it again. On a
whole, this is going to be damaging to the economy.
A 2018 study by the International Monetary Fund reviewed tariff
changes across 151 countries between the decades of the 1960s to 2014.
The International Monetary Fund found that tariff increases led to less
output and less productivity, and, then, you know what happens. There
is more unemployment, and when you have more unemployment, you get
greater inequality.
The recent U.S. tariff increases have invited tariff retaliation from
our trading partners. I know because Iowans are bearing the brunt of
this retaliation. Imposing tariffs on auto parts will inevitably invite
more retaliation, and we simply can't afford more of that.
The United States must continue to lead the world on trade and
economic issues, as we have for at least the period of time since World
War II. We have benefitted from one of the most open markets in the
world, and we must continue to lead the world by providing a good
example. We have led to a better world since World War II, and the
results have been these. Several decades ago, 50 percent of the world's
population was in poverty. Today, it is less than 10 percent. Recently,
in two or three references I have seen, the fact is that right now or
next year, as for major middle class status in the various countries
around the world and in different ways around the world, half of the
world is middle class. President Trump is right to hold our trading
partners accountable. So I don't find fault with him there.
We can't take benefits we have received from international trade for
granted. International trade has been a tremendous benefit to farmers
and businesses in my State of Iowa and across the country. We are
better off because we can sell our products around the world.
Our farmers say they don't want aid from the Federal Treasury. They
want markets. They want to trade. You develop those markets and you
keep those markets. Tariffs and retaliation send a signal to other
countries that you might not be a reliable supplier, and they go
elsewhere to create relationships that they can depend on. America
ought to be able to be depended upon any place in the world from the
standpoint of trade.
When you talk about America and Iowa exporting products, these are
some of the best products in the world. In this vein, then, I hope the
President will heed my call to forego the auto tariffs and instead
focus on opening up new markets.
The U.S. auto industry is a major driver of our economy, supporting
nearly 10 million American jobs and accounting for 3 percent of the
gross domestic product. Without question, any tariffs that are imposed
will have a negative effect on the U.S. auto industry and our economy.
Our focus, instead, should be on strengthening our relationships with
our allies, while targeting China's harmful trade practices and
policies. Tariffs on autos and auto parts will not help us achieve
these critical priorities.
____________________