Companies Warn More China Tariffs Will Cripple Them and Hurt Consumers

The Trump administration is holding six days of hearings on its proposal to impose tariffs on an additional $200 billion worth of Chinese goods.

WASHINGTON — As the United States and China prepare to resume fractious trade talks this week, executives from American companies flocked to Washington on Monday to warn the Trump administration that imposing tariffs on an additional $200 billion worth of Chinese goods would cripple their businesses and raise prices on everything from bicycles to car seats to refrigerators.

Dozens of companies voiced concerns to trade officials during the first of six days of hearings on the administration’s plan to impose tariffs of as much as 25 percent on a wide array of Chinese imports. The length of the hearing by the United States Trade Representative, initially scheduled for just three days, was doubled to accommodate the leaders of nearly 400 companies and trade groups who will testify in hopes that they can influence the final list of products subject to tariffs.

While the companies appearing before the government panel varied widely, their concerns struck a similar theme: The United States is no longer equipped to produce many materials that they depend on for their products. The rise of global supply chains has shifted the bulk of manufacturing and production outside the United States, leaving companies no choice but to rely on foreign materials, including those from China.

Jim Day, a vice president at the ’47 Brand hat company, said it would take at least a decade for the United States to develop the manufacturing capacity to produce the hats he sells because such facilities were shuttered many years ago. If President Trump’s tariffs move ahead, Mr. Day said, it will mean job cuts at his Massachusetts-based business.

“We’re supportive of the president’s desire to protect U.S. businesses, continue economic growth and bring jobs to the U.S.,” Mr. Day said. “Our position is this proposed tariff increase would do the opposite.”

Mr. Trump has said his tariffs are a negotiating tactic to compel China to lower its trade barriers, stop the theft of intellectual property and open its markets to businesses from the United States. His trade policy, which includes tariffs on steel and aluminum from countries across the globe, is also aimed at lifting American manufacturing by making it less cost-effective to outsource production overseas.

But companies that rely heavily on Chinese imports say that approach will destroy many of the American businesses the president has said he is trying to help.

Jennifer Harned, the president of Bell Sports, which makes helmets for cyclists and skaters, said the tariffs her company would face on pads and straps from China could send costs soaring, potentially nudging cyclists to go helmet-free.

“We fear consumers could forgo utilizing products altogether, choosing to ignore safety laws perhaps by not buying a bike light and getting hit by a car because a driver does not see them or not wearing a helmet and dying from an impact to their skull,” said Ms. Harned, whose Illinois-based company employs 500 workers.

Others suggested that national health care costs could be inflated by Mr. Trump’s tariffs if the price of fitness products put that $600 treadmill out of reach or made even basic sporting goods unattainable.

Tom Cove of the Sports and Fitness Industry Association said 10 to 25 percent tariffs on plastic youth baseball gloves could discourage children from taking up the game and getting involved with exercise activities generally. He argued that raising the cost of getting in shape would be detrimental to the United States economy in the long term.

“It makes no sense to drive up the price of products that otherwise contribute to lowering the national expenditure on health care,” Mr. Cove said.

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How China Became Trump’s Trade Nemesis

China’s explosive rise was a shock to the global trading system. For decades, Western economies like the United States have struggled with the growth of this economic powerhouse.

