at c-span.org. next, a look at new tariff announced by president trump on steel and lum naluminum imports. they conducted a study on how it might affect u.s. industry. hosted by the heritage foundation, this is an hour. >> john, thank you so much, as always, for the very kind introduction. i think that we are here as always, a very timely fashion, here at the heritage foundation and speaking about the issue of section 232. i am so pleased and so grateful for our panelists to be joining us today and i'll be introducing them momentarily, but i want to start by setting the stage. we all know why we're gathered here today, but the president signed yesterday two proclamations on section 232 to

implement tariffs on steel and aluminum. 25% on steel and 10% on aluminum and the president did say that there will be exemptions for canada and mexico. somehow it's tied to their renegotiation of nafta, but and also a process for other countries who are allies to seek exemptions through a process that will be determined. i think the first thing to mention here, to set the stage is the continuing message here here at the heritage foundation about this issue and that it is that section 232 is not the proper measure to be utilized in this situation. the administration has time and time again said that china is the issue with steel, maybe russia is the issue with steel, and this -- these tariffs will not do much, if anything, to impact our imports from china.

2% of all u.s. steel imports come from china. that's a statistic from 2016. and that number has decreased significantly over the last five to six years because of anti-dumping and counterveiling duties that have all, but cut off import steel from china. i think what's really going to be seen and will happen here despite the exemptions for canada and mexico is a lot of impact on our closest trading partners. brazil, for example, korea, japan, et cetera, and the list goes on and on. i think the -- what we are -- what the purpose is here at the heritage foundation today is to continue to reiterate the position of this institution on this issue and on the issue of tariffs overall and really, the duty of us as an institution, and to provide a true north for

capitol hill and the white house and that true north is driven by our mission. it is driven by our mission to build an america where freedom, opportunity, prosperity and civil society flourish and advancing free enterprise and economic freedom is a large part of that. with that, i will leave our lovely experts on the panel here to discuss the issue further. our first panelist will be laura bowman. laura is president of the trade partnership and economic consulting firm that she started in 1991 which she formed with dr. joseph francois. >> did i say that? >> francois. >> the american name is pronounced. >> and dr. dean spinanger, in 2001. ms. bowman has been an international economist since 1977 and follows closely the impacts of both prospective and trade policies in the u.s.

economy and the trade flows of u.s. trading partners. the firm's -- the firm produces detailed economic assessments of these policies and programs based on traditional economic modeling. miss bowman holds degrees in economics from columbia and georgetown universities. >> following laura, our next panelist will be vanessa sciara. i'm hitting it with the names here and the vice president for legal affairs at the national foreign trade council and an organization of leaving u.s.-based enterprises representing all major sectors of the economy. prior to joining nftc, miss sciara served as vice president for committee for american trade. her additional experience includes working on a private sector most recently with the law firm of cassidy llp in their washington, d.c. office. it included a broad range of

international trade matters ranging from the pharmaceutical, medical and trucking and shipping sectors. she advises clients in the areas of customs, exports controls and compliance as well as anti-dumping and countervailing cases. she appeared before the key u.s. trade agencies including the department of commerce and the customs and border protection office and the trade representative. office of foreign assets control and at the u.s. department of treasury, the bureau of industry and security at the department of commerce, food and drug administration and the consumer production safety commission. quite the list of accolades. something to aspire to. prior to entering private practice, miss ski ara served with the office of the united states trade representative in washington, d.c., while in that position she worked in the negotiation and implementation of the north american free trade agreement particularly with respect to services, investment

and dispute settlement obligations. she also served as legal counsel during the negotiation of the general agreement on trade services and participated in the drafting of the uruguay round implementing bill. prior to her work at ustr, miss sciara was a trial attorney with the department of justice in the civil division. she represented the u.s. government in countervailing duty laws, custom matters and government contracts. she regularly briefed and argued cases before the u.s. court of international trade, the u.s. court of federal claims and the u.s. court of appeals for the federal circuit. miss sciara is a member of the columbia bar and earned her bachelor's degree from yale any her masters in economics from the london coschool of economic and yale law school. please join me in welcoming our panelists. either way. whichever you prefer.

>> i'm lazy. thank you. thank you, tori. it's a pleasure to be here today to talk to all of you about this very important trade policy development. every minute it seems to change so hopefully we can -- we can provide some information that's at least current at least for today. i have to say, when i first heard about the potential for these tariffs and the president's motivation for them i really had to agree that i thought that, you know, i thought it was a proposal of his coming from the heart. it must be hard to travel around the midwest and the whole country and everywhere during a campaign and see so many communities that have been decimated and unemployed workers and the hardship that they're going through and anybody -- anybody would care about that and anybody would want to do

something about that and i genuinely think his motivation is good. the problem, of course, that we have is there are reasons why someone can lose a job and sometimes it is competition and more often than not it's been shown to be things that don't have anything to do directly anyway with imports. it's technology. it's productivity changes. it's changes in the economy, and structural changes in the way a product is being received by consumers, you know? it's new epa rules on mileage economy, and it's a host of other things that cause an industry to need to shift and react to changes in consumer demand, but you know, it's so much easier especially to politicians to point to foreigners as part of our ills and way more easier than it is

