Shoes Spared, TVs Hit as Corporate America Digests China Tariffs

(Bloomberg) -- The list of 1,300 Chinese products the U.S. is targeting with tariffs spared some American industries, punished others and left many struggling to figure out if they would be hurt or not.

Clothing and shoes were left off the list, but consumer goods such as TVs were included, drawing an outcry from retailers. The long litany of items singled out by the U.S. Trade Representative Tuesday for a 25 percent duty ranged from the arcane (“Reel-fed offset printing machinery, double-width newspaper printing presses”) to the widely used (“dishwashing machines of the household type”) to the just plain weird (flamethrowers, dental cement).

“Stuff that you put on your body: spared. Stuff you put in your home: targeted,” said Hun Quach, vice president of international trade for the Retail Industry Leaders Association.

In some cases the tariffs targeted raw materials and components used to assemble finished goods in the U.S., such as ingredients for insulin, while in others the items were complete products, like Chinese-assembled cars. Many of the affected products were machines used to make other things, vexing factory owners accustomed to being praised by Trump for manufacturing in the U.S.

Foot Fault

While apparel and footwear won’t get additional tariffs, some equipment used to make them, like textile printers and injection molders for shoes, are getting taxed. “Tariffs on certain machinery will make American-made products more expensive,” said Matthew Shay, president of the National Retail Federation, in a statement.

One trade group, Footwear Distributors & Retailers of America, cheered the outcome. “I’m so proud of the effort that footwear companies, executives, employees, and FDRA staff put forward to help keep footwear off President Trump’s new tariff target list,” said Matt Priest, the group’s president. But the American Apparel & Footwear Association, which represents manufacturers, provided a mixed response, praising the absence of footwear from the list but warning that tariffs on machinery would “directly raise costs on domestic manufacturers and impact our ability to grow Made in USA.”

Not Chocolate

But the impact of the tariffs depends a lot on how much American companies rely on Chinese equipment to make their products. A tax on “machinery for the manufacture of confectionery, cocoa or chocolate” might sound bad for Hershey Co., but the Pennsylvania chocolatier said it doesn’t use Chinese machines.

The National Association of Manufacturers will be consulting with its members about what specific products on the list it may oppose and try to get removed during the comment period, spokesman Michael Short said. The group urged Trump to pursue a bilateral trade agreement with China rather than act on its own.

Trade industry associations said they are expressing their concerns about the tariffs publicly and privately with the administration and will be active during during the comment and review period to determine the final list of products subject to tariffs.

Will It Work?

The U.S. Chamber of Commerce “looks forward to working with the administration throughout the comment period to make the business community’s voice heard,” Myron Brilliant, executive vice president and head of International Affairs, said in a statement.

The administration is right to focus on restoring equity and fairness in trade with China but “imposing taxes on products used daily by American consumers and job creators is not the way to achieve those ends,” Brilliant said.

If history is any indication, the proposed tariffs will not work and will be counterproductive, Dean Garfield, president of the Information Technology Industry Council, said in a statement. Its members include Microsoft Corp., Intel Corp., Qualcomm Inc. and Alphabet Inc.’s Google.

"Tariffs penalize U.S. consumers by increasing prices on technology products and will not change China’s behavior,” Garfield said. “Instead, the administration should act consistent with international obligations and work with other countries to address systemic issues with China.”

--With assistance from Craig Giammona Andrew Harris Ben Brody and Naomi Nix

To contact the reporters on this story: Lindsey Rupp in New York at lrupp2@bloomberg.net, Mark Niquette in Columbus at mniquette@bloomberg.net.

To contact the editor responsible for this story: Crayton Harrison at tharrison5@bloomberg.net.

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