By Michael Martina and David Brunnstrom
WASHINGTON (Reuters) – The U.S. needs tougher legislation to enforce trade laws and ensure criminal prosecution of Chinese government-subsidized companies that circumvent U.S. tariffs by shipping goods through third countries, U.S. companies said on Wednesday.
Executives from a slate of mid-size industrial companies – including makers of steel pipes, kitchen cabinets and coat hangers – said at an event with lawmakers on Capitol Hill that for years the U.S. had been losing out on tariff revenue and American companies had been forced out of business by Chinese firms that exploited trade rules.
Even when U.S. companies had won trade cases, they said, limited funding for enforcement meant the Chinese firms could easily find loopholes.
“We’ve been forced to close factories, reduce employment and reduce investment,” said Tom Muth, executive vice president of Zekelman Industries, an independent pipe and tube producer.
“These imports come not directly from China, but indirectly. They come from countries like Oman, Thailand, Vietnam and the UAE. These are all major importers of subsidized and dumped hot-rolled steel from China,” Muth said.
Milton Magnus, CEO of M&B Metal Products Company, Inc, which produces wire garment hangers for the dry cleaning and textile industries, said his 82-year-old family business had been fighting illegal trade practices by China for 22 years.
Magnus told the lawmakers, including Republican Representative Ashley Hinson and the Democratic ranking member of the House of Representatives’ select committee on China, Raja Krishnamoorthi, that his company won an anti-dumping case against China in 2008 but it provided little relief.
“Before the ink was dry on the order, China was already evading the order by transshipping through other countries, hopping from country to country, changing the names, shifting shipments, just to stay ahead of us,” Magnus said.
The executives were speaking in favor of a bipartisan bill that would ramp up prosecution of duty evasion and other trade fees, called the Protecting American Industry and Labor from International Trade Crimes Act.
China’s embassy in Washington did not respond to a request for comment on the executives’ charges.
The reintroduction of the bill, which failed to make it to law in the last Congress, comes as President Donald Trump has launched into a new tariff war with China, as well as Mexico and Canada.
In an address to Congress on Tuesday, Trump said the U.S. has been “ripped off for decades by nearly every country on Earth,” adding that his administration would resort to reciprocal tariffs or non-tariff measures for any retaliation by U.S. trading partners.
The executives warned that without increased funding for enforcement, shipments via third countries and tariff evasion would continue.
“I’ve watched American factories shutter not because they failed, but because enforcement failed them. It’s unacceptable,” said Betsy Natz, CEO of the Kitchen Cabinet Manufacturers Association.
She said her group spent $10 million fighting a major anti-dumping case that resulted in 260% tariffs against Chinese exporters, only for those goods to be funneled through Vietnam, Malaysia, Cambodia and Indonesia, evading duties.
David Rashid, executive chairman of auto-parts maker Plews and Edelmann, said the U.S. needed an enforcement system that punishes cheaters.
“Not just fines, but prison,” he said.
(Reporting by Michael Martina and David Brunnstrom; additional reporting by David Lawder; Editing by Stephen Coates)
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