Everyday prices to rise in United States thanks to new China tariffs

Business lobby group warns Trump administration consumers will pay more for everyday items from cradle to grave

PUBLISHED : Monday, 20 August, 2018, 4:11pm
UPDATED : Monday, 20 August, 2018, 4:57pm

New tariffs on US$200 billion of Chinese imports will force Americans to pay more for items they use throughout their daily lives, from cradles to coffins, according to a broad cross-section of US businesses.

Six days of public hearings on the proposed duties of up to 25 per cent will start on Monday in Washington as part of US President Donald Trump’s and the US Trade Representative’s efforts to pressure Beijing for sweeping changes to its trade and economic policies.

Unlike previous rounds of US tariffs, which sought to shield consumers by targeting Chinese industrial machinery, electronic components and other intermediate goods, thousands of consumer products could be directly hit with tariffs by late September.

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The US$200 billion list targets Chinese seafood, furniture and lighting products, tyres, chemicals, plastics, bicycles and car seats for babies.

“[The] USTR’s proposed tariffs on an additional US$200 billion of Chinese imports dramatically expands the harm to American consumers, workers, businesses, and the economy,” the US Chamber of Commerce said in written testimony for the hearing.

The US business lobbying group said the Trump administration lacked a “coherent strategy” to address China’s theft of intellectual property and other harmful trade practises and called for “serious discussions” with Beijing.

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Mid-level Trump administration officials and their Chinese counterparts are expected to meet later this week in Washington to discuss their trade dispute. But it is unclear whether the talks will have any effect on the implementation of US tariffs and retaliation by China.

In more than 1,400 written comments submitted to the USTR that will be echoed in the hearings, most businesses argued that the tariffs would cause harm and higher costs for products ranging from Halloween costumes and Christmas lights to nuclear fuel inputs, while a small number praised them or asked that they be extended to other products.

Graco Children’s Products, a unit of Newell Brands, said tariffs “will have a direct negative impact on our company, American parents and most importantly the safety of American children”.

The company said higher prices might prompt more parents to buy car seats, swings and portable play yards on the second-hand market.

“The proposed tariffs may force parents to use unsafe sleeping environments or let children dangerously co-sleep with parents,” Graco wrote. The tariff “only causes a children safety issue; it will not convince China to change its policies”.

Evenflo Feeding said the tariffs would hit manual breast pumps “and would cause disproportionate economic harm to US interests”.

At the other end of the life cycle, Centennial Casket president Douglas Chen said his Plano, Texas-based company relied exclusively on Chinese-made caskets and the tariffs would cause “great loss” and raise costs for “grieving families purchasing caskets for their loved ones at one of the worst times of their life”.

The Internet Association, representing companies including Facebook, Amazon.com and Alphabet, said the tariffs “would cause disproportionate economic harm to American internet companies. The list includes products that impact how internet companies function.”

Westinghouse Electric, the leading US nuclear fuel producer, said it relied on China for zirconium and zirconium powders – key inputs for tubes used in nuclear fuel assemblies that it uses at plants in Utah, Pennsylvania and South Carolina.

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There was no US source of zirconium so the tariff would “raise the cost for Westinghouse to manufacture nuclear fuel for US commercial nuclear power plants” and it ultimately “would increase the cost of electricity to a significant percentage of US electricity consumers”, the company said in a filing.

Huffy, the largest US bicycle brand, with 4 million Chinese-made bikes sold annually, said a 25 per cent tariff posed a “serious threat to the company”.

Huffy CEO Bill Smith wrote that the tariffs should have been put in place 20 years ago when Huffy and other US bicycle makers sought to increase the 11 per cent US bicycle tariff because of aggressive Chinese imports. When this effort failed, Huffy closed three US plants in 1998 and 1999, terminating 2,000 employees and shifting to Chinese bikes.

“This proposed tariff is too little, too late,” Smith wrote, adding that now, a higher tariff would “only create problems” and cost jobs at independent US bicycle dealers.

“There is no other country in Asia or Europe that can provide the volume Huffy requires as China is the largest bicycle producer in the world,” he said.

In Beijing on Monday, US-China Business Council president Craig Allen said more tariffs could create “grave economic distortions”, but that Trump had been very clear about the problems in the trade relationship.

“They [Chinese officials] have been given these suggestions in writing. I think that they know very well what is being asked. And let the negotiations proceed,” Allen said, calling for a “surge” in Chinese market opening.