US Trade Representative Jamieson Greer has emphasized the need for tariff policies to address trade imbalances, ahead of the release of findings from a Section 301 investigation under the Trade Act. He pointed to Korea's rise as a steel powerhouse despite its relative lack of resources as a prime example of how government intervention can create structural trade imbalances.
In a contribution to the International Monetary Fund's Finance & Development (F&D) Magazine published this month, Greer said, "The United States is taking bold action to lay the foundation for an international economic system based on balance, reciprocity, fairness, and resilience." He added, "We are already witnessing the positive effects of President Donald Trump's tariff policies," citing a 32% year-on-year decrease in the US trade deficit with China last year as evidence.
Greer argued that "modern economics must take into account the reality that economies of scale combined with government intervention create structural trade imbalances that are far removed from comparative advantage." He posed the questions: "How can the United States, with the world's most fertile farmland, run a trade deficit in agriculture? How could Korea, with limited energy resources and no coal or iron ore, become a steel powerhouse?" He pointed out that "economic interventions by various countries have distorted the global economy by placing some countries in chronic (trade) deficit and others in surplus," adding, "This is not desirable for either side."
The USTR is conducting Section 301 investigations targeting Korea and other countries on overproduction and forced labor. In a CNBC interview on Tuesday local time, Greer said the Section 301 investigation report would be released within a few weeks. The Section 301 investigation is intended to replace the reciprocal tariffs that the federal Supreme Court ruled illegal in February.
Greer argued that for about 30 years before Trump took office, tariffs and import restrictions had been effectively excluded from the policy-making process, causing US manufacturing jobs to plummet, factories to close, and trade deficits to surge. "There is no more time to wait," he stressed. "The United States is utilizing tariffs and trade agreements to attract productive investment, strengthen incentives for domestic production, and open export markets for American products."