to say well, i'm going to take away your technology so that you can have a job again. who wants to do that? so that's -- you know, we learned back when the bush administration put tariffs on imports on steal and 2001, there are serious unintended consequences when you intend to limit imports with the trade barrier and in that case it was tariffs. we worked very closely back then and most of them were manufacturers and all of them were saying this is killing us. many of them were saying we're laying off workers. it was very clear from that experience, there's documented information that shows that people did lose jobs in other industries when tariffs were put on imports of steel. so there are unintended

consequences associated with import penetration. when i read the commerce department's 232 reports and the one on steel in particular i was impressed in two ways as an economist. first, i saw that there really was an effort to do some economic modeling. yea, yea! on who the tariffs ought to be and what effect they would have on producers. they used something called an equilibrium model that the trade commission uses and a whole host of other folks in the u.s. government to estimate the up and down scheme effects of trade policy of a given trade policy. so, for example, what's the effects of a free trade agreement with korea? they use this model. in this case, the instructions were what should the tariff rate be to get use producers to 80%

capacity utilization? and they report in the 232 report these are the tariff rates we came up with because this is what will reduce imports to the right percentage that enables u.s. production to go up and capacity utilization to hit 80%. bravo, they did serious thinking on this. i happen to know and most economists do know that these models generate a whole lot of other information. what's the impact on this tariff on gdp and what's the impact on prices? what's the impact on other sectors of the economy and not just the steel industry? i went looking for that information. it wasn't there. so, you know, alarm bells went off that the president was not being presented with the full picture of what the tariffs would do. yes, they would save steel jobs and the cost wasn't anywhere in

the report. there's no information in the report about what effect the tariffs would have on jobs. so we thought, okay, we need to get this information to the white house before he makes the decision. it's important, you know, that they have the full picture of what these tariffs could do. so we decided to use the same model that the commerce department used and we imposed tariffs on imports of 25% and 10%, steel and aluminum and we calculated, the model calculated the full range of the effects and we drilled down to take a look at the job effects and he indeed find employment and 33,000 jobs would be gained in the steel industry and the aluminum industry combined, but we also found that a whole heck of a lot of other jobs would be cost because -- would be lost because as costs go up,

steel-consuming industries get less competitive. they have to cut costs somewhere to stay competitive. so, you know, they might cut wages. they might reduce investment. they might cut workers and there is a range of things they can do to try to stay competitive and all of these things we know they tried to do in 2001 and job losses are one of those effects and the model told us that there would be nearly 13,000 jobs lost in fabricated industries. over 5,000 lost in motor vehicle sector. another 2,000 in troeansportati sectors. on manufacturing as a whole, minus 3,000 jobs and that includes the plusses for the steel industry and all of the minuses for the other manufacturing industries. so it's a net hit for manufacturing, but it doesn't

stop there because all of this steel activity also has ramifications for industries like construction and even services. when workers lose their jobs they don't go out to dinner so much anymore. they don't go out to the movies so much anymore so services sectors have to retrench a little. they feel the negative impact. overall, the model was telling us we're looking at 179,000 job losses. so when you add that negative to the positive for the steel industry, we came up with a net loss of 146,000 jobs. so we wrote it up real quick and we stuck it out on the internet and the rest is history. >> thank you so much, laura. vanessa, please, kick us off. >> we're so happy you did it. >> absolutely. >> so a little background on why i'm here. so i work at national foreign trade council and we are a -- we represent american companies and among the membership we don't represent the steel and aluminum

producers and we serve as a convener of many companies using in the downstream industries and we were approached by many of our members and we started getting pushback and we were interested in this effort and we recently formed an alliance that is basically composed of sort of two categories, basically steel and aluminum industries and it consists of parties that are hurt by retaliation and we can talk about that in a minute. as laura said, she was very clear, they stated in the front and back end of the study that they did not model the effects of retaliation and we can talk about that when we get more into the discussion and we represent the industries that feel they're exposed to retaliation and history teaches us that the primary sector that feels the pinch of retaliation is agriculture. we have agricultural commodity groups and associations in our alliance. the alliance is all associations. there's no companies at this point and we felt that was the

best way to present our views to be composed of those of us who were in business associations that represent these different industries and we have all of the industries that i mentioned represented and what we are doing is working very hard and our initial plan was to push back and hope that the tariffs were want enacted and battles -- wars are won by numerous battles and we will pursue our goals and we will try to limit the effect of the tariffs and the ultimate goal to get them rolled back. history does teach us also that they tend to not be in force and the bush tariffs were in effect for only 18 months and when you factor in the fact that they took a couple of months is it was more like a year is what the effect was. we are hopeful that even though we're not going to be living with the tariff, we are hopeful there won't be a huge drag on our members' abilities to manufacture and produce in the u.s. for very long. in terms of -- in terms of sort

