Obama signs tariffs bill to aid manufacturers

Critics demand pressure for free-trade accords as deficit expands

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President Obama on Wednesday signed a bill lowering tariffs on materials used by U.S. manufacturers and urged Congress to approve $5 billion in additional clean-energy tax credits, saying the moves will help the country meet his goal of doubling exports in the next five years.

But the signing ceremony was held hours after the Commerce Department announced that the U.S. trade deficit in June climbed to its highest level since October 2008, with exports falling by $150 billion as imports of foreign goods rose by $200 billion. That news fueled critics of Mr. Obama’s trade policies, some of whom cited his failure to persuade Democrats in Congress to approve three pending free-trade agreements.

Mr. Obama did not specifically address the trade deficit in his remarks. Instead, he reiterated his support for U.S. manufacturers and noted that the sector has added nearly 200,000 jobs in seven months this year.

“In fact, for the first time in more than five years, the Big Three [U.S. auto companies] are operating at a profit, and the auto industry has added 76,000 jobs since last June - that’s the strongest period of job growth in more than 10 years,” Mr. Obama said. “We’re not yet where we need to be, but there are some good trends out there.”

The Manufacturing Enhancement Act of 2010 reduces or temporarily eliminates tariffs on a range of materials used by U.S. companies. Mr. Obama said the law would benefit myriad industries, including the auto, chemical, medical device and sporting goods sectors.

In July, the National Association of Manufacturers cited studies saying the bill would boost production by $4.6 billion and “support” almost 90,000 jobs.

The measure passed with bipartisan support, but Republicans said Mr. Obama has failed to do what it takes to reach his goal of doubling U.S. exports, which he announced in January during his first State of the Union address.

“If he were serious about reaching his goal, he could ask Democratic leaders in Congress to pass the Colombian Free Trade Agreement. Or the Panama Free Trade Agreement. Or the South Korea Free Trade Agreement,” Michael Steel, a spokesman for House Minority Leader John A. Boehner, Ohio Republican, wrote in a blog post. “As President Obama ignores these opportunities, other countries are taking advantage - at America’s expense.”

In his State of the Union speech, Mr. Obama called on Congress to pass the pacts, but they remain stalled. Republicans on the House tax-writing panel have pointed out that U.S. exports to South Korea plummeted after the European Union approved a free-trade agreement with the country.

Economists say June’s $49.9 billion trade deficit threatens to hamper the recovery and exacerbate national unemployment, which is stuck at 9.5 percent. Peter Morici, a professor at the University of Maryland Robert H. Smith School of Business, argued Wednesday that the administration needs to focus on China’s undervaluation of its currency, which discourages U.S. exports there.

“In 2010, the trade deficit with China reduces U.S. [gross domestic product] by more than $400 billion or nearly three percent. Unemployment would be falling and the U.S. economy recovering more rapidly, but for the trade imbalance with China and Beijing’s protectionist policies,” Mr. Morici wrote in a commentary.

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About the Author
Kara Rowland

Kara Rowland

Kara Rowland, White House reporter for The Washington Times, is a D.C.-area native. She graduated from the University of Virginia, where she studied American government and spent nearly all her waking hours working as managing editor of the Cavalier Daily, UVa.’s student newspaper.

Her interest in political reporting was piqued by an internship at Roll Call the summer before her ...

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