Trump initiates probe into causes for $700 bn trade deficit
The Dollar Business Bureau
In another executive order signed by Donald Trump, the Department of Commerce and the Office of USTR (US Trade Representative) have been asked to submit, within 90 days, a comprehensive report on the causes of USA's $700 billion trade deficit. Commerce Secretary, Wilbur Ross, is to lead the said investigation of unfair trade practices hurting the US economy.
Threatening countries which get away with violating import duties, Trump asserted that a detailed investigation of trade abuses will be done, following which stringent laws will be put in place to prevent them.
The move comes immediately before the first diplomatic meeting between Trump and China's President Xi Jinping, scheduled for next week. Although the bill doesn't target any specific country, China has been at the receiving end of Trump's sharp criticism for use of manipulative trade practices.
Sean Spicer, White House Press Secretary said that the government would impose punitive countervailing duties to prevent dumping of certain products by subsidised economies. In order to protect domestic manufacturers and 'American Workers', the US Customs and Border Protection Agency, which has a mechanism for detecting such transactions, imposes penalties on malicious dumping practices. But due to lack of enforcement, duties worth $2.8 billion have gone uncollected since 2001, Sean Spicer reported.
"If a foreign company, often due to its being partly or entirely government-run or subsidised, is able to flood American markets with an artificially cheap steel, for example, they price American companies out of the system,” Spicer said, throwing a brickbat at China.
The announcement made by Wilbur Ross identifies 16 nations majorly contributing to USA's trade deficit. China leads the cohort with a $347 billion surplus. Deficits with Japan ($68.9 billion), Germany ($64.9 billion), Mexico (63.2 billion), Ireland ($35.9 billion) and Vietnam ($32 billion) are also targeted by the new executive order. India also features among these 16 nations, sporting a $24 billion surplus with the Western economy. Canada, Indonesia, Thailand, Malaysia, South Korea, Switzerland, Italy, Taiwan and France figured in the list as well.
Adding that the findings from this exercise will enable 'measured' decision making in fair trade practices, Spicer said that this is the first such review which will lay out problems country-wise and product-wise, so that the true causes of USA's heavy trade deficit can be pinned down.