of how this tariff looks to us right now and i assume everybody has seen the proclamations that were made public by the white house. for those of you who haven't taken a look at them, like most documents i'm a lawyer and there are hidden piece of information in the drafting that the president didn't quit articulate when he was doing his overview. so points i would make, just to make sure that we're all on the same page on what's going on here. these are tariffs of an indefinite timeframe. there's no time limit in the proclamations, and there is an undertaking by the president that he will direct the commerce department to work at the effects of the tariffs from time to time and we are potentially looking at tariffs that could be in place for a very long time. absent some action by the hill to remove his authority, and so that's sort of the first piece of information that people find a little surprising and the scope is very broad, if you are interested in understating the

scope, there is a list of harmonized tariff numbers that are affected. mostly, this is primary product and just because of the way aluminum and steel is fabricated and it is not true and there are some sort of secondary materials that are captured and if you have to dig into the numbers a little bit. so that's sort of the second sort of tidbit i will leave you with. with respect to canada and mexico, the proclamation says that they're being given some additional time to explain how they're going to contribute to the national security imperative that is underscoring these. obviously, the rhetoric produced by the administration that this is tied into nafta negotiations and having been in mexico recently and having been in the rounds, i will tell you that things are not going swimmingly well and there will be a round in april in early april in

washington and the rounds rotate between the three capitals in washington is hosting the next round. that sort of fits with the 30-daytime frame that we heard peter navarro mention and it was some sort of implicit timeframe and it appears that that's part of their thinking and that's part of the ambassador's thinking and they're going to run out of time this year to submit another gpa if they want to submit it for this congress and there is a natural timeframe when things would have to reach a point with nafta, when they figure out what's going on with nafta let rest of the legislative year just because of the way the calendar falls this year. i would say if you're a canada and mexico watcher, keep a light on the bomb because this is where it will heat up on the canada and mexico front. with respect to our other allies, i guess it's begging time. you know, the order doesn't really explain the process by which people can come in and

security partners can come in and explain how they're going to offer to assist the administration in dealing with this national security threat and make of that what you will and ambassador houser will be conducting those discussions. i suspect that it will not be just be national security that's on the table. it sounds to me more like you have a nice steel industry there and let me tell you what you can do to make you feel better. so i think our allies are justifiably concerned. we know that australia, the uk and japan will be the first ones in the door and they feel like we have the strongest arguments both on the security side and also in terms of what they produce relative to what we produced domestically and there are products that are not made in this country and could not be made in this country without significant changes to the way we produce steel and aluminum. so i think those three countries are probably the first three that get in the door and probably the first three that are prioritized in terms of discussions, but it's not really

clear from the order what it will take to sort of get an exemption and it is applied to the context. the last piece of order that is relevant is exclusions are for products. if you have any familiarity with dumping you will understand what scope exclusions are and this is the process routinely conducted by companies who go before companies saying my product is should not be covered by the order. and that is a sort of a -- if you think about how this exclusion process ran in 2001 and how it's likely to run here it's a similar process and you go in and claim and explain what your product is and explain that you're a u.s. party. that's a piece of this and then you explain why your product and in this case the order does provide some guidance and you can make an argument if the product is not produced in the united states or if it's not

readily available, short supply situations or in the situations where the u.s. doesn't make the product and also you'll be able to argue specific national security considerations. particularly for the folks who who are in the procurement, the dod procurement space that is one of the things that they'll look at if you have a product that the u.s. regularly procures and you want to pursue that. i think those -- history tells us that that process is not a fast process. i asked someone how many exclusions were filed and they me it was 100,000. it was a ridiculous number and it was still my product, by the way. there has to be a process for that and within ten days we're supposed to get guidance on how the process will run, but i've told my companies, don't expect it to be particularly quick. you will be in line with lots of other people who will all be rushing in at the same time. my guess is you will have to file deposits and seek a refund

at the end of the day so you will be putting money on the table and them get it back which is what i did the last time. the government says we'll see, and if you win they give it back and it's not particularly speedy so you should advise your supply chain that that's coming. the date is march 23rd and that is consumption entries filed on that date. so if you have cargo on the water it does not matter. it matters what you get in the door on march 22nd. on march 23rd you will be paying and there was a push, i know, by some people to get a grandfathering for contracts that were long term or for cargo on the water and as far as i know none of those will be granted and you literally have the window shuts at midnight on march 22nd and customs will be assessing and they will be assessing these additional duties. >> so i think a lot of cause for concern among the alliance members and my membership. my last point is what i learned

in talking to the members of this alliance is there are a lot of small businesses that fabricate with aluminum and metal. a lot, and these small businesses are and not going to be able to nimbly jump to another source of supply. if you are a big company, say you're a big beverage manufacturer or -- you can probably jump and make other supply chains and if you're a small fabricator in ohio, michigan and ohio and you use a foreign met ale because it's been price attract of for you to do that or there's some relationship that you have with your supplier and those are basically going to be cut off by these increased tariffs you will have a hard time jumping to a new source of supply. i would say that unfortunately, in addition to the consumer effect it will hit people that buy food and low-income levels the hardest or buy cars that are older and need parts at the highest level and this will also be felt largely by smaller businesses that do not have the resources to jump to other sources of supply.

