World Economy

China Tariffs Will Shoot Up US Prices From Cradle to Grave

The top US business lobbying group says the Trump administration lacks a “coherent strategy” to address China’s theft of intellectual property and other harmful trade practices and called for “serious discussions” with Beijing
Westinghouse Electric, the leading US nuclear fuel producer, said it relies on China for zirconium and zirconium powder  for use in nuclear fuel assembliesWestinghouse Electric, the leading US nuclear fuel producer, said it relies on China for zirconium and zirconium powder  for use in nuclear fuel assemblies

A broad cross-section of US businesses has a message for the Trump administration: new tariffs on $200 billion of Chinese imports will force Americans to pay more for items they use throughout their daily lives, from cradle to coffin.

Six days of public hearings on the proposed duties of up to 25% were due to start on Monday in Washington as part of President Donald Trump's and the US trade representative's efforts to pressure Beijing for sweeping changes to its trade and economic policies, Reuters reported.

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.

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

"USTR's proposed tariffs on an additional $200 billion of Chinese imports dramatically expand the harm to American consumers, workers, businesses and the economy," the US Chamber of Commerce said in written testimony for the hearing.

Lacking Coherent Strategy

Hundreds of American businesses are delivering the same plea: "Don't raise tariffs on more Chinese goods" to Trump as he considers imposing tariffs on nearly 40% of imported Chinese goods.

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

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 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 may 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 Corp 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 and Alphabet, said the tariffs "would cause disproportionate economic harm to American internet companies. The list includes products that impact how internet companies function".

Nuclear Fuel

Westinghouse Electric, the leading US nuclear fuel producer, said it relies on China for zirconium and zirconium powder—key inputs for tubes used in nuclear fuel assemblies at plants in Utah, Pennsylvania and South Carolina.

There is 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 Corp, the largest US bicycle brand, with 4 million Chinese-made bikes sold annually, said a 25% 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% 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.

US-China Business Council President Craig Allen, speaking to reporters in Beijing on Monday, said more tariffs could create "grave economic distortions", but that Trump had been very clear about the problems in the trade relationship.

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