Maker of Purell Hand Sanitizer Denied in Request for Trump Tariff Relief

(Bloomberg) --

With the U.S. now surpassing all other countries in the number of coronavirus cases and health experts estimating the peak may still be weeks away, President Donald Trump’s administration is having a harder time defending tariffs on health-related goods imported from China.

That’s especially true for products used in the U.S. response to the pandemic that are in high demand but running short on supply, such as ventilators, surgical masks and hand sanitizers.

Gojo Industries, the inventor and manufacturer of Purell-branded products, builds its hand-sanitizer and soap dispensers in the U.S., but a key input that ensures the dispensers work is made in China and subject to a 25% duty.

In a tariff-exemption request last year, Akron, Ohio-based Gojo said it’s exploring third-country sourcing but added that unilaterally moving production would require reverse engineering of a key chip that’s manufactured by a Canadian company in China. “Such action would violate their intellectual property” and Gojo “does not control the ability to move that production,” the submission reads.

The U.S. Trade Representative denied Gojo’s request earlier this month, saying the company failed to show that the duties “would cause severe economic harm to you or other U.S. interests,” according to USTR General Counsel Joseph Barloon’s letter on March 5.

Three weeks later, the USTR issued exemptions for Apple’s watches and a range of other products that have no apparent link to Covid-19.

The USTR didn’t respond when asked if the Gojo denial would be reassessed as part of a new exclusion process to identify more products needed to treat the virus or limit its outbreak.

Publicly, American officials have doubled down on their tariff strategy and are calling for a rethink of supply chains, especially when it comes to key medical products.

The reliance on other countries for those supplies has created a strategic vulnerability for the U.S., trade chief Robert Lighthizer said. “By encouraging diversification of supply chains and — better yet — more manufacturing in the U.S., President Trump’s economic and trade policies are helping to overcome that vulnerability,” he wrote in a Wall Street Journal editorial last week.

Charting the Trade Turmoil

Maker of Purell Hand Sanitizer Denied in Request for Trump Tariff Relief

Consumers across the globe are still loading their pantries — and the economic fallout from the virus is just starting. The specter of more trade restictions is stirring memories of how protectionism can often end up causing more harm than good. That adage rings especially true now as the moves would be driven by anxiety and not made in response to crop failures or other supply problems.

Today’s Must Reads

  • Second wave | Much of China’s industrial sector is ramping up production, only to find another painful economic shock: canceled orders from the U.S. and Europe.
  • Workplace safety | Food workers getting sick is the latest threat to the global supply of everything from vegetables to pork, with quarantined workers at production facilities raising fresh concerns.
  • Faster decoupling | One of Apple’s manufacturing partners said half its capacity could reside outside China within a year, underscoring the shift companies are making outside the world’s second-largest economy.
  • Battle fields  | Europe’s farmers are struggling to find people to harvest rapidly ripening fruits and vegetables, as the coronavirus prevents hundreds of thousands of migrant laborers from leaving home.
  • Pulling the plug | Sony said fallout from the coronavirus may wipe out a previously projected increase in its profit and force it to delay an earnings report scheduled for April.

Bloomberg Analysis

  • Shrinking growth | A global recession has begun, according to a Bloomberg Economics review.
  • Troubled waters | A Bloomberg Intelligence webinar explains how ship owners are positioned to weather the crisis.
  • Use the AHOY function to track global commodities trade flows.
  • See BNEF for BloombergNEF’s analysis of clean energy, advanced transport, digital industry, innovative materials, and commodities.
  • Click VRUS on the terminal for news and data on the coronavirus and here for maps and charts.

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