big companies will be able to do that just because of the supply relationships are deeper and they have more market-based relationships with other countries and they'll be able to import to other places. >> so i think that's my summary and let's get to questions and that gives you basic information. i think. >> how do you want to do it? i know you have some questions. >> do i. >> i was writing down lots of questions. so thank you so much for both of your comments and they were insightful and they helped to get our minds around in the realm of not only what happened, but what are the ramifications and how much of those ramifications are still unknown and will remain unknown for a long time. as the daughter of a someone -- it hits home for me and a lot of people whom my dad works with.

i think putting that into the perspective of small to medium-sized businesses and the largest employers, and they're the folks who are the movers and shakers when it comes to growing the economy and creating jobs. so with that, vanessa, i think i can listen to you speak all day long. if you want to come teach a class at gmu. >> i've always wanted to teach a class. >> you should. you should. i want to start things off with one technical question you mention exclusion process and some of them sounded buy america, buy americanish to me when it is not in reasonable quantity, not made here. one thing that i notice was missing is price. and there's no indication -- no

indication if this will increase the price of your good by say, 50% or 60%. >> there's none of that. historically that's not been a drrgz and want list sa consideration and not listed for order. they're not nimble enough to necessarily be able to switch their supply and that sort of brings the point that i should have made which is that we will also suffer in our exportability, right? because if you're making a product in japan and you can make it with cheaper steel than we can, then you're going to be more competitive when you sell it to vietnam or china or wherever you'll sell it. again, laura's model can only cover so much. it didn't cover retaliation and export losses, for example. you guys did a model on what the export losses would be in terms of product losses. >> it included that, but it did not include retaliation. in terms of markets and product losses and exports that are not going to be sold because of the

ability of foreign product to underprice us when it comes in in terms of just the competitive market. so a lot of -- you probably know this, one in every four acres of u.s. agriculture product is for export and that's a great concern to people who may be subject to retaliation, for example or even the companies with the fabricated metals when their foreign competitors have a cheaper source thoos closer. the ramifications of this, this is definitely the pebble in the pond that has lots of ripples and the more you think about it, the more you realize how interconnected we are and how much an event like this and this is a raising of the border can have all of these ripple effects across the u.s., but also even sort of into the markets where we are pretty competitive in terms of selling u.s.-produced products, and i think autos is a really good example of that. we are a net export of 2 million autos right now and it's an amazing statistic if you think about where the auto industry

was 20 years ago and the autos are very price sensitive and the steel and aluminum will get more expensive and that will make u.s. production of cars more expensive and the auto industry feels -- they're filling up a lot, because they're at the center of nafta and at the center of that discussion and now they'll get hit hard on this, as well. we have all of the major auto industries in our coalition and every time i hear them talk about it i realize how they just feel like -- their voters largely voted for the president and they sort of feel why me and there's concern on whether the auto industry will weather this and the next six to nine months and the exercise as well. >> i think vanessa led perfectly into my next question which is one laura and i were discussing previously, and that has to do with the reactions from the administration on these price increases. i'm sure everyone saw this past

week, secretary ross on fox business with his campbell's soup can saying the price of the soup can will only increase by, say, a penny or a penny and a half, something to that effect and that's not a big deal. who wouldn't be okay with paying a penny and a half more, but that adds up and so i would love to hear you guys' reaction of how the administration is responding to the price increases and do you feel they're out of touch with what troez pri those price increase would be? i would like to hear your thoughts. >> i do -- i do think that they are mischaracterizing, you're right, the real cost of those price increases. when you look at it the retail level, sure, it looks small for certain product, but as i was indicating earlier, most of the job losses, a lot of the job

losses that we're seeing are not -- are at that middle level of the value chain. it's the companies that make screws and wire and machinery. they're going to see much bigger price increases relative to the can of soup and you're not going to see that because who goes to the hardware store to buy, you might go to buy a screw, but you're not going to go to buy air-conditioning, big air-conditioning machinery that goes into a construction project so those price increases will be bigger and they're hidden from most average people the other thing, tory and i were talking about this and you may have seen that wilbur ross put out an editorial this morning, at least it's on the commerce department website and one of the things he says is the price increases will want be that big and it will amount to, for example, for a car $4 a month more for the

monthly payment of a car and who wouldn't pay $4 a month more to save the steel job? . he doesn't mention anything about job, and they might have a problem paying $4 more for that car. and they're ignoring that side of the discussion. he ignored it in his report to the president and it's troubling. it's troubling. >> the story was told to me recently that i hadn't thought about this and there are decisions made about structural changes in their business and i'll give you an example. if you're a beverage manufacturer and you can choose between building a new aluminum canning line which is a pretty big investment for a bottler or going plastic. there is a point in time you have to make that decision and you're not dictated by forces and your business is growing and you need to bottle more bottles, right? you need to make a decision and

