Industry leaders wary of trade war with China

WASHINGTON–New and retreaded aircraft tires, several types of machinery for molding or processing rubber and plastics, and a long list of motor vehicles are among the $50 billion worth of goods imported from China facing 25 percent tariffs from the U.S. government.

President Trump announced the tariffs June 15. On June 18, he ordered U.S. Trade Representative Robert Lighthizer to draw up a further list of Chinese goods worth $200 billion to be levied 10 percent tariffs if China refuses to take steps to narrow the trade deficit with the U.S.

The initial list of 1,102 Chinese products facing tariffs, covering 28 closely printed pages, was issued June 15. Besides the aforementioned goods, the list covers products in aerospace, information and communications technology, robotics and raw materials.

Tariffs against 818 products, totaling $34 billion, will go into effect July 6. The rest of the products, identified by an interagency committee as benefiting from Chinese industrial policies, will undergo further review and a public comment period.

“Trade between our nations…has been very unfair, for a very long time,” Trump said in a June 15 statement explaining his reasons for the new tariffs. “These tariffs are essential to preventing further unfair transfers of American technology and intellectual property to China, which will protect American jobs. In addition, they will serve as an initial step toward bringing balance to the trade relationship between the U.S. and China.”

Trump promised further tariffs if China retaliated against the U.S., including new tariffs on American goods, services and agricultural goods, raising non-tariff barriers or taking punitive actions against American exporters or U.S. companies doing business in China.

In a statement issued the same day as the tariffs, the Chinese Ministry of Commerce promised to retaliate.

“We will immediately introduce taxation measures of the same scale and the same strength,” the ministry said. “All the economic and trade achievements previously reached by the two parties will no longer be valid at the same time.”

The 25 percent duties imposed by China go into effect July 6, and cover high-profile U.S. products such as electric vehicles, soybeans, whiskey, orange juice, lobsters, salmon and cigars.

The U.S. actions and planned retaliations are similar to those announced May 31, when Trump signed off on tariffs against steel and aluminum imports from Canada, Mexico and the European Union under Section 232 of the Trade Expansion Act.

In return, Canada, Mexico and the EU levied steep tariffs on U.S. manufactured goods and agricultural products.

The U.S. Tire Manufacturers Association, which said the earlier tariffs would harm its members, declined to comment on the action against China. However, many other organizations expressed a wide range of opinions on the new tariffs.

The Motor & Equipment Manufacturers Association, which also expressed grave concerns over the tariffs against Mexico, Canada and the EU, said retaliatory tariffs against China could negate the benefits of tax reform and other measures the Trump administration has made to help U.S. business.

“The tariffs are taxes that hurt U.S. companies, put jobs at risk and negatively impact consumers,” MEMA said. The association cited testimony it gave before the USTR in May, stating that tariffs on motor vehicle parts would not help redress intellectual property theft, but only harm U.S. vehicle parts manufacturers.

The National Retail Federation asked Congress to intervene for U.S. business on the tariffs issue.

“This is just what we predicted–a tit-for-tat trade war has erupted, and American families are caught in the middle,” Matthew Shay, NRF president and CEO, said in a press release. “Higher prices for everyday essentials and lost jobs threaten to sap the energy out of the strong U.S. economy, just as most Americans are starting to enjoy the benefits of historic tax reform.”

An NRF study conducted earlier this year found that $50 billion worth of tariffs against Chinese goods would reduce U.S. gross domestic product by nearly $3 billion and cost the nation 134,000 jobs, the association said.

The National Association of Manufacturers said a binding bilateral trade agreement with China, not tariffs, was the best way to restructure America’s trade relationship with China.

“Manufacturers certainly have concerns that tariffs will cause more problems than they solve, but we also recognize that that the administration may intend to use them as a negotiating tactic to bring China to the table and achieve larger goals,” Jay Timmons, NAM president and CEO, in a statement.

The Alliance for American Manufacturing, which has long supported action against China to reduce the trade deficit, supported the tariffs but said they weren’t enough on their own.

“For too long, American businesses and workers have suffered devastating losses due to China’s unchecked cheating,” AAM President Scott Paul said. “These targeted tariffs are the right thing to do for our workers, our economy, and our future.

“While we support the administration’s actions today, there is still much left to be done,” he added. “Restricting Chinese investment, pursuing multilateral trade cases against Beijing, and defending our farmers and workers who may be unfairly targeted by Chinese retaliation must also be priorities.”



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