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U.S. Companies' Message to Trump: Don't Expand China Tariffs

20 Jun 2019
U.S. Companies' Message to Trump: Don't Expand China Tariffs
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How things go about if President Donald Trump carry through his warning to demand tariffs on the remaining $300 billion in Chinese goods that he hasn't already hit with 25 percent import taxes?
 
A New Hampshire fireworks company says it would have to elevate prices, probably lose business and force some small towns to cancel their Fourth of July fireworks displays.
 
A Minnesota motorcycle maker warns that it would lose business to foreign rivals that do not have to pay taxes on Chinese parts.
 
A Los Angeles designer and distributor of houseware goods tells it would have to extend a hiring freeze and hold-up plans to spread out into a more substantial warehouse.
 
The administration, in the middle of the trade war it began with Beijing, had demanded comments on its plan to extend 25 percent tariffs to everything China ships to the United States.
 
It's getting an earful.
 
A large number of businesses, trade groups and individuals have written to protest that the a great deal more import taxes would increase prices for consumers, squeeze profits and leave U.S. companies at a competitive negative aspect to foreign competitors that commonly are not susceptible to higher taxes on the vital components they buy from China.
 
They are appealing with the administration to reconsider the tariffs — or at least free the particular imports they and their customers rely on. Some will appear in person to air their grievances in seven days of hearings in Washington that begin Monday.
 
A common theme in their pleas tends to be that American businesses — not China, as Trump often asserts — must pay the import taxes the president is imposing on Chinese goods. And in conclusion, some of these companies will pass their higher costs on to their customers.
 
Trump has recently imposed 25 percent tariffs on $250 billion in Chinese imports. The aim is to pressure Beijing to stop stealing American technology, forcing U.S. businesses to hand over trade secrets and unfairly subsidizing Chinese tech companies.
 
Eleven rounds of negotiations proved unsuccessful to manage the dispute over China's aggressive drive to surpass America's technological dominance. Businesses and investors say they hope the negotiations will gain momentum if Trump and President Xi Jinping hold a face-to-face meeting at a Group of 20 summit in Osaka, Japan in two weeks.
 
'Most businesses are almost praying for a solution,' said Patrik Berglund, who tracks global trade as the CEO of Xeneta, an Oslo, Norway ,firm that provides data on the shipping industry. 'These things will have enormous consequences. We're so connected in this global world.'
 
Trump's earlier tariffs mostly spared American consumers by emphasizing industrial goods that don't show up directly in the mall or big-box stores. But the new round will inflict financial pain on ordinary households on the grounds that it will affect many consumer goods, from cellphones and computers to shoes and silk scarves.
 
'We're talking about things that you and I buy and buy in a store, and that's going to be felt directly by consumers,' said Neil Bradley, chief policy officer at the U.S. Chamber of Commerce. The companies that serve the retail market, he replied, tend to have 'much, much less margin to absorb those increased tariff costs.'
 
A report commissioned by the National Retail Federation found out that American consumers would pay a further $4.4 billion a year for clothing, $2.5 billion more for shoes and $1.6 billion more for household appliances.
 
More broadly, economists say the tariffs could destroy a U.S. economy that is apparently on shakier footing. Mark Zandi, chief economist at Moody's Analytics, said the bigger import taxes would leave the United States with 900,000 fewer jobs than it would have had otherwise.
 
'The U.S. economy will be flirting with recession later this year and early next,' Zandi said.
 
Indian Motorcycle Co. in Medina, Minnesota, complained that its foreign competitors will likely not have to pay a tax on Chinese parts, giving them to 'import the finished motorcycle into the United States — without increased costs.'
 
Excluding motorcycle parts from the tariffs, a company lawyer, Paul Vitrano, wrote, would 'avoid the unintended consequence of providing foreign-based motorcycle manufacturers with a competitive advantage.'
 
Carltons Men's and Women's Apparel store in the Delaware beach town of Rehoboth says the tariffs would force it to raise prices — a $500 suit could cost $625 — and lose business and cut its staff of 15. 'If revenue declines, then payroll must, too,' said owner Trey Kraus.
 
Protests to the tariffs commonly are not unanimous. The Bohning Co., a maker of archery instruments in Lake City, Michigan, asserted that Chinese companies are counterfeiting its products and have simpler access to the U.S. market than it has to China's.
 
'The 25 percent tariffs should be put in place,' wrote CEO Larry Griffith.
 
Nonetheless most of those who sounded off on the tariffs were implacably opposed to them — and frightened.
 
'We beg, plead and pray you will use common sense in these trade practices and consider the little guy!!' wrote Alan Chadwick, who imports silk scarves from China and sells them in Wyoming. 'We are just ants who get trampled under fighting buffalo.'
 
This article is originally posted on tronserve.com

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