you have a moment in time when you have to make a strategic decision about planning for your company. this has impacts as you amortize your equipment and you have to make a decision on what we know now. we know someone might choose plastic bottle versus aluminum bottle. if you choose plastic your fash recati rication, and that decision is being made in the context of all of this uncertainty and you know, business people are rational for the most part and they'll pick the safest pathway to go and there will be decisions made along those lines and the decisions to delay projections and decisions to choose to go with plastics versus metals and decisions to halt certain construction projects wheel we wait. we've heard from construction and they're having all sorts of deadlines being pushed because no one is sure whether they should try to buy metals or not and it isn't capturable and they're not decisions being made

and we're not capturing that at all. he's just missing this whole part of the business that has to be -- where people make strategic decisions about planning and where they're basing that on uncertainy and metals are looking somewhat less attractive and people will have to figure out how to hedge for that. >> definitely. those are all great points and my next question and i'll open it up to the audience. sorry for monopolizing the time, but i have a lot of questions. one thing from the her titage foundation, what can congress do? why doesn't congress have a role in this process while they've essentially wrote themselves out of the process. >> they're great delegators. >> they are great delegators? what are the next steps for congress and a couple of the things that we've been talking at heritage is to reassert congressional authority with

changing, section 232 and section 201 and senator mike lee has a bill associated with this with requiring a joint resolution by congress that the president wants to increase tearives through some of these different avenues and another thing to discuss is through appropriations for the institutions that actually implement and check the tariffs and preventing them from using funds to do those processes. what do you guys think about those different options? what sorts of other, you know, kind of mechanisms do you think that congress has to do more than write a strongly-worded letter? >> so there's been a strong congressional reaction. i think probably people have seen it. interestingly, not just from the rs and the ds, senator white and senator schumer will put out statements damning with feint praise what's been done. everyone knows we have a problem

with the structural economy and unemployment and the manufacturing, and we know there are some issue, but sort of the overall feeling was this wasn't the way you were supposed to do it and the chinese are not feel anything pain today at all. interestingly enough, they're feeling more pain from the tpp announcement and i would be more worried about that than the steel tariffs. >> i guess i'll quickly run through my thoughts. senator flake introduced a bill, and i think anything you do you have a high bar. you might have the numbers in the senate and it will be hard in the house, i think speaker rhian is painfully aware of that which is why their comments have been more measured than what we're seeing on its side. there is a let of discussion, and certainly a lot of discussion on the hill and with people like you guys about what we could do and there is a general recognition with nafta and the set of 232s that there

is a balance that was struck between the congress and president, and the president has power of foreign affairs and it's been somewhat awkwardly managed and tpa is the best thing that we've come out with on the trade front, and when you have a tpa for 232? who knew? >> yeah, so i think the question of what to do is on a lot of minds and a lot of very good people are thinking about it. i wish there was a simple way to answer the problem. the congress is the protector of proven shall interests and the historic balance is to give the president room and the congress delegates this ability because it wants the president to be the one who is aggressively opening markets whereas the congress has to be more worried about protecting jurisdictions and constituencies and it's seen as the institution that does that. that, we may be in a situation historically where we're flipping that we have to figure

out how to grab whf that power back from the president. i'm sure that won't go over well with the white house lawyer, but there's definite discussion about what to do to redel 28 that. >> i don't think law professors are happier and this is a fascinating topec and you have two lawyers in the room, it becomes into hours of information whil oe our spouses look at us like this is so boring. this is a complicated set of political situation that we're in, and creative minds will help get us out of it, i think, that's the answer. in term was what else you can do, i do think there will be hearings. so representative kind and meeks and larson just requested hearings in a letter to the committees of jurisdiction. i think there will be an appetite for hearings. there haven't been that many hearings relative to another congress, but i think we may be

getting to a flurry of hearings. i would say that that is probably needed and there has been a shocking lack of shareholder and stake holder discussion between the administration and the business community. there have been a lot of discussion with the unions and that's great. i understand that that constituency matters and i a mraut for meeting with them, but if you only hear one side of the table and we've had trouble -- frankly to ambassador lighthouser, it's not been a very welcoming administration for meeting with business and i think we feel like that is part of the problem here is that we're not getting to say our peace to them and they don't talk to us that much. so i would say that's another piece of it. i think yesterday was the beginning of a long discussion and a lot of get ready for this to be on the front page of the post. it has been on the front page of the post every day for two weeks

