US ‘More Vulnerable to Job Loss’ if Tariffs Rise to 30%, Say Manufacturers
American producers are footing a $7.6 billion annual bill from the three existing rounds of 25 percent Section 301 tariffs on Chinese goods, “making it more expensive and less competitive to manufacture in the United States,” commented the National Association of Manufacturers in docket USTR-2019-0015. Hiking the tariffs to 30 percent, as the Trump administration is proposing for Oct. 15 (see 1909120002), “will further impact a wide variety of manufacturers already grappling with the operational costs and business uncertainty resulting from the original 25 percent tariffs on these lists,” said NAM. Comments were due Friday on the proposed increase.
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The higher tariff costs are “undermining production, capital and R&D investment and jobs here at home while also forcing manufacturers to cede ground to their competitors overseas,” said NAM. Adding more duties would leave U.S. producers even “more vulnerable to job loss and broader negative economic impacts,” it said.
Though manufacturers “of all sizes” are feeling the pain, “those hardest hit are frequently small and medium-sized manufacturers,” said NAM. Smaller companies “often have fewer choices and less ability to navigate the considerable business uncertainty that these tariffs are creating,” it said. NAM estimates electrical equipment and electronics, second only to machinery as the “top impacted” U.S. manufacturing sector, will incur $2.3 billion in added yearly costs if the 25 percent tariffs rise to 30 percent, it said.
NAM hails President Donald Trump’s “leadership” in confronting “foreign market distortions and unfair trade practices that have held back manufacturers in the United States for far too long,” it said. “But the clock is ticking, with the economic pain of escalating tariffs being directly felt by manufacturers. The president has China’s attention and with it an unparalleled opportunity to reset the U.S.-China commercial relationship for the better.”
Hiking the tariffs risks “harming U.S. leadership in the electronics sector,” said SEMI, which represents companies in the global semiconductor supply chain. “It will also reduce the ability of our members to continue to invest in U.S. R&D and production.” Larger, multinational companies “may have the ability to shift operations globally to avoid the additional tariffs,” said SEMI. But smaller companies, “which make up a majority of the supply chain and bear the brunt of these tariff increases, often do not have the same luxury and ultimately cannot compete,” it said.
The longer the trade war drags on, “and with every incremental tariff increase, the stress placed on these companies is more difficult to overcome, eroding the supply chain of the electronics sector,” said SEMI. There needs to be “a concerted effort to bring a close to the U.S.-China dispute in terms of a favorable outcome for all involved,” it said. China and the U.S. have a “strong and unrelenting incentive” to reach a comprehensive trade agreement, it said. “SEMI respectfully urges the U.S. government take the opportunity during this window prior to any potential escalation to reach a tentative agreement with China that paves the way for a long-term agreement.”
Total tariffs paid on tech imports from China increased from $383 million in 2017 to $1.9 billion in 2018, “a fivefold increase since Section 301 tariffs were first levied,” said CompTIA. “Should a 30 percent tariff rate apply to all tech product imports from China for the remainder of 2019, the cost could run into the tens of billions of dollars.”
There’s “no doubt” tariffs will create “irreparable harm to America’s technology companies, the 11.8 million Americans who work in tech occupations, and consumers who rely on affordable technology in their daily lives,” said CompTIA. The proposed increase to 30 percent “will decrease the competitiveness of CompTIA member companies’ products by making U.S.-manufactured technology products more expensive relative to foreign-made competing products,” it said. It’s “economically unfeasible” for tech companies “to incur these additional costs without passing along some costs via price increases” to businesses and consumers, it said.
Tariffs “are not the solution” for securing “meaningful commitments from China to change their trade practices,” said TechNet. “They have inflicted harm on U.S. workers, consumers, and businesses of all sizes. Increasing tariffs from 25 percent to 30 percent for tranches one, two, and three would be a mistake.”
China “must be confronted about its unfair trade practices, but increasing tariffs will further harm the long-term health of the U.S. economy,” said TechNet. “We hope that upcoming negotiations between the U.S. and China will lead to real progress.” It urges the U.S. and the Chinese “to work strenuously to resolve this situation and end the tariffs,” it said. “We urge the Trump Administration not to escalate this trade war by moving ahead with its proposed increase.”