Via Teleconference
5:06 P.M. EDT
MR. KIKUKAWA: Good afternoon, everyone. And thank you for joining our call previewing President Biden’s remarks tomorrow at the United Steelworkers headquarters in Pittsburgh, Pennsylvania.
This ca- — call will feature on-the-record remarks from National Economic Advisor Lael Brainard and background questions and answers with senior administration officials.
For your awareness and not for reporting, those administration officials are [senior administration official], [senior administration official], and [senior administration official].
The content of this call and accompanying materials are embargoed until tomorrow at 5:00 a.m. Eastern time. If you did not receive the materials, please email me.
With that, I’ll turn it over to Lael to kick us off.
MS. BRAINARD: Well, thank you, and thanks to everyone for joining us this afternoon.
As you know, President Biden grew up in Scranton, Pennsylvania. President Biden understands that American steel built our nation and steel mills helped to build the American middle class with good-paying union jobs in communities in states like Pennsylvania and Ohio.
The President is committed to ensuring that American infrastructure and industies — industries of the future, like clean energy and electric vehicles, will be made here in America using American steel made by American workers. The President understands we must invest in American manufacturing, but we also have to protect those investments and those workers from unfair exports associated with China’s industrial overcapacity.
Our Investing in America Agenda is working. Spending on manufacturing facility construction has more than doubled since President Biden took office. Manufacturing employment is up almost 800,000 on his watch, higher than at any point under the previous administration.
While the previous administration failed to secure an infrastructure law, President Biden delivered more than 50,000 infrastructure projects so far: roads, bridges, rail, and ports. And he committed that those projects would be made with American steel by — made by American steelworkers.
However, China’s policy-driven overcapacity poses a serious risk to the future of the American steel and aluminum industry. China cannot export its way to recovery. China is simply too big to play by its own rules.
In manufacturing sectors like steel, China is already producing more than China or the world can easily absorb. China’s subsidies and other forms of support lead to exports flooding global markets at artificially low prices, undercutting American steel that is cleaner.
Tomorrow, the President will travel to Pittsburgh, to the United Steelworkers headquarters, to talk about actions that he will take to help protect American steel and American steelworkers.
The President’s approach is strategic, balanced, and targeted, and it has been developed in close partnership with industry stakeholders and unions who have directly lived through the impacts of China’s unfair trade practices for years.
It is also an approach where we are working with our partners and allies who also are feeling the effects of China’s overcapacity and artificially low-priced exports.
President Biden has made it clear that his vision for the future is one that doesn’t leave American workers and communities behind. And today he continues to deliver on that promise.
And with that, I’m going to turn it over to my colleagues to talk in greater detail about the actions he will discuss.
MR. KIKUKAWA: Thanks so much, Lael. We’ll now take some questions. If you have a question, please raise your hand using the “raise hand” function, and we will call on you.
The first hand I see is from Trevor Hunnicutt. You are now able to unmute.
Q Thanks so much for taking the question. Could you talk a little bit about why these tariffs are necessary given the Section 232 tariffs that already exist and — and triple-digit tariffs on, you know, product-specific categories?
And then also curious if you could give an update on — on what’s happening with the U.S. Steel deal and whether the President is going to use his authorities under CFIUS or DOJ to — to block that deal now that he’s come out in opposition to it. Thank you.
SENIOR ADMINISTRATION OFFICIAL: Great. Thanks for that question. I think I can take the first part.
I think you rightly note that we’ve had 232 tariffs already in place, but I think as Director Brainard noted, President Biden has passed landmark legislations that together are driving greater investments in the manufacturing industry, and we are seeing tremendous job growth as well as investments across the board.
So, you know, we also know, at the same time as our economy is experiencing this relative strength, China’s economy is increasingly dependent upon export-led growth to essentially support their growth. So, there is growing concern against, you know, a new export surge that may be impacting global markets. Secretary Yellen has also spoken about this. So, it’s critical that we get ahead of this surge to protect our workers.