and i don't think it's going away. north korea will be there, but this is going to be there and the last point i would make is it's really incumbent upon all of us to try to stress to the administration that china is a huge problem. i am going to tell you that when i talk to my business members every single company will tell you that china is the highest on the list in terms of concern both because steel and aluminum and frankly because it is so hard to do business there and it's an attractive market. you want to be there, but you don't want to be there and the trend that we're seeing with china is moving back on all of the reforms that they had at least said they were going to do and the new administration, other than the current administration doesn't seem to be inclined in doing things that would help u.s. companies do business there. we have to figure out how to engage our allies in a collective way. how do we get our allies to work with us? i'm afraid this is not the greatest way to open the door for that discussion and those of

us who are not in government do have a lot of ways to talk to friends in other capitals and we need to encourage a discussion with the europeans and the japanese and australians about how we constrain the chinese as a collective matter. history teaches us that collective action does work over time. that countries that work together that actors do eventually, they are able to do that i and really think that that will be the key to this. i think there is a weird collective action in these proclamations and it's like coming to tell us how you're going to get out of this bad thing that we're doing to you. in a way, i was thinking that's kind of an invitation to talk about a solution that's more multilet ra multilateral and it's a weird way to start a conversation and just because of the way countries diplomatically have to be seen by their domestic constituents, people will not welcome that, when i was in mexico, the mexicans looked at us and they were, like, what are we going to do now?

>> now you made it public. now you're just telling everybody and we have to come in and beg and they're in the middle of an election seekel and they feel like this couldn't be a worse time for them in terms of a disaster in terms of making those who would speak with working with the u.s. that part of the conversation is getting drowned out by saying, see? they're just always going to make us suffer. this is the american way is to make the southern partner suffer. it is setting up a very difficult conversation and my point in going on this pathway to say to those who engage in this kind of discussion with the counterparts in the capitals, you've never been needed more. i am going to quebec in two weeks. we have got to engage with our partners and we have to work to the extent that we need to work outside the government, let's make this need to come up with a solution with a need among partners and there's no way we can solve the chinese problem

and i don't think we can solve this problem just by the u.s. staying it so and then the chinese will come to the realization, ask that's just not going to happen. multilateralism works? >> absolutely. anything to add to that? >> no. i want to take notes. with that i would like to open up the floor to questions. please raise your hand and please wait for the microphone we'll go ahead and do the first question here and announce your name and affiliation when asking your question and please make your question a question. >> thank you. my name is brian riley and thanks to heritage for having this timely event and laura, i wanted to restate something you said and make sure i understand it correctly. this isn't an issue where the commerce department proposed tariffs and you went out and ran a model and cam up with different results than what they

came up with. if i understand you correctly, they ran the same model, came up with similar results and covered up the parts that they didn't like and only told half the story or less. those are my words. >> all they reported was the effect on the steel industry. they didn't report the effects on anybody else and they also didn't report the job effects and we wanted to get all of that into the discussion. >> my name is cami, and i'm pakistani, and many democrat economists think that that's just a political stunt and it's a baloney that will not have long-term effect. i mean, sanctioning these tariffs especially on chinese product, do you agree that trump is trying to appease the people

who are very die hard follower and there is not much substance because he said we are taking canada out and mexico out and we are relaxing these tariffs for these countries and in the end it wouldn't have any long-term effect? i'm asking this question because a couple of years ago our dr. ross and peter navarro both were invited -- and i forgot the name of the think tank. they're a good couple and i don't mean they are gay and dr. ross, you feel like he's about to fall asleep and peter navarro wouldn't let you talk. he is so aggressive and then i met him privately and he is very intelligent person and knows these things very well, and i don't think that he is -- he knows that it is not going to make much difference because in the end everybody will be happy as long as people who voted for trump they are happy for trump is good. do you believe that it's a political game?

a charade? thanks. >> well, i'll start and i think laura has something to say about this issue. all trade is political. there's no -- i mean, that's why trade votes are hard to get to the congress, right? because trade plays at least in 2018 trade plays very poorly at home with the electorate. it's a very divisive issue. i frankly think that americans have trouble understanding trade and we're a very large country and not deal with the outside world much and so trade is by definition, highly politicized particularly with this administration and there may be an element of parliament, and peter navarro and the president think this is not going to be able to be sustained over the long term and you have to work with what you have and the proclamation right now says effectively indefinite and i would say that regardless which lasts for 12 months or five

years, the effect on business on felt immediately because businesses don't make decisions just about tomorrow. they make decisions about six and nine months down the line. so, for example, and laura can probably talk more about this than i can. the spot price on steel and aluminum and my understanding is prices have been trending up for months now and we can expect that once the tariffs are in place there is a certain amount of price increase that will happen from the domestic producers because there's sort of a rent, if you will, that can be achieved up to the level of the tariff to be captured by those who can benefit from that. economists will tell you the prices will float up because there's room to do so and rational business people would want to capture that, that sort of rent, if you will. no matter how long it lasts and practically speaking even for the exemptions and exclusions, you're talking six, nine months and you'll have an effect on business people who have to make choices like my butler who will have to make ramifications for the company five to seven years

