Commerce Secretary Nominee Says USTR's Responsibilities Unchanged

Lutnick submitted written answers to questions from Republicans and Democrats on the committee, which were made public ahead of the vote.

Both Democrats and Republicans also asked him to pledge to have a fair and transparent Section 232 exclusion process if new products are subject to tariffs -- the exclusion process for steel had been criticized by government watchdogs -- and Sen. Tammy Baldwin, D-Wis., asked him to expand the tariff program's scope on steel. Sen. Jerry Moran, R-Kan., asked if Mexican and Canadian metals would be subject to tariffs again after the review.

Lutnick was noncommittal on exclusions, writing, "Upon confirmation, I will coordinate closely with the Department of the Treasury and USTR to develop and implement trade and tariff policy. I will prioritize fairness, consistency, and transparency."

He told Moran he could not "prejudge the results of that study [of current Section 232 tariffs and quotas] or predict how President [Donald] Trump may react to its findings." The study he referred to was ordered in an America First Trade memo (see 2501200002.

Baldwin, who complained that certain downstream products aren't covered and said adding them would save U.S. jobs, received a promise from Lutnick that "I will be sure the Department specifically looks at prestressed concrete steel strand and fabricated structural steel" as part of the study of the Section 232 action.

Sen. Gary Peters, D-Mich., said he expects, with a more aggressive use of tariffs in this administration, there will be more duty circumvention allegations to investigate. "Do you believe the agency possesses the appropriate resources to handle what will likely be an increased volume of investigations?"

Lutnick replied that he hopes to work with appropriators to ensure the International Trade Administration "is properly resourced," given the "significant increase in trade enforcement cases."

Several senators from both parties used the opportunity to submit questions to express displeasure with the president's threats to impose tariffs on Canada. Sen. Ed Markey, D-Mass., wrote: "Canada has already taken significant steps to reduce illegal activity at the border. Will you push back if President Trump attempts to use trade laws for anything other than to support Americans and American jobs?"

Lutnick responded: "President Donald J. Trump’s mission, and my mission, is to support the American people, create good paying American jobs, and keep our country safe. I think we all can and should support those goals."

Sen. Shelley Moore Capito, R-W.Va., told Lutnick that a Toyota plant in her state manufactures engines and transmissions that are put into cars built in Canada, and 412,000 of those Canadian cars that return to the U.S. for sale include those engines.

"Do you agree that tariffs placed on foreign goods may also encompass components of those goods that are manufactured in the United States," she asked, and asked if imposing tariffs on Canadian exports wouldn't lead to fewer West Virginia exports?

He did not directly reply, saying instead, "Automobiles and automobile parts are a critical part of [USMCA], which ultimately has to work for American manufacturing and American workers."

Sen. John Hickenlooper, D-Colo., asked if intra-company shipments between the U.S. and Canada should be spared tariffs, and Lutnick said he would not prejudge the studies ordered in the America First Trade Policy memo.

Sen. Jacky Rosen, D-Nev., complained that softwood lumber prices have increased 35% in the last five years, driving up the cost of building new houses. "While the U.S. does produce its own lumber, we cannot meet our own demand from domestic production alone. As the top exporter of lumber to the U.S., Canada serves as a critical partner in our efforts to increase housing supply by ensuring that we have a reliable source of lumber at a competitive price. President Trump’s proposed tariffs are estimated to raise the already-high cost of construction materials by $3 billion to $4 billion, which would make homebuilding drastically more expensive and ultimately increase housing costs for homebuyers and renters." She asked him to make sure tariffs are designed in such a way that they won't make new homes more costly. He said he could not prejudge the studies.

Sen. John Fetterman of Pennsylvania, the only Democrat on the committee who voted for Lutnick, asked him if the country needs more tools in trade remedy law to counter cross-border subsidization that happens when Chinese firms move to new countries to avoid antidumping duties on their products.

"Upon confirmation, I look forward to studying the issue and working with Congress to make sure that the Department has the resources and tools it needs to strongly enforce our trade laws and address unfair trade practices by foreign actors," Lutnick replied.

Moran asked if court decisions have "hampered Commerce’s ability to enforce antidumping and countervailing duty laws."

Lutnick said he's aware of decisions remanding cases, "including with respect to the application of adverse facts available and particular market situations," and that he is open to "potential legislative changes that would strengthen and clarify the Department’s authority to impose antidumping and countervailing duties." He also said he'll ensure the department complies with CIT and appellate court decisions.

A few senators asked about trade with China; Sen. Dan Sullivan, R-Alaska, complained that China didn't buy the amount of American seafood it pledged to under the phase one agreement -- in fact, instead of doubling its purchases, they are below the level before the pandemic. He asked if Lutnick would push the Chinese to fulfill this promise. Sen. Maria Cantwell, D-Wash., warned that if there are broad retaliatory tariffs on China, they could hinder Boeing's ability to sell planes to China. Lutnick didn't directly address that concern, but to Sullivan he said, "Upon confirmation, I will ensure the Department takes a holistic approach in addressing the U.S.-China trading relationship, including consideration of past practices and behaviors by the Chinese government. I will work diligently to ensure our trading partners fully comply with all terms of our agreements."

Peters and Baldwin both asked about the connected vehicles rule. Lutnick said there has been no official act to delay it, but he will review it. (The America First Trade memo suggested it could be broadened.)

Baldwin complained that buses and other commercial vehicles weren't covered. "BIS states in its final rule that it intends to propose a new rule specifically tailored to the commercial vehicle sector. Mr. Lutnick, will you commit to prioritizing such rulemaking for commercial vehicles and continue to evaluate the necessity for similar restrictions on drones, vessels and maritime applications, and other applications where U.S. economic and national security are at risk?"

Lutnick said he will take appropriate action once he's briefed on the rule.