Patrick McHenryChairman

Washington, July 12, 2018 -

Financial Services Committee Chairman Jeb Hensarling (R-TX) delivered the following opening statement at today’s full committee hearing with U.S. Department of the Treasury Secretary Steven Mnuchin:                 

Whether you’re looking at unemployment, disposable family income, GDP, small business optimism, you name it, it is clear that many if not most Americans are enjoying the very best economy of their entire lifetimes. And no man is more responsible than President Donald Trump. However, if we find ourselves mired in a full-fledged global trade war with no end in sight, all of the economic gains that he has helped bring us may well be lost.

I have heard the President boldly call for the elimination of global tariffs. I enthusiastically applaud the President for doing so. However, I also continue to hear talk from the Administration of “ending trade deficits” and imposing “reciprocal” trade policies. These are not identical goals to reducing trade barriers.

For example, we could end trade deficits tomorrow by simply outlawing trade and then watch GDP and disposable family income plummet.

With respect to reciprocal trade agreements, just because other nations punish their consumers with tariffs doesn’t mean we should necessarily follow suit. Because at the end of the day, a tariff is a tax – a tax that is usually passed on to the consumer.

So, for example, when the Administration first announced their tariffs on steel, aluminum and washing machines earlier this year, it became more expensive for working Americans to share a 6 pack with their friends at the local laundromat. And as of last Friday, when the Administration announced $34 billion in tariffs on an array of Chinese goods, including auto parts, it also became more expensive to work on your car in that same laundromat parking lot. And now with an additional $200 billion in tariffs announced, who knows whether the laundromat will even be here at years end.

As my constituent Chris in Mesquite, TX wrote me about tariffs, “I’m now facing increasing costs in auto parts and housing. It can’t get any closer to home that that.”

Not only do tariffs harm American consumers, they harm many American employers and their American workers as well, since over half of our imports are intermediate components or raw materials for American businesses. As my constituent Elizabeth from Dallas wrote me, “I am a metal manufacturer. Since the tariff talks began in February I have seen major increases, well over 25% from steel vendors and the mills. [Soon] my end uses won’t be able to afford the cost of our products.” This is the voice of but one American business but she undoubtedly speaks for many.

Tariffs can also damage entire industries, including strategic ones like our domestic energy industry. For most of my life America has been energy dependent. Now we are on the cusp of producing more oil than any country in the world. But the oil and gas industry import specialty steel and aluminum for pipelines, wells and other infrastructure. The tariffs may just harm our ability to remain energy independent.

I’ve yet to speak of the retaliatory tariffs of the EU, Canada, Mexico, and China. Needless to say, it is a bad time to be an American SUV producer or an American soy bean farmer. The soy bean prices have dropped to their lowest level in almost a decade, one farmer said about his family farm, “that is $100,000 that has disappeared into thin air. We were already in the red, now it’s even worse.”

We have known since the days of Adam Smith and David Ricardo that trade is a win-win situation. No trade, in contrast, is a lose-lose situation. I understand that our trading partners have more to lose than we do because their economies are more export dependent. But losing less is not the same as winning more.

When the dust finally settles, the Administration’s trade policy may prove to be brilliant. I hope so. With patience, short term pain may pay off in long term gain if tariff and non-tariff trade barriers are actually reduced. But in the meantime, [capital expenditure] checkbooks are closing and expansion plans are being put on hold as growing uncertainty creeps throughout our economy.

So I hope it is time that we get on with it. I respectfully call upon the Administration to concentrate time, resources, diplomacy, on those nations that consistently violate WTO guidelines and force involuntary IP and technology transfers. In other words, it is the moment we should be uniting with our traditional allies to confront China. I would also call upon the Administration to drop any effort to unilaterally impose auto tariffs under section 232. The 11 year old Honda Accord I drove to work today simply does not threaten national security, nor does any other imported vehicle. I fear further efforts in this regard are counterproductive and will simply undermine the Administration’s credibility.

I do wish though to compliment President Trump and Secretary Mnuchin for working with Congress on vital CFIUS reform. Thanks to the leadership of Mr. Pittenger, Mr. Heck, Mr. Barr and the Ranking Member, the House’s bill was passed 400-2, and we look forward to going to conference with the Senate. This shows how the Administration and Congress and both parties can work together on shared trade goals. The administration should continue to work collaboratively with Congress on trade and yesterday’s Senate 88-11 vote is indicative of its importance.