“If you look at what’s happening with trade in China, it hasn’t been fair for many, many years.” When President Trump rails against China, he says things like, “Our country is being taken advantage of,” or, “We lost years ago by presidents and others allowing this to happen.” He’s probably referring to the past four decades, when China has grown faster than any major economy in history and gone from a poor, developing country to an economic powerhouse that is challenging America’s spot at the top of the international food chain. “Its emergence as a global power was so sharp and so extreme, faster than the world can handle, in some ways faster than China can handle.” The U.S. and other Western nations kick-started much of China’s rise by opening up trade. What they haven’t figured out is how to get this fundamentally different economic system to play by free market rules. A pivotal moment came in 2001 after 15 years of negotiations. China joined the World Trade Organization, which sets the rules for free and fair trade between member countries. “All of the countries that were in the club at the time put enormous demands on China for what they needed to do.” The Chinese committed to sharply lower tariffs and reduced some of the government’s role in how business gets done. But they argued then, as they still do now, that China is a developing country and so should be held to less stringent free trade standards. The hope was that these first steps would lead to even more sweeping changes. “Why did we assume that? The experience of communism was through the lens of the Soviet Union and its satellite states, which was ultimately not a success. And so the presumption was, China’s going to want to become like us, more market oriented.” “After China joined the W.T.O. in 2001, you saw this enormous surge of Chinese exports to everywhere in the world, and to the United States in particular.” “They were kind of an elephant hiding behind mice with respect to other countries in global trade negotiations at the time.” The U.S. and other countries complained that China was not opening its markets enough, and keeping the value of its currency artificially low to make Chinese exports more attractive. “China has been making great strides using tools that are really not acceptable under the global trade system.” China has continued to operate as a centrally planned economy. The government owns, influences or subsidizes major industries, giving them an artificial competitive edge. There are heavy restrictions on foreign investment, and foreign companies are pressured to share their technologies. “China has become more market oriented, but dating back to probably 2007, 2008, I think it was recognized that China wasn’t on the path to become more like us. And so then countries began to think about, well, what do we do instead?” “Some view the rise of Asia-Pacific with suspicion and fear. America doesn’t.” Enter the Trans-Pacific Partnership, initiated by Bush, signed by Obama. “When implemented, It won’t just boost trade and support jobs in our 12 countries. It will help set stronger rules for trade across the Asia-Pacific.” Put less politely, It was also supposed to be a bulwark to China’s growing economic power. “The idea was that China would want to join this great trading pact, and so they would have this incentive to reform their economy.” “This is the one that President Trump ripped up on his third day in office.” “The first one is withdrawal of the United States from the Trans-Pacific Partnership.” “I had seen the erosion of popular and congressional support for trade for many years. But I’d never seen anything like Donald Trump.” “Our founding fathers understood trade much better than our current politicians, believe me.” Trade is generally accepted by economists as win-win for countries on the whole. But Trump says that China is winning and the U.S. is losing. “He and people in his administration argue that past approaches to dealing with China haven’t worked. It’s not actually that profitable to negotiate with them. We need to focus on this much bigger trade measure, and then we can really hit them with a very aggressive, forceful action.” “He seems intent on generating a moment of crisis.” “We put a $50 billion tariff on, then we put a $100 billion tariff on. And you know at a certain point, they run out of bullets.” But dynamics have changed. Today, China sees its economy as strong enough to withstand almost anything the U.S. can throw at it.

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China’s explosive rise was a shock to the global trading system. For decades, Western economies like the United States have struggled with the growth of this economic powerhouse.CreditCredit...Johannes Eisele/Agence France-Presse — Getty Images

And, he added, finding alternatives to China or producing such products domestically is not the answer for companies that have been depending on Chinese manufacturing for decades.

“China remains a vital and not easily replaceable link in our industry’s supply chain,” Mr. Cove said. “Shifting manufacturing to other countries is simply not feasible in real time or to scale.”

Economists have warned that the humming American economy could begin to slow if the United States engages in a protracted trade war with China. The administration has already imposed tariffs on $34 billion worth of Chinese goods and those on an additional $16 billion worth are expected to go into effect on Thursday. China has retaliated with its own tariffs on American products, and neither country has shown signs that it is willing to back down.

A delegation of midlevel Chinese officials arrives in Washington this week for a new round of trade talks on Wednesday and Thursday with American economic policymakers at the Treasury Department, but little progress is expected to be made. In an interview with Reuters on Monday, Mr. Trump said he has “no time frame” for ending the trade dispute with China.

The tariffs being debated this week would hit products such as fish, petroleum, chemicals, handbags and a broad array of items that affect consumer products. This month, Mr. Trump ordered his administration to consider more than doubling the proposed tariffs from 10 to 25 percent out of frustration that earlier rounds of tariffs failed to compel China to acquiesce. If imposed, businesses and consumers could feel the pain before the November midterm elections.

The White House is “unwavering in their view that the U.S. will ‘win’ this trade war and that the Chinese government will have to capitulate,” Henrietta Treyz, the director of economic policy research at Veda Partners, an investment advisory firm, said in a note to clients. “We do not have evidence to suggest that China is preparing to capitulate in such a manner and do not see an end to the tariffs in the near term.”

At the hearing at the United States International Trade Commission building on Monday, business leaders said that they understood Mr. Trump’s desire to negotiate a more favorable trade deal with China, but that tariffs were a misguided approach.

Some officials there represented businesses not yet on the tariff list, but feared they could be next. Among them was Stephen Lang, the president of the American Bridal and Prom Industry Association, who said it is impossible to find people in the United States to do the intricate beading and sewing necessary to make prom and wedding dresses on a large scale.

“We can’t make wedding gowns and prom dresses in the United States,” said Mr. Lang, who said he feared what would happen if his industry was the next to face tariffs. “Nobody wants to do this work.”

Mr. Lang, who is the chief executive of Mon Cheri Bridals in New York, said he had to change banks this year because his lender thought tariffs posed a risk to his business.

“I shouldn’t be put out of business because of an ill-placed attempt to balance the books between these two countries,” he said.

Not every company represented at the hearing is expected to oppose the tariffs. On Friday, Michael Korchmar, the owner of Korchmar, a leather specialty company, is scheduled to testify about the pain China has inflicted on his business.

“My company has been severely impacted by China’s predatory marketing practices throughout the last 38 years, costing the jobs of almost 500 U.S. manufacturing workers,” Mr. Korchmar wrote in a letter requesting to testify. “These additional duties will help us greatly to continue rebuilding our U.S.A. manufacturing.”

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