Hundreds of representatives of companies and trade groups are warning President Donald Trump that carrying out his plan to impose tariffs on $300 billion more in Chinese imports will hurt consumers’ pocketbooks, hamper business growth and fail to achieve the president’s objectives.
“It’ll be the straw that breaks the camel‘s back for a lot of our companies,” said Karen Giberson, president and CEO of the Accessories Council, an industry group whose members include fashion designers, jewelry importers and the upscale retailer Bloomingdale’s.
The howls of opposition coming from retailers like Best Buy, streaming box company Roku, child-products company Baby Trend and other big and small businesses weakens Trump’s hand as he prepares for a possible showdown with Chinese President Xi Jinping at the G-20 leaders meeting in Osaka, Japan on June 28-29.
More than 300 witnesses are expected to testify over the next seven days, with representatives from sectors that include semiconductors, energy, plumbing, software, home appliances, sports equipment, boat manufacturing, chemical firms, pet supplies, bicycles and fireworks.
Mark Schneider, CEO of the clothing line Kenneth Cole Productions, told administration officials at a hearing in Washington that he has tried finding alternative sources of supply, such as Mexico, for the company’s shoes and other products. But Trump’s unpredictable trade policy — such as a recent threat to slap tariffs on Mexico over migration issues — has made it hard to know where to make sourcing decisions.
“I started looking in Mexico, but I got scared off,” Schneider said Monday. “Some sort of stability with this type of discussion would be really helpful. There’s no preparation for anything.“
Businesses have also tried to lobby members of Congress and the administration directly against the imposition of more duties. Their best hope is to persuade U.S. Trade Representative Robert Lighthizer to leave their industries’ items off the broad list of products that will face duties of up to 25 percent.
If that fails, they could still have the chance to petition Lighthizer’s office for a one-year exclusion from the duties. But companies complain that process is already slow and cumbersome.
Apple Inc., one of the biggest importers from China, did not ask to testify in person, but is expected to file comments before the deadline closes on Monday. Apple CEO Tim Cook met with Trump last week at the White House and has publicly warned that tariffs on cellphones and other electronics from China would hurt the United States.
David Baer testified that his company, Element Electronics, is the only domestic manufacturer of TVs left in the U.S. The additional duties, however, would have the opposite effect of what the president wants in preserving domestic jobs. “We will be forced to shut down the South Carolina factory and move our production offshore,” Baer said.
“We’re doing exactly what the administration is asking of American companies“ by manufacturing in the U.S. but the tariffs would make costs for components too high to import, he said.
Trump has already imposed a 25 percent tariff on $250 billion worth of Chinese goods in a bid to pressure Beijing into purchasing more U.S. goods and stopping practices that force American companies to turn over valuable technology to access the market. But those duties primarily hit items and goods used by manufacturers.
If Trump carries through on his threat to impose 25 percent duties on the $300 billion worth of goods, it will hit many consumer items like cell phones, laptops, clothing, footwear, toys, luggage, cameras, sunglasses, baby carriages, musical instruments and kitchen goods.
“There are better alternatives to address China’s policies and practices that would not have the same adverse impacts on U.S. consumers, businesses and local communities,” the U.S. Chamber of Commerce said in comments filed with the Trump administration.
Just as it seemed the U.S. and China were on the verge of a deal, Trump upped the ante last month by threatening to hit almost all remaining Chinese goods after accusing Chinese negotiators of backtracking on previous commitments in the talks.
“We had a deal that was done and they wanted to renegotiate,” Trump told reporters last week. “You can’t do that.”
For its part, Beijing said the collapse in the talks is entirely the fault of the United States, arguing there is nothing unusual about last-minute changes in a negotiation.
U.S. law requires a comment period and hearing before Trump can impose the tariffs, although three previous rounds of public consultations resulted in relatively few items being excluded from the administration’s current tariffs on Chinese goods.
This time around, final comments are due seven days after the hearings conclude, so the administration’s decision on whether to impose additional tariffs would come in July at the earliest.
The seven days of hearings wrap up on Tuesday, June 25, just a few days before both Trump and Xi are expected in Osaka for the G-20 meeting. So far, no bilateral meeting between the two leaders have been announced.
During the previous tariff hearings, some American businesses testified in favor of duties, arguing that Chinese state subsidies and other forms of support gave their competitors an unfair advantage.
The Office of the U.S. Trade Representative did not provide a breakdown of the more than 1,600 comments it has already received on Trump’s latest tariff proposal, in terms of how many were in favor of the action and how many opposed.
But it appeared that opponents of new duties far outnumbered supporters.
“The net result of this is we lose, with the very real prospect that we go out of business,” said Mark Corrado, president of Leading Lady, which sells women’s intimate apparel. He showed the panel one of his company’s bras to demonstrate how labor intensive and intricate production can be.
Trump has argued the tariffs are bringing jobs back to the United States. But Corrado, a third-generation owner of a Ohio-based company started by his grandfather in the 1930s, countered: “People don’t sew in the U.S. anymore.“
The National Council of Textile Organizations, for one, is urging the administration to go through with tariffs on clothing and textile products from China, which they said would increase U.S. leverage in the negotiations in Beijing.
But a number of items used by textile manufacturers — such as certain chemicals, dyes, machinery and rayon staple fiber, that were previously excluded from duties — should stay off the list to make sure American producers remain competitive, the council said.
Trump’s latest target list also includes nearly $190 billion of raw materials, intermediate goods or capital equipment from China used for manufacturing in the United States.
The National Association of Manufacturers, which has benefited from Trump’s tax cut and regulatory reforms and has been reluctant to criticize the president, warned the existing tariffs are already making U.S. companies less competitive in world markets.
“Increased tariffs on these inputs make it more expensive and less competitive to manufacture in the United States, undermining production, capital and R.&D. investment and jobs here at home while also forcing manufacturers to cede ground to their competitors overseas,” NAM said in its public comments.
Both Trump and White House chief economic adviser Larry Kudlow have indicated the United States could go ahead with the duties if Xi refuses to meet, even though some economists believe the additional tariffs would endanger U.S. economic growth and possibly even tip the global economy into recession.
In one possible sign of progress toward arranging a summit meeting, Chinese Vice Foreign Minister Zheng Zeguang was in Washington over the weekend for talks with administration officials, a White House official confirmed.
With Trump slumping in the polls and Republicans worried about losing control of the Senate in the 2020 election, the president may feel pressure to back off his tariff plan.
“In theory he retains the ability to impose tariffs on a whim, but in reality he is constrained,” said Ian Shepherdson, chief economist of Pantheon Macroeconomics, an economic research firm.
“Hitting $300B-worth of consumer goods with tariffs, thereby pushing up the price of everything at Walmart, would strike existential fear into the heart of Congressional Republicans, and they would push back hard,” Shepherdson said.