I think you already know that China alone accounts for almost 50 percent of global steel production. China is producing more steel than it can utilize domestically. And as they think about expanding their export-led growth, of course, steel is an important channel through which it is likely to take place. And if you look at prices, China’s export steel prices are 40 percent lower than U.S. steel prices. And, therefore, it’s important that, you know, these new tariffs, if acted, provide a more level playing field against China’s unfair trade practices in steel and aluminum.
And I think as to your second question, which was about U.S. Steel, I think nothing new to add. I think the President has already spoken and said that, you know, it’s important that U.S. Steel remains a domestically owned and operated company. And, you know, I think the President will make that clear again. He has told the steelworkers he will have his [their] backs, and he means it.
MR. KIKUKAWA: Great. We’ll now turn it over to Josh Wingrove.
Q Hi there. Thank you. Can you talk a little bit about the Mexico provisions here? Did you consider actual tariffs on Mexico or on Chinese steel from Mexico? Is this more of a warning? Just wo- — wondering if you can walk us through that decision process. Thank you.
SENIOR ADMINISTRATION OFFICIAL: I can take that question. Look, we’ve got a senior team in Mexico today, and I want to emphasize our desire to cooperate and partner with Mexico on addressing imports coming into the North American market as a way of circumventing tariffs.
So, I’m not going to get ahead of the diplomatic conversations that have happened today and that will be happening in the days and weeks to come. But I think we’re hoping to come to a mutually acceptable solution with Mexico because this is a problem that affects both of our economies.
SENIOR ADMINISTRATION OFFICIAL: But I just want to just also jump in here and just say that the — the President’s calling on USTR to consider tripling the 301 tariffs specifically for Chinese imports on steel and aluminum.
MR. KIKUKAWA: Great. We’ll now turn it over to Doug Palmer.
Q Hi. Thanks for taking my question. So, just on the recommendation that USTR consider urging — consider tripling the tariffs, I mean, how does that — how does that work? Is that a foregone conclusion that the 301 tariffs would go to 25 percent?
And in terms of the shipbuilding probe, one of the things that the steelworkers have asked for is a port fee. They talked about, like, a hypothetical million-dollar port fee on a 20,000 TEU ship that visits the United States. Would you expect the 301 investigation to — to lead to a finding like that?
SENIOR ADMINISTRATION OFFICIAL: Hi. This is [senior administration official]. Happy to jump in on these questions. And, colleagues, please feel free to supplement.
With respect to the first part of your question, so the President is calling on the Trade Representative to consider raising and up to tripling the steel and aluminum tariffs under the four-year review.
The first step would be conclusion of the four-year review. And, as you know, that statutory review is ongoing. We hope to see results on that review soon.
And based on the findings of that review, then further responsive action and enhancing the effectiveness of the tariffs could be taken into account, consistent with the President’s call.
With respect to your question on the ships investigation, so the Trade Representative will be initiating the investigation on ships tomorrow. That will launch an investigation into China’s acts, policies, or practices and their burden of restriction on U.S. commerce.
So, it’s a little premature to talk about potential responsive actions now. It’s only if there are affirmative findings, affirmative determinations that the acts, policies, or practices exist and burden or restrict U.S. commerce that the Trade Representative would then turn to consider responsive action. Thanks.
MR. KIKUKAWA: Thanks, Doug. We’ll now turn it over to Andy Duehren.
Q Hi. Thanks for taking my question. I just wanted to ask on these concerns about Chinese overcapacity and production — if that is limited to steel? I mean, obviously, you’re seeing that in a few different sectors in China or people are seeing that in a few different sectors in China, but obviously you’re only singling out steel. And so, I’m curious if the administration’s concerns are limited to that sector or if they go beyond that. Thanks.
SENIOR ADMINISTRATION OFFICIAL: Thanks for that question. I think, as you know, Secretary Yellen, returning from her trip from China, has also outlined serious overcapacity concerns in, for example, solar. This is not a one-sector export surge or policy-driven industrial overcapacity issue; it’s a multisectoral challenge, of course. But today’s actions that the President is proposing are focused on steel and aluminum.
MR. KIKUKAWA: Great. Now we’ll turn it over to Demetri.
Q Thank you. I’ve got two questions. The first is on the tariffs. How much leeway does USTR have to not accept the recommendation from the President?
