Congressman Cleaver Holds Hearing On Tariffs and U.S. Trade Policies in Financial Services NSIDMP Subcommittee

Press Release

Date: June 19, 2019
Location: Washington, DC
Issues: Trade

In his role as Chairman of the U.S. House Financial Services Subcommittee on National Security, International Development, and Monetary Policy (NSIDMP), Congressman Emanuel Cleaver, II (D-MO) held a hearing today entitled, "Promoting Economic Growth: Exploring the Impact of Recent Trade Policies on the U.S. Economy."

"As the President continues his reckless foray down the path of tariffs and trade disputes, it is important that the American people are aware of the concrete and potential damages these trade policies are doing to American consumers, farmers, and businesses," said Congressman Cleaver. "I will continue to sound the alarm on the harm this President is doing to large sectors of the American economy, while encouraging appropriate oversight and accountability."

During the hearing, the subcommittee reviewed the impact of President Trump's tariffs on imported goods from certain countries, which have so far impacted 10% ($267.5 billion) of U.S. annual imports and would grow to 40% ($1,018.1 billion) of all U.S. imports based on proposed future tariffs by the President. Researchers from the Federal Reserve Bank of New York, Columbia University, and Princeton University found that "the entire incidence of the tariffs fell on domestic consumers and importers up to now, with no impact so far on the prices received by foreign exporters." Additionally, their research found that, "U.S. producers responded to reduced import competition by raising their prices" and that these tariffs cost the average American household $414.00 in 2018, which could grow to $831.00 in 2019. With the President's newest tariffs in place for 2019, the total cost to Americans consumers is expected to be more than $106 billion annually.

The impact of the President's trade war with China on American farmers was also a subject of discussion during the subcommittee hearing. As a direct result of the President's proposed escalation of the trade war, 70,800 farmers or other members of the American agricultural sector are projected to lose their jobs over the next three years. U.S. farmers who rely on exports to China are simultaneously seeing decreases in exports and higher costs for steel-based farm equipment, effectively being hit from both sides. American farmers are being hit the hardest by this trade war.

In 2017, American soybean farmers exported $12 billion worth of soybeans to China. From January through October of 2018, U.S. soybean exports were 63% lower than during the same time period in 2017, and after China hiked its tariff on American soybeans in response to newly imposed American tariffs in July 2018, American soybean exports were essentially halted entirely. Not only have these exports to China ceased, but the price of U.S. soybeans has also declined by 20% since China's retaliatory tariffs took effect, according to the American Soybean Association. As a result of the trade war's disastrous effects on the U.S. soybean industry, many farmers may be left with no other option than to harvest a crop they cannot sell.

This subcommittee hearing not only explored the numerous impacts of the President's trade policies on American businesses and consumers, but also sought to highlight the need for increased oversight as these tariffs have all been enacted without congressional approval. The subcommittee reviewed a piece of legislation today that Congressman Cleaver is drafting that would require the President to provide advance notice and reporting of proposed tariffs and would establish a Tariff Review Committee. Given that these tariffs have a profound impact on U.S. financial markets and American consumers, this legislation would provide enhanced accountability and oversight of proposed tariffs to ensure that any tariffs that are enacted will be in the best interests of the American people.

"The tyrannical approach of unilaterally implementing tariffs on the American people without congressional input is reminiscent of the Boston Tea Party and the calls of "taxation without representation,'" Congressman Cleaver said. "If the President wants to continue enforcing tariffs on the American people, he must receive input and consent from Congress, and every member should have to go on record with an explicit statement of whether they approve of this trade war."

You can find Congressman Cleaver's complete opening statement below:

"Thank you all for being here today and your shared focus on the national crisis we find ourselves in. Our country has entered day 512 of what can only be described as a Trade War. The opening salvo came with President Trump's tariffs targeting solar panels and washing machines. As our witnesses will attest, it has cascaded to shots and counter shots from countries including China, India, Canada, Mexico and members of the European Union. Offenses that have impacted nearly everything facet of our economy--from agriculture to manufacturing. While I know and have read the works of most of our witnesses, Ronnie Russell is not only a witness but a constituent that I know very well.

I have heard from Ronnie, and a number of other famers in my district, explain to me the devastating tole this trade war has had on their lives and their livelihood. I understand that in response to US actions, American agricultural and food exports to China declined precipitously--largely due to a drop in exports of US soybeans. China has levied retaliatory tariffs of 25% on US soybeans, raising the total tariff rate to 27% and effectively restricting access to what was the largest U.S. export market for that crop. About half of all soybeans produced in the United States were exported prior to the application of the tariffs. As the farmers on this panel can attest, there is hardly a place that will purchase their soybeans forcing many of them to let the crop die in the field. Many of the folks Ronnie and John are representing here today don't have another few months for this trade war to linger on. Their farms are literally on the line. The costs of this trade war are not limited to the boundaries of my rural communities. It traverses the length of Missouri's I-70, across all rural and urban divides around the country. Federal Reserve Chairman Jerome Powell, in his testimony before this committee earlier this year told us that uncertainty is being injected into manufacturing sentiment due to trade disputes. This is costing American jobs. Trade Partnership Worldwide finds that, on net, my home state of Missouri stands to lose over 45,000 jobs as a result of the trade war and our country could lose over two million jobs.

Furthermore, there is no American that is insulated from this pain. The Federal Reserve found that "U.S. tariffs were almost completely passed through into U.S. domestic prices, so that the entire incidence of the tariffs fell on domestic consumers and importers up to now, with no impact so far on the prices received by foreign exporters." They found that "producers responded to reduced import competition by raising their prices." Making it more expansive for Americans to buy the staples of like. Americans already struggling with low wages and long hours at work. The job of our government, and what voters put us in office to do, is to help make their lives a little easier.

To help remove the barrier that inhibits their prosperity. These tariffs are taxes that hamper American growth and threaten our future. As our witnesses can attest these tariffs threaten to reduce US GDP growth by nearly a percentage point. As we have this hearing, down the hall my colleagues in the Ways and Means Committee are receiving testimony from the President's leading lieutenant in this war, the U.S. Trade Representative. Down the street the Commerce Department is entering their third day of testimony from industry groups suffering and crying out for an end to this war. At Pennsylvania Avenue, we all await the prospects of a another shot that would rock our financial markets, inject another level of uncertainty and possibly push our economy into a recession. The consequences of inaction compel us to have this important conversation and derive solutions to protect our economy and the country. I would ask my colleagues for unanimous consent to enter into the record a discussion draft of bill that I am working on. This bill would require the president to engage in a thoughtful analysis of the costs to the various segments of the American and the American public before imposing any new tariff. It would require him to seek advice from a council comprised of cabinet officials to ensure that a decision that could impact every American is more thoughtful than a tweet. With that I would like to again thank you all as I look forward to the testimony of our witnesses."