Retailers Blast Trump’s New Tariff Threats as ‘Reckless Escalation’ of Trade War
Retailers immediately blasted President Donald Trump’s threats to impose new Trade Act Section 301 tariffs of 10 percent on an additional $200 billion worth of goods from China. Trump's threats are a “reckless escalation” of the U.S. trade war with China and should serve as “the latest reminder that Congress must step in and exert its authority on trade policy,” said National Retail Federation CEO Matthew Shay Monday.
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Trump’s latest threats in response to China’s retaliatory actions are “just what we predicted -- a tit-for-tat trade war has erupted and American families are caught in the middle,” said Shay. “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.”
The Retail Industry Leaders Association agrees the current situation amounts to “a global trade war, plain and simple,” said Hun Quach, vice president-international trade. American families “will be the ones who suffer most," she said. RILA represents Best Buy, Walmart and other big-box retailers.
CompTIA, among the few tech groups also weighing in against the threat of additional tariffs, has “no doubt that China needs to be held accountable” for unfair trade practices, said Elizabeth Hyman, executive vice president-public advocacy, Tuesday. “But additional tariffs are cutting off our nose to spite our face,” she said. “Rather than using the blunt instrument of tariffs on China, more energy should be devoted to working with the U.S. Congress to develop productive solutions.” Unfair Chinese trade practices “have caused American workers and American companies to suffer enough,” she said. “We do not need additional self-imposed harm.”
China's retaliatory decision to impose 25 percent tariffs on $34 billion in U.S. imports, mirroring the administration’s own Section 301 tariffs announced Friday (see 1806150030), shows China "has no intention of changing its unfair practices related to the acquisition of American intellectual property and technology," said Trump Monday, making the new tariffs threat. "The latest action by China clearly indicates its determination to keep the United States at a permanent and unfair disadvantage."
Trump said he directed U.S. Trade Representative Robert Lighthizer to “identify” $200 billion worth of Chinese goods for additional 10 percent tariffs, to take effect after they’re vetted in the “legal process.” If China retaliates again, the U.S. will escalate with additional tariffs on another $200 billion in Chinese imports, said Trump, without saying at what rate. Lighthizer's office "will announce the additional tariffs proposed and provide a similar legal process as the proposed tariffs" announced April 3 (see 1804040023), said the office. That process involved several rounds of written comments and three days of public hearings on the proposed tariffs. "No additional tariffs will go into effect until the legal process is complete," said the office.
Hours before Trump threatened the additional tariffs, an IHS Markit analyst warned that the 25 percent tariffs the administration imposed Friday could hurt U.S.-based companies more than punish the Chinese for allegedly unfair trade practices. Though finished TVs from China were spared the 25 percent tariffs, not so for “some components used in TV assembly,” said Paul Gray, IHS principal analyst-consumer devices, Monday at the IHS Media and Technology Conference in London. “So for assembly in the U.S., things are worse than before,” said Gray. “That’s as of now,” said Gray, pointing to his watch. “But of course, things could change.”
A team of IHS analysts, including Gray, “looked at this over the weekend,” he said. “We thought we needed to get it straight ahead of today’s event.” Their task “wasn’t made any easier” because the product subheadings in the U.S. Harmonized Tariff Schedule are “not the same as world codes,” he said.
The IHS team found tariffs won’t affect LCD panels from China, but components such as tuners and printed circuit boards will be subject to the higher duties, said Gray. “So it’s business as usual if TVs are made in China and sold in the U.S.,” he said. “But it will affect assembly in the U.S., with components from China -- critically, PCBs [printed circuit boards] -- attracting new tariffs, and that means new ventures like Foxconn in Wisconsin will be affected.” Components for automotive displays also “look likely to be affected, but on a case-by-case basis,” he said. Foxconn didn’t comment.
Most of the products earmarked for tariffs to take effect starting July 6 “would mostly miss Chinese companies and instead hit non-Chinese multinational corporations operating in China,” said a study updated Monday at the Peterson Institute for International Economics. Compared with the originally proposed tariffs list the administration released April 3, “the revised set of tariffs affects an even higher share of products from non-Chinese corporations, especially for transportation equipment and chemicals,” said the study. “The tariffs are aimed at patent-intensive industries that rely on global supply chains, disadvantaging American producers and harming US allies operating in the region.”