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US companies warn additional China tariffs will cripple their business and hurt customers

Firms travel to Washington to warn United States is no longer equipped to produce materials needed for products

Alan Rappeport
Tuesday 21 August 2018 17:17 BST
Donald Trump says he's 'ready to go to 500' in tariff battle with China

As the United States and China prepare to resume fractious trade talks this week, executives from US companies flocked to Washington to warn the Trump administration that imposing tariffs on an additional $200bn (£155bn) worth of Chinese goods would cripple their businesses and raise prices on everything from bicycles to car seats to refrigerators.

Dozens of companies voiced concerns to trade officials during the first of six days of hearings on the administration’s plan to impose tariffs of as much as 25 per cent on a wide array of Chinese imports.

The length of the hearing by the US Trade Representative, initially scheduled for just three days, was doubled to accommodate the leaders of nearly 400 companies and trade groups who will testify in hopes that they can influence the final list of products subject to tariffs.

While the companies appearing before the government panel varied widely, their concerns struck a similar theme: The US is no longer equipped to produce many materials that they depend on for their products.

The rise of global supply chains has shifted the bulk of manufacturing and production outside the US, leaving companies no choice but to rely on foreign materials, including those from China.

Jim Day, a vice-president at the ’47 Brand hat company, said it would take at least a decade for the US to develop the manufacturing capacity to produce the hats he sells because such facilities were shuttered many years ago.

If Donald Trump’s tariffs move ahead, Mr Day said, it will mean job cuts at his Massachusetts-based business.

“We’re supportive of the president’s desire to protect US businesses, continue economic growth and brings jobs to the US,” Mr Day said. “Our position is this proposed tariff increase would do the opposite.”

Mr Trump has said his tariffs are a negotiating tactic to compel China to lower its trade barriers, stop the theft of intellectual property and open its markets to businesses from the US.

His trade policy, which includes tariffs on steel and aluminium from countries across the globe, is also aimed at boosting US manufacturing by making it less cost-effective to outsource production overseas.

But companies that rely heavily on Chinese imports say that approach will destroy many of the American businesses the president has said he is trying to help.

Economists have warned that the humming American economy could begin to slow if the US engages in a protracted trade war with China.

The administration has already imposed tariffs on $34bn worth of Chinese goods and those on an additional $16bn worth are expected to go into effect on Thursday.

China has retaliated with its own tariffs on US products, and neither country has shown signs that it is willing to back down.

A delegation of mid-level Chinese officials arrives in Washington this week for a new round of trade talks on Wednesday and Thursday with US economic policymakers at the Treasury department, but little progress is expected to be made.

In an interview with Reuters on Monday, Mr Trump said he had “no time frame” for ending the trade dispute with China.

The tariffs being debated this week would hit products such as fish, petroleum, chemicals, handbags and a broad array of items that affect consumer products.

This month, Mr Trump ordered his administration to consider more than doubling the proposed tariffs from 10 to 25 per cent out of frustration that earlier rounds of tariffs failed to compel China to acquiesce. If imposed, businesses and consumers could feel the pain before the November midterm elections.

The White House is “unwavering in their view that the US will ‘win’ this trade war and that the Chinese government will have to capitulate”, Henrietta Treyz, the director of economic policy research at Veda Partners, an investment advisory firm, said in a note to clients.

“We do not have evidence to suggest that China is preparing to capitulate in such a manner and do not see an end to the tariffs in the near term.”

At the hearing at the US International Trade Commission building on Monday, business leaders said they understood Mr Trump’s desire to negotiate a more favourable trade deal with China, but that tariffs were a misguided approach.

Not every company represented at the hearing is expected to oppose the tariffs.

On Friday, Michael Korchmar, the owner of Korchmar, a leather speciality company, is scheduled to testify about the pain China has inflicted on his business.

“My company has been severely impacted by China’s predatory marketing practices throughout the last 38 years, costing the jobs of almost 500 US manufacturing workers,” Korchmar wrote in a letter requesting to testify.

“These additional duties will help us greatly to continue rebuilding our USA manufacturing.”

The New York Times

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