And then on shipbuilding. Given that the U.S. is really, frankly, just to — kind of a bit player globally now — when you look at all the ships being built in China, South Korea, and Japan — is this investigation intended to try and bring shipbuilding back to the U.S. or just come to an outcome where, as someone said earlier, you impose port fees to try and get some money out of the Chinese for what they’re doing? Thank you.
SENIOR ADMINISTRATION OFFICIAL: Hi. This is [senior administration official] again.
Well, with respect to the first question, the tariffs, I can just say: So, the President is calling on the Trade Representative to consider tripling tariffs consistent with the findings and the outcome of the statutory review, which is akin to an investigation. And so, the Trade Representative would consider that as part of the — the next step after making findings, which is, you know, review of the effectiveness and looking to enhance the effectiveness of the tariffs that are in place under the — the Section 301 — existing Section 301 action.
With respect to the new Section 301 investigation, we think that the labor unions — five national labor unions — have raised very serious concerns with respect to China’s pursuit of dominance in the maritime logistics and shipbuilding sector. So, the petition is extensive. It raises a number of very significant concerns and presents a lot of evidence in relation to China’s nonmarket policies and practices through which it pursues its dominance with significant impacts on U.S. workers and on the U.S. industry.
So, we take those allegations very seriously and intend to conduct a thorough investigation into them. Thanks.
Q Can I just quickly follow up and ask: If — if nothing is going to be decided until after the 301 review, why is the President coming out now with a recommendation?
SENIOR ADMINISTRATION OFFICIAL: I think it’s appropriate as part of the President’s consideration with respect to actions on steel and aluminum to consider, you know, the application of Section 301 tariffs to this sector. This is a sector that was targeted by China with respect to some of its force technology transfer policies and practices.
And as part of re- — our review, we consider the tariffs’ impact on the U.S. economy and how they can be made more effective in seeking to address China’s policies and practices. And so, that’s why there is a focus on the use of Section 301 tariffs for this sector at this time.
Q Thank you.
MR. KIKUKAWA: Thank you. We will now turn it over to Gabe Gutierrez.
Q Hi. Thanks so much for doing this. I guess, what would you say to critics who say these tariffs will raise consumer prices, heat up inflation, or those, you know, who say it’s only — it’s only happening in an election year? And that’s one question.
Then, secondly, is this a continuation of the trade war started by the prior administration? How would you respond to that? Thank you.
SENIOR ADMINISTRATION OFFICIAL: Well, thank you for that — thank you for that question. If taken, these actions will not increase inflation, but they will protect American jobs and steel industry.
Let me just lay out why we see no impact on inflation at all. First is inflation has come down more than 60 percent. Right now, residual inflation is not coming from goods. These actions will not change that.
Second, as you know, the President’s approach has been to invest in key sectors and expand the supply side of our economy, which has contributed to lowering inflation. And as we are seeing manufacturing rebound, it’s important to protect those gains.
Third, our trade actions are actually strategic and balanced. President Biden will not impose ineffective, across-the-board tariffs that would increase costs and harm hundreds of thousands of jobs. In fact, the imports of steel from China account for about 0.6 percent of total U.S. steel demand. So, it’s quite small, and we see no inflationary passthrough.
But it is important for us to get ahead of China’s new export surge and their continued pressure on prices that I made — that makes it hard for American steel companies to compete. Because, if left unaddressed, it can be quite costly to workers, as we have learned from previous cycles of overcapacity and surges.
And that’s why we’re proposing these actions. It has nothing to do with elections. I think it has to do with the fact that we’re actually acting from a place of self-confidence and strength because our economy is growing and manufacturing is rebounding thanks to all the investments the President has made. And it’s important to safeguard and shield those investments from unfair competition from abroad.
Q Thank you.
MR. KIKUKAWA: All right. With that, we, I think, have run out of time. If you have any other questions, please feel free to email them to me.
Again, this call is embargoed until 5:00 a.m. tomorrow. The remarks from NEC Director Lael Brainard were on the record, and the Q&A was on background as “senior administration officials.”
Thank you.
5:24 P.M. EDT
# # #
'