o out. it's a costless exercise and even if it is a certain amount of political theater and you have an impact on businesses and companies. once a company lays off a worker, i mean, i am not a business owner, but i am told it's not just a matter of changing your mind and there are decisions that are made and then there are ramifications to that, though. am i characterizing that right? >> yeah. the only thing i would add is i don't know him and i've never talked to him, the president, but everything i read suggests that deep down he really believes this stuff. it's not politics to him. excuse me? [ inaudible ] >> sir, can you let her answer the question, leez? >> they have a boss who is demanding action for reasons that he doesn't think is political. he thinks in his heart that this

stuff is horrible and import protection will fix it, and you know, he's got peter navarro telling him, yeah, yeah, yeah. go for it. i think it's a little more complicated than just politics versus not politics which is -- which makes it tough to present a rational case to anybody who works in this administration, you know? here are the horrible things that will happen if you do x. my boss telling me i have to do x. we're stuck. >> it is difficult to have those conversations because they're being told. >> our action was this is outcome determinative and you work backward and you don't look at any of the extraneous effects and then that part is done. >> so i don't fault the people who wrote the report and there were many career people because they were being told this is where i want to go and these are the a sumpings you can make and this is the information i don't want, and this is what it should look like and lo and behold

that's what the report should look like. i do not want to suggest that at all. i am totally in love with it and it's the best place i've worked and the people work so hard and i do think there is a top down direction given to people that's sort of not -- it's direction that doesn't allow for the top down and you want to do it the way i want it to be done. so i think that's part of it. >> i think we have time for one, maybe two more questions, here in the front? >> hey, i'm clark packard and trade policy counsel at the art institute. one of the things i noticed from the white house's rhetoric is they keep talking about the issue of chinese transshipment of steel, without acknowledging that they gave anticircumvention tools to the executive branch a couple of years ago. the question i want to ask is do

we have a sense for how pervasive that issue is? yes, you know, 2% or 3% of steel from the united states is from china, that's what the figures show from commerce, but do we have a sense on how pervasive this is trying to skirt anti-dumping and countervailing du duties? >> you do it just enough to change the tariff code and then you bring it to the united states and it avoids the anti-dumping because it's not captured within the tariff numbers and you change it just enough. this is a chinese art form and i represent a firm that represents dumping cases and the chinese are are very good at this and they're good at telling their affiliates how to do this, so the answer is it is a problem. it's been a problem for the steel industry, although the aluminum industry has had problems with mexico, so i don't want to belittle that.

i think there is a problem and senator widen's office will tell you they tried very hard to get at this problem and give the administration more tools. at the end of the day, tracing these commodities is very hard. things don't leave don't leave stamp that says i'm chinese steel and they work their way through the chain. the reality is, if people want to be evasive, they can find ways to do that. as i sid, the chinese have developed this into an art form, almost. there is no question there is trance shipment issues. my comment on that is i think that's why some countries will not get exemptions. the administration has been sort of cagey about that and i don't think those countries want to talk about that, but i think it's pretty clear if you follow in a dumping discussions that there is a certain amount of trance shipment through south korea, vietnam, thailand, taiwan. those countries i think will find it hard to argue their case to the administration. and interestingly enough, that's why the koreans, i think, have been very quiet over the last 24 hours. where as other countries, for example, australia, uk, japan,

those are not countries that have a history of transshipment pre-empts and will be able to say this isn't a problem and the administration will say, we believe you. we don't see any evidence of that. t they actually have a lot of people on their staff who have been trying to mon there those trends. since they have the ear of the administration, one assumes that information will get funneled to the administration and that will be on the table when people in and a i want an exemption. right. >> okay. why don't we do the last question there in the back. this will be the last -- >> retired -- >> no, sir. i'm just -- >> i was raising my hand. >> i apologize. i have -- i apologize, sir, i'm selecting people very randomly. very randomly. >> henry hatger, retired government. i wondered, you haven't

mentioned the recycling industry of aluminum and steel. 30 years or so ago, they indicated as u.s. steel moved overseas or sold out that recycling would replace the losses that were produced initially. we'd be able to recycle the steel. how does all of this work? will this increase as far as a method of production or will we still be importing aluminum? i read in the newspaper that aluminum is still being imported. it didn't say whether it was aluminum products or some state or aluminum or, but maybe we need more aluminum. the number of products continues to increase, even here, let alone in china. that being the case, how about recycling? will this increase or decrease or does it have much impact on the problem and the tariffs? >> why don't we pause for a moment and let the gentleman here couple the questions together. >> we can do them all together. >> at the same time. >> that way we can take them together. >> absolutely. >> yes, my question would be, is there a potential that this

actually could provide some solution if you look at it from the extreme opposite point of view, is there a potential, at least a short-term adjustment that could provide some benefit and stimulus to american industry? >> thank you. >> do you want to -- do you want to talk about recycling? >> no -- >> to i'm not an expert, but i talk to a couple of companies in that business. so the good news is we're really a much better country recycling. we've all sort of learned to recycle. i wouldn't stay it's, you know, truly in every community across america, but certainly in urban areas, for example, areas where you would have, you know, densely populated people with garbage, people have sort of learned to do it. the problem with recycled product i understand it's not suitable for every use. where as you can use it for some things, you can't use it, for example, to build oil pipelines

