The US recently announced it would levy anti-dumping penalties against Canada. These actions specifically target softwood timber, dairy, and steel. While the full effects are yet to be fully assessed, and opposition has been raised by an unexpected source: Florida.
Why should we worry about misaligned participations in trade? According to the U.S. Department of Commerce, less than 1 percent of U.S. firms export. Tens of thousands of small-business manufacturers and service sector firms could export their goods and services, but do not. These companies often fear the challenges of going overseas. But all firms entering new markets face shortcomings and disadvantages when compared to local competitors. Due to a lack of local knowledge, unfamiliarity with market conditions, insufficient insights into consumer behavior, and newness to political decision making, all new entrants encounter a “burden of foreignness.” Policymakers need to help prospective exporters overcome this burden and successfully access new opportunities overseas.
President Trump has issued a new executive order focusing on so-called “Buy American, Hire American” policies. Making the announcement at the Snap-On Tools plant in Kenosha, Wisconsin, the President’s order directs various federal agencies to produce reports and recommendations on government procurement policies, with the goal of increasing domestic employment and production.
The Executive Order (found here) covers two broad areas of government policy: numerous “Buy American” laws and regulations, which set requirements that materials purchased by the government – say, steel for building a bridge – give preference to US domestic producers; and “Hire American,” which aim to address reported abuses of H1B visas that undermine high-skilled domestic labor.
President Trump has issued a new executive order focusing on international cheaters, who do not pay their debts due to dumping penalties. The order targets the problem of unpaid special customs duties known as “Countervailing Duties” (CVD), levied on products from companies found guilty by an “anti-dumping” investigation.
First to the jargon: “Dumping” refers to a type of predatory trade practice. In its simplest form, it amounts to a company selling a product in a foreign market for less than it costs to make it. In theory, the goal of “dumping” is to drive down the price, and in doing so, muscle out smaller, weaker competition in order to later establish a monopoly status on that market. Under the rules of the World Trade Organization, dumping is a prohibited practice, and countries are permitted to levy special taxes on goods found to be unfairly dumped in their market in order to rebalance the price level. These tariffs are called “Countervailing Duties”, abbreviated as CVD.
Here in Washington D.C., the nation’s capital, we were drilled over the past few days to expect the snowstorm of the century. A minimum of 12 inches of snow were forecast and major anticipatory adjustments were taken. For example my health care office called to let me know about their closure – since the commute would be unbearable. Schools were closed (or on a ‘contingency’ basis), and even the visit of German Chancellor Merkel was postponed due to concerns about the plane and its landing.