From Detroit Free Press
WASHINGTON — The United States comes under World Trade Organization penalties for the first time today, the result of congressional failure to steer through presidential politics, employment anxiety and budget deficits and head off the tariffs.
A 5-percent penalty tariff awaits U.S. exports such as jewelry and refrigerators, toys and paper. The penalty climbs by 1 percentage point for each month that lawmakers fail to bring U.S. laws in line with international trade rulings.
The tariffs penalize the United States for failing to eliminate a tax break that is worth $5 billion a year to U.S. exporters. It was declared an illegal export subsidy by the WTO and lawmakers agree they must repeal it.
But the House and Senate disagree on tax cuts to replace the old ones. American business, divided between manufacturers hoping for help and multinational companies hoping to modernize American tax laws, cannot agree on a solution.
The dollar’s sharp decline in value against the euro, the European Union currency, means American goods are cheaper on European markets. That may protect U.S. manufacturers from feeling the bit for some time, said Gary Hufbauer, a trade economist at the Washington-based Institute of International Economics.
“Add all of this together, and you can see why we are going beyond the deadline,” he said.
Senate leaders expect to start debating their legislative solution this week, then set it aside temporarily to work on next year’s federal budget.
Click here to view the rest of today’s headlines.