or electrical-grade steel. these are specialty uses and the recycling process gets impure over time. so you can only allow it for certain things. i think the reality is we will be a net imported of steel every after these come into effect. in some cases, the user will pay the premium. i can absorb it. i need that product. i thunk that the recycle product because it's only used for certain type office uses it won't completely replace imports. the issue that you raised. so i gragree that laura's statement is correct. i believe the president cares about these people. i think there are huge problems steel country where we need to find ways to help people who don't see that they have options and job opportunities. we need to find ways to sort of provide a pathway. you know, interestingly enough, steel jobs are not that -- they're not as many steel jobs

as you would think. you know, 10, 20 years ago, steel plants were very labor intensive. we think of a line of workers, but the reality is now that line has one guy at the end who basically works out of a control room. modern steel and aluminum fabrication, as i understand it, a lot of is done by robots and machinery. that's probably where we headed in terms of the fabrication we want to see. at the top end of that and seeing our companies using technology. even though there is some protection provided by the tariffs and some ability for the companies to reinvest, these reinvestments are hugely expensive and not that labor intensive, relative to what the old steel and aluminum production facilities will look like. that is a problem for the aluminum and steel countries because if this protection is only going to be two or three years in length, that's really not a lot of protection if you're going to bill build out a new 21st century plant. this doesn't necessarily help them with that problem, it helps them in the short term. clearly they will get money out

of this because of the rent issue i just discussed, but whether it will give them enough money to build out out a new 21st century operation or a new smelting operation or the new mills competitive with the mills we see in asia, time will tell. laura's group did a study in 2002 and you had real data to work with, and you were able to say, okay, this is -- we did the experiment with the bush tariffs and this is what happened. i fear laura's group will be doing a study two or three years from now that will be a similar study and i fear the results will be the same. ing basically global tariffs as a solution to global structural problems are not the best economic solution to the problem. that doesn't make your point any less valid. it means we, again, this is a call to action for all people who are thinkers. we need to come up with better ways to address these problems. we need to be the creative people who say what about this and what about that and go to the congress and the white house and try to press our point.

>> i would just add that we need to be very clear about what the problem is. what's the cause of the problem? as i indicated at the outset, it's really easy to blame foreigners, but in this instance and many other instances, that is not the biggest reason why we've got unemployment we have hollowed out factories, depressions in many communities in the midwest, i mean, in the rust belt. so -- and our -- the commerce department announced this as well as ours did show that for the economy as a whole, it's a net negative at the gdp level. there was a decline in gdp resulting from the tariffs. ross acknowledged it. he never put it in writing or anything, but he just said it was negligible, quote, unquote. we well, okay, it's still negative. so there is something wrong with that solution to the problem and we need to look elsewhere. >> well, thank you so much. please join in thanking our

fantastic panel on the discussion here today. [ applause ] a look now at some of our "american history tv" programming coming up this weekend. on saturday, house majority leaderer can even mccarthy hosts a ceremony to commemorate the 220th anniversary of frederick douglass' birth. you can see that ceremony at the u.s. capitol's e-manmancipation.

reeevaluates presidency. mr. calhoun explains why president grant was considered an unsuccessful chief executive by many early 20th century historians, despite his domestic and foreign policy achievements. he argues that president grant was actually an influential president dogged by political enemies and scandal. sunday at 6:00 p.m. eastern on "american history tv's" american artifacts, political cartoonist herbert block, better known as her block, his career spanned 42 years. see the largest collection of his work housed at the library of congress. >> one of the missions of the library of congress is to document the creativity and intelligence of the american people and preserve it for future generations. i think it's a mark of a free

society that we can gather opinions with which we do not agree and collect them and preserve them for future generations. there are a lot of countries in the world where nobody would dare do that, and here we are just steps from the u.s. capitol and we have a variety of opinions and a variety of cartoonists, and mr. block is just a great example of one of the artists that we've collected. >> watch "american artifacts" sunday at 6:00 p.m. eastern on "american history tv" on c-span3. c-span, where history unfolds daily. in 1979, c-span was created as a public service by america's cable television companies, and today we continue to bring you unfiltered coverage of congress, the white house, the supreme court and public policy events

in washington, d.c. and around the country. c-span is brought to you by your cable or satellite provider. tonight on c-span3, a senate hearing on military spending and an audit at the pentagon budget. ohio govern john kasich delivering his annual state of the state address and transportation secretary elaine chao discussing the trump administration's infrastructure plan at a house hearing. congress has ordered the pentagon to conduct an internal financial audit which they began last year. defense department officials testified on capitol hill about the audit process. senator mike enzi chairs this hour and 45 minute budget committee hearing.