No Fan of Trump's Tariffs, Companies Still Want Action on China
(Bloomberg) -- American companies want President Donald Trump to make China play fair on trade. They just don’t like the idea of using tariffs to achieve that goal.
That was the main takeaway from many of the 120 firms and groups that testified during three days of hearings on Trump’s proposed duties on $50 billion in Chinese imports.
While some companies argued for tariffs to be added to certain products, many firms and trade groups repeatedly raised concern that the tariffs would increase their costs and result in higher prices for consumers. But they also support efforts by the U.S. to crack down on what they described as China’s illegal efforts to steal their intellectual property and unfair trade practices.
“China simply must follow the same rules as everyone else,” Linda Dempsey, vice president for international economic affairs at the National Association of Manufacturers, said in written testimony. “It simply must be held accountable when it cheats.”
The trade group is pushing for a bilateral agreement with China to resolve differences rather than tariffs, and other companies said alternatives including action at the World Trade Organization should be pursued instead.
Hun Quach, vice president of international trade at the Retail Industry Leaders Association, told a committee of the U.S. Trade Representative’s office during the final day of hearings Thursday that tariffs should be avoided while negotiations continue between the two nations.
Trump is expected to meet Thursday at the White House with Liu He, Chinese President Xi Jinping’s top economic adviser, who is visiting Washington to try and defuse trade tensions. Treasury Secretary Steven Mnuchin is expected to lead the discussions with Liu through Friday, following a visit to Beijing earlier this month.
During their meetings with Liu on Wednesday, U.S. lawmakers pressed China to stop unfair trading practices as the nations try to pull back from the brink of a trade conflict.
“I urged the Chinese vice premier to seize this moment in time to address these lasting concerns and to continue to grow this relationship in a more fair way,” said Kevin Brady, the Republican chairman of the House Ways and Means Committee that oversees trade.
Trump has proposed a 25 percent tariff on more than 1,300 Chinese imports worth $50 billion. After China promised retaliatory tariffs on soybeans on other products, the president ordered that duties be considered on an additional $100 billion in goods.
Tariffs on 40- to 60-horsepower outboard engines could raise the average cost of a small recreational boat by nearly $2,000, John Pfeifer, president of Wisconsin-based Mercury Marine, testified Wednesday. It assembles the motors in a wholly owned facility in China using many U.S.-made parts and designs, he said.
“The tariffs are unlikely to have any meaningful impact on the Chinese government policies,” Pfeifer said.
But companies including SolarWorld Americas also described trade practices by China they said harm their businesses. Chinese hackers stole thousands of sensitive files from SolarWorld beginning in 2012, paving the way for lower-cost Chinese competitors to enter the market earlier than expected, Tim Brightbill, a lawyer with Wiley Rein LLP in Washington, testified for the company on Tuesday.
Even companies and industry groups opposing the tariffs or asking for exemptions for their products agreed that action must be taken to change China’s trade practices.
“We support the administration’s goal of promoting a level playing field for international trade,” Karan Bhatia, president of government affairs and policy at General Electric Co. and a former deputy U.S. trade representative, said in his written testimony. The hope is that the issues “can be resolved without resorting to tariffs, by either side.”
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