It’s getting harder for companies to escape Trump’s China duties

US$16 billion in Chinese goods are targeted for 25 per cent duties. — Reuters pic
US$16 billion in goods are targeted for 25 per cent duties. — Reuters pic

WASHINGTON, July 24 — US companies and industry groups are returning to Washington this week in an increasingly futile effort to get relief from President Donald Trump’s tariffs on Chinese imports.

More than 80 witnesses are scheduled to testify during the two-day hearing starting today on the US$16 billion in Chinese goods targeted for 25 per cent duties, which could be imposed after a comment period ends July 31. The administration imposed tariffs on US$34 billion of products on July 6, after similar hearings in May.

The Office of US Trade Representative has also identified an additional US$200 billion of goods slated for a 10 per cent duty after retaliated in an escalating trade war, and Trump has said he’s “ready to go” with tariffs on US$500 billion in imports — roughly the value of ’s annual goods exports to the US.

While companies successfully lobbied to remove some consumer goods from the administration’s initial list of targets and the USTR will act in good faith, there’s less flexibility because items removed must be replaced to reach Trump’s total, said John Veroneau, a partner at Covington & Burling in Washington and a former deputy US trade representative under President George W. Bush.



“Finding replacements is becoming more challenging,” Veroneau said.

Trade war

Trump is showing no sign of backing down from a global trade war that the IMF has warned could derail the strongest economic upswing in seven years. In a Twitter outburst last week, the president accused China and the euro area of manipulating their currencies, and complained that a rising dollar is blunting ’s competitive edge.

There may be some accommodations made or attempts to shift products from the list of Chinese imports with a 25-per cent duty to the one with 10 per cent to soften the blow, but that’s hard to do when Trump is aiming for such a high number, said Gary Hufbauer, senior fellow and trade specialist at the Peterson Institute for International Economics.

Separately, the House Ways and Means Trade Subcommittee has set a hearing today on the “broken” process for companies to request exclusions on the duties Trump slapped on steel and aluminum imports from March. The Commerce Department has been flooded with requests and drawn criticism for the cumbersome process.

Resins, bikes

The hearing on Chinese imports this week focuses on products from resins and chemicals to large freight containers, electric bicycles and vaping devices. Most of the companies and business groups that have filed comments are seeking to have goods spared from duties on grounds the tariffs are ultimately a tax on consumers and hamstrings them with their global supply chains.

Joseph Cohen, founder and chief executive officer of New Jersey-based Snow Joe LLC, is back to testify after he successfully argued in May to have electric and cordless snow blowers removed from the tariff list that took effect July 6.



Now, he’s making the case that lawn products including tillers and log splitters on the US$16 billion list should be removed, and the company’s pressure washers are among the US$200 billion in goods targeted for the 10 per cent duty.

“We’re still optimistic that the administration’s going to come up with a solution,” Cohen said.

Companies and trade groups including the US Chamber of Commerce have said they agree with the administration taking action to change China’s behavior on trade but that a negotiated deal, not tariffs, is the better approach.

Business killer

Kimball Electronics Inc of Jasper, Indiana, said it may be forced to move manufacturing outside of the US — just as Wisconsin-based Harley-Davidson Inc. announced last month — to avoid Trump’s tariffs on diodes and electric integrated circuits.

“I do not exaggerate when I say that 25 per cent duties on these products would kill domestic durable electronics manufacturing,” Donald Charron, chairman and chief executive officer, said in written comments posted online.

The is asking that duties on 20 product lines that collectively would cost businesses more than US$500 million a year be removed, according to SEMI, which represents companies in the manufacturing supply chain for the electronics industry.

The US has long had a trade surplus in the semiconductor equipment industry globally and with China, and more than 40 per cent of imports in the sector from China came from firms that are either US based or owned, SEMI said in written comments.



Some companies are arguing the tariffs on certain Chinese imports be kept or added. The Steel Manufacturers Association wants duties to be levied on fabricated structural steel that China is sending to the US for bridges, airports and other critical infrastructure projects.

Trump authorised the tariffs after an investigation he ordered found that China was violating intellectual property rules and forcing American companies to transfer their technology. The China Chamber of International Commerce denied that in its written testimony and said the tariffs “will lead to nothing but confrontation between the two countries.”

The chamber said the US and China had made progress during meetings earlier this year before talks broke down, and that it is “unwise for the US to turn back to unilateral actions.” — Bloomberg

Source: The Malay Mail Online





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