Friday, April 13, 2018
A tariff is a tax, or duty, governments place on imports to make domestic products more attractive to purchase. They are often used to punish countries deemed to be upending the competitive landscape for domestic businesses. Last month President Trump called for tariffs ranging from 10 to 25 percent on steel, aluminum and other goods imported from China in response to alleged violations of U.S. intellectual property rights by the Chinese.
In an April 11, 2018, letter to the House Ways and Means Committee, a coalition of 107 U.S. trade associations said it shares the Administration's concerns about China's unfair trade practices and intellectual property rights violations, but argued tariffs will trigger a trade war with China that hurt U.S. businesses and consumers. Rather than a bilateral trade war, the group wants lawmakers to push the Administration to work with other nations to negotiate better trade relations with China.
"The impact of a trade war and tariffs would be felt by businesses, workers, farmers and consumers throughout the U.S. and across industry sectors," the coalition wrote. "Congress must ensure that hardworking families in the United States are not forced to pay the price for China's bad behavior."
The Office of the U.S. Trade Representative, at the direction of the President, earlier this month proposed a comprehensive list of imports from China potentially subject to tariffs. The proposed action is now out for public comment. Interested parties have until May 11 to file written comments, and a public hearing on the proposed tariffs has been set for May 15, in Washington.
Nearly 1,000 products representing about $50 billion in 2018 imports are slated to be subject to the proposed tariffs, according to the official request for comment. However, several published reports suggest the total of trade affected is closer to $150 billion. Products singled out for tariffs are used in nearly every sector of the economy. These are just some of the items identified:
"President Trump's proposed list of tariffs on Chinese imports has the potential to directly impact the payments industry since cash registers are on the list, making any point of sale terminal imported from China subject to an additional 25 percent tariff," said Jason Oxman, CEO of the Electronic Transactions Association. "This is a regressive tax that will directly impact merchants. Additionally, the uncertainty around the process places an additional burden on companies that will result in higher prices for consumers' everyday products."
The Electronic Transactions Association was a signatory to the letter, which was addressed to Ways and Means Committee Chairman Kevin Brady, R-Texas, and Rep. Richard Neal, D-Mass., the committee's ranking minority member. The Ways and Means Committee has congressional jurisdiction over U.S. trade policies, as does the Senate Finance Committee. Other signatories to the letter included the National Retail Federation, the American Apparel and Footwear Association, the Association of Equipment Manufacturers, the Consumer Technology Association, the Home Furnishings Association and the Information Technology Industry Council.
"Our opposition to tariffs is pragmatic. Tariffs do not work," Dean Garfield, president and CEO of the Information Technology Industry Association wrote in a separate letter to Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer. Rather they increase costs, tariffs inhibit economic growth "and are inevitably reversed because of the negative economic impacts and political fallout," Garfield added.
Instead of tariffs Garfield advised the Administration to "build an international coalition that can challenge China" through the World Trade Organization. "Numerous countries share the United States' concerns about China and its unfair trade practices," Garfield said. "The United States is uniquely well-situated to lead that coalition."
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