US business groups bash Trump tariffs as China talks intensify

US companies and business groups are lining up to oppose the Trump administration’s plan to slap tariffs on Chinese imports, as the two nations step up efforts to resolve their trade dispute.

About 120 firms and industry groups are expected to testify at a hearing beginning Tuesday on the administration’s plan to impose tariffs on US$50 billion in Chinese goods. So many groups signed up that the US Trade Representative’s Office extended the hearing by two days until Thursday. The USTR has received more than 2,700 comments.

The hearing will coincide with a planned trip by Chinese President Xi Jinping’s top economic adviser to Washington for broader trade negotiations, in a follow-up to talks led by US Treasury Secretary Steven Mnuchin in Beijing earlier this month.

Companies including US Steel Corp, Best Buy and General Electric, as well as lobby groups such as the National Retail Federation, Consumer Technology Association and National Association of Manufacturers, are set to testify this week. While they are generally supportive of US action to level the playing field on trade and investment with China, many want the talks to focus on resolving differences rather than the pursuit of tariffs.

Some companies, such as AK Steel Corp, are in favour of President Donald Trump’s plans to slap duties on Chinese goods to punish the nation for abuse of US intellectual property. US manufacturers, consumer products companies and technology groups that filed written submissions opposing the tariffs say they would raise input costs and consumer prices and draw crippling retaliatory duties from China.

“Tariffs are hidden, regressive taxes that will be paid by US businesses and consumers, paradoxically harming US competitiveness,” the US Chamber of Commerce said in written testimony filed before the hearing.

The industry backlash against the planned tariffs comes amid signs the president may be seeking a less confrontational approach to Beijing. In a surprise twist, Trump said Sunday he was helping to allow Chinese telecom-equipment maker ZTE Corp “get back into business” after the US cut off the company’s access to US suppliers for allegedly making false statements in a sanctions case.

On Monday, Trump defended his move to help ZTE after the concession stoked bipartisan criticism. “ZTE, the large Chinese phone company, buys a big percentage of individual parts from US companies,” Trump said in a tweet. “This is also reflective of the larger trade deal we are negotiating with China and my personal relationship with President Xi.”

The moves may bode well for ongoing trade talks between the world’s two biggest economies. Vice-premier Liu He, Xi’s top economic aide, is expected to visit Washington from May 15-19 for high-level trade negotiations.

Tension between the US and China has roiled financial markets and raised fears the world’s two biggest economies may stumble into a trade war. The International Monetary Fund has warned that a global trade war could undermine one of the broadest world upswings in years.

Trump proposed the tariffs after USTR concluded China violates US intellectual property in a variety of ways, including by forcing American companies to transfer technology. Last month, the administration released a list of US$50 billion of proposed products to be hit with tariffs, from semiconductor components to sewing-machine needles.

After China promised to retaliate with tariffs in kind on soybeans and other US exports, Trump suggested the amount should be raised by US$100 billion. The US has not released a list to meet that expanded goal, and the administration has not specified when any of the duties will take effect, opening the door to companies to try to shape Trump’s plans. A comment period on the first US$50 billion in proposed duties ends May 22.

The tariff issue has laid bare a dilemma for US companies, many of which are disappointed with the progress China has made on economic reforms but do not want to be drawn into a diplomatic dispute that would hurt their interests.

Some companies and trade groups are calling for tariffs to be added to certain products because they face a competitive disadvantage with the separate duties on steel and aluminium imports, imposed earlier this year, raising their costs.

AK Steel chief executive officer Roger K. Newport said in his written comments the company supports the tariffs to combat China’s efforts to gain access to the technological advancements that took years to research and develop. Without adequate protection, the company said it is unlikely to make significant future investments.