It is becoming increasingly clear that the Biden administration will retain many old President TrumpDonald TrumpFears grow over Russian chemical threat to Ukraine Defense and national security overnight – Senators question Biden officials on Ukraine Jussie Smollett gets 150 days in jail after faking hate crime against himself MOREChina’s trade priorities, including taking a tough stance on China and pursuing trade policies that protect American workers. Americans should welcome policies that support free and fair trade, but we should not allow those policies to drift into counterproductive protectionist measures.
A concerning trend is the massive increase in anti-dumping investigations by the Commerce Department, which rose 283% during the previous administration. While these surveys are an important mechanism for ensuring fair trade, they can also be used by US companies to create uncompetitive barriers to trade. A clear example of this abuse is currently playing out in the mattress industry, where older domestic mattress manufacturers appear to be using anti-dumping claims to stifle competition from newer, more innovative US mattress companies.
American demand for mattresses has been growing for decades, but many traditional American producers have struggled in the face of new competition from American companies with innovative products. Products are often produced in other markets and as a result mattress imports have increased over the past decade. Last year, a coalition of former producers asked the International Trade Commission (ITC) to investigate the potential dumping of mattresses from seven countries: Cambodia, Indonesia, Malaysia, Serbia, Thailand , Turkey and Vietnam.
As advocates of free and fair trade, we should ask ourselves, “Are these unfair trade practices or free market forces? A few key points are informative.
In a preliminary ruling, the Commerce Department recommended tariffs against the seven countries, ranging from a 2.61% tariff against mattresses produced in Indonesia to a whopping 990% tariff against mattresses produced in Vietnam. Tariffs at these rates would essentially eliminate the ability to sell imported mattresses from anywhere but Indonesia.
These tariffs are intended to counter alleged subsidies to foreign manufacturers. However, the investigators’ calculations do not match. Invoices from manufacturers in these countries show that mattress prices from any of these countries vary by only a few dollars. In this scenario, these distant nations would have had to conspire to subsidize their own mattress industries to levels that would allow each country to sell at the same price. It seems unlikely. Additionally, most traditional domestic manufacturers continue to import mattress components from many targeted countries at prices that match the cost of a finished mattress.
Traditional companies also claim that the domestic supply can meet the growing demand for mattresses. In response to the Commerce Department’s investigation, Walmart and the Justice Department issued warnings that domestic supply could not meet growing demand and that prices would rise for consumers as a result. These predictions have come true; traditional companies have extended lead times and raised prices.
It is ironic that if the Commerce Department’s preliminary duty rates are approved by the ITC, Zinus, a Korean-owned mattress importer that produces in Indonesia and imports more than $100 million worth of mattresses into the United States each year, will be able to continue importing to the United States with a tariff rate of only 2.61%, while importers of American-owned mattresses will be driven out of the market by tariff rates ranging from 20 to 990%. In an effort to protect former mattress makers, the ITC would effectively exclude US importers from the mattress market in favor of a Korea-based company.
This should serve as a wake-up call to Americans who believe in prosperity through innovation and free and fair trade. In that case, the country can look to Utah for an example. Utah is home to two thriving mattress companies: Malouf and Purple. One mainly imports products. Other manufacturers in the United States. Both companies have experienced phenomenal growth while other mattress manufacturers have struggled. How do the two thrive? Innovation.
Both companies sell innovative products and offer direct-to-customer sales, trends that clearly separate the growing mattress suppliers from the others. Malouf and Purple are proof that in America we can win by innovating and giving customers choice. Free and fair trade guarantees the best outcome, and we protect it through the international trading system. We must guard against protectionist policies that undermine innovation and ultimately harm American consumers.
Derek Miller is President and CEO of the Salt Lake Chamber and Downtown Alliance. He was previously president and CEO of the World Trade Center-Utah, served as chief of staff for former Governor Gary Richard Herbert, and managing director of the Governor’s Office of Economic Development for former Governor Jon Huntsman. He began his career in Washington as a management consultant with Arthur Andersen and as legal counsel at the US House.
Miles Hansen is President and CEO of the World Trade Center-Utah. He most recently served as Director of Gulf Affairs at the White House National Security Council and, prior to that, served as Assistant to the State Department’s Assistant Secretary for Near Eastern Affairs.