Business groups urge US not to impose more tariffs on necessary Chinese imports

On the first day of a two-day public hearing, witnesses said their industries relied heavily on products that only China could provide

PUBLISHED : Wednesday, 25 July, 2018, 3:38am
UPDATED : Wednesday, 25 July, 2018, 4:08pm

Representatives of American industries that will be affected by the proposed new tariffs on Chinese imports voiced their concerns to US officials on Tuesday as part of a hearing on US President Donald Trump’s expanding efforts to exert economic pressure on Beijing.

They warned that new duties would be harmful to US businesses, especially those that rely heavily on products that only China can provide, with one witness decrying the “blunt instrument of tariffs”.

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The Office of the US Trade Representative called the two-day public hearing in Washington as the government seeks to finalise a list of Chinese products totalling US$16 billion that will be subject to a 25 per cent punitive tariff.

The move would be the first expansion of US tariffs on Chinese goods since a similar tax was imposed on US$34 billion worth of goods on July 6.

In an indication that those duties are already affecting American agriculture, the administration announced on Tuesday that it was planning to offer US$12 billion in aid to farmers hurt by China's retaliatory tariffs.

In his opening remarks at Tuesday’s hearing, Representative Kevin Cramer, Republican of North Dakota, offered a defence of Trump’s trade policy.

“After years of unsuccessful US-China dialogue, the United States is taking action to confront China over its state-led, market-distorting policy and practices,” Cramer said, adding that it was the “negligence of previous administrations” that had caused the United States’ current trade disadvantage.

“It is past time we take strong, defensive action to protect America’s lead in technology and innovation” he said.

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But the initial testimony from witnesses suggested that it was the tariffs themselves that had provoked strong, defensive reactions.

The first round of eight witnesses – of a scheduled 85 individual appearances – voiced unanimous opposition to the inclusion of chemical imports on the proposed list of new duties.

Speaking on behalf of a plastics industry trade association, Richard Braillie urged the administration not to push ahead with tariffs that targeted fluoropolymers, of which Teflon is an example, saying the new tariffs would cause “severe and irreparable damage to the US fluoropolymer industry”.

Such duties, Braillie said, would harm more than 4,000 businesses and jeopardise the tens of billions of dollars the industry contributes to the US economy.

The effect of new tariffs on small and medium-sized businesses, the protection of which was a prominent staple of Trump’s presidential campaign, was a recurring theme on Tuesday morning, with a number of witnesses from the chemical industry saying that such companies are reliant on imported products that only China offers.

Saying that the proposed tariffs ran counter to the administration’s commitment to creating jobs, Charlie Souhrada of the North American Association of Food Equipment Manufacturers said that “complex supply chains” could take up to five years to rebuild if China was no longer a viable supplier.

The tariffs are in part an effort to thwart the progress of China’s “Made in China 2025” campaign, which the Trump administration considers a threat to US supremacy in technology and innovation.

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But speaking out against the “blunt instrument of tariffs” Heidi McAuliffe of the American Coating Association said that chemical materials like polymers were created through “very mature processes,” and as such did not constitute the type of innovative technology characterising the Made in China 2025 plan.

Also set to appear before the panel are representatives of industry organisations such as the National Electrical Manufacturers Association and the Steel Framing Industry Association. Companies testifying include computer peripherals producer Logitech and HVAC manufacturer Daikin Applied.

Similar hearings to finalise the list of products in the first round of tariffs were held about six weeks before the duties took effect.

In a written submission before Tuesday’s hearing, the US Chamber of Commerce expressed its staunch opposition to tariff escalation, saying it would be US businesses and customers who would foot the bill of the “hidden, regressive taxes”.

“The escalating tariff threats made by the administration will not effectively address or advance our shared goal of changing these harmful Chinese practices,” the statement said. “The time is now for serious bilateral discussions that can identify solutions and forestall unintended impacts.”

The trade war could eventually extend well beyond the US$50 billion worth of Chinese imports already targeted and likely to face tariffs after this week’s hearings.

Having already laid the groundwork for a further US$200 billion worth of further tariffs in early July, Trump said last week that he was willing to impose tariffs on all Chinese products imported to the United States, with the total value of good targeted reaching US$500 billion.