LDN - Business

U.S. firms warn next China tariffs to cost Americans from cradle to grave

[August 20, 2018] By David Shepardson and David Lawder

WASHINGTON (Reuters) - A broad cross-section of U.S. 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 cradles to coffins.

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

Unlike previous rounds of U.S. 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. (See the complete list https://www.regulations.gov/document?D=USTR-2018-0026-0001)

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

The top U.S. business lobbying group said 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.

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 U.S. tariffs and retaliation by China.

In more than 1,400 written comments submitted to USTR that will be echoed in the hearings, most businesses argued that the tariffs will 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 Inc, a unit of Newell Brands Inc, 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 will hit manual breast pumps "and would cause disproportionate economic harm to U.S. interests."

At the other end of the life cycle, Centennial Casket Corp President Douglas Chen said his Plano, Texas-based company relies 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."

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Shipping containers, including one labelled "China Shipping," are stacked at the Paul W. Conley Container Terminal in Boston, Massachusetts, U.S., May 9, 2018. REUTERS/Brian Snyder/File Photo

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

Westinghouse Electric Co LLC, the leading U.S. nuclear fuel producer, said it relies 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.

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

Huffy Corp, the largest U.S. bicycle brand, with 4 million Chinese-made bikes sold annually, said a 25 percent tariff poses 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 U.S. bicycle makers sought to increase the 11 percent U.S. bicycle tariff because of aggressive Chinese imports. When this effort failed, Huffy closed three U.S. 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 U.S. 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.

U.S.-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.

"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.

(Reporting by David Shepardson and David Lawder; Additional reporting by Michael Martina in Beijing; Editing by Dan Grebler)

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