When It Comes to Tariffs, Many U.S. Companies Are on China’s Side
Date: Friday, June 28, 2019
Source: The Wall Street Journal
As Trump and Xi prepare for G-20 summit, U.S. businesses warn of expected damage from proposed levies
WASHINGTON—Chinese President Xi Jinping isn’t the only one pushing President Trump to lay off on tariffs.
As the two leaders gear up for their trade meeting in Osaka, Japan, on Saturday—where tariffs will be a central point of discussion—U. S. businesses are warning that new 25% duties on $300 billion a year of Chinese goods will wreak widespread direct and collateral damage.
A company that assembles TV sets in South Carolina says it might have to move operations to Mexico if the tariffs extend to the LCD screens and circuit boards it imports from China. Retailers say Chinese rivals could undercut them by shipping goods directly to U.S. consumers by mail, evading tariffs.
Port operators say cranes and other equipment to load cargo largely come from China, raising their operational costs.
“All we’re doing is making it more competitive for the freight to find its way to Canada or to Mexico, because they won’t have to pay the tariffs on their equipment and they’ll be able to put forward a product at a lower price,” said John Reinhart, the chief executive of the Virginia Port Authority.
Mr. Reinhart was among hundreds of executives arguing against the tariffs during public hearings that ended this week on 25% tariffs on $300 billion in Chinese goods Mr. Trump has proposed, on top of existing tariffs on $200 billion in Chinese imports.
Mr. Trump contends the tariffs are intended to coerce China into making changes he says are needed to create level competition for U.S. businesses. Beijing says it is willing to make changes, but that the U.S. is unfairly seeking to thwart its economic advance.
Negotiations to resolve the dispute broke down in early May, with China saying the U.S. was making unreasonable demands and the U.S. saying Beijing reneged on commitments it had made earlier.
With both sides at an impasse, Mr. Trump and Mr. Xi are scheduled to meet on the sidelines of the Group of 20 leading economies summit in Osaka on Saturday for what many see as a make-or-break moment in trade talks.
Mr. Xi plans to present Mr. Trump with a set of terms the U.S. should meet before Beijing is ready to settle the confrontation. Among these, Beijing is insisting that Washington remove its ban on the sale of U.S. technology to Chinese telecommunications giant Huawei Technologies Co., according to Chinese officials with knowledge of the plan.
Beijing also wants the U.S. to lift all punitive tariffs and drop efforts to get China to buy more American exports than Beijing agreed to when the two leaders met in December.
On Wednesday, before flying to Asia, Mr. Trump said it was “absolutely possible” he would agree to hold off on the proposed new tariffs after his meeting with Mr. Xi.
“If we don’t make a deal, I will tariff—and maybe not at 25% but maybe at 10%,” the president said in an interview on Fox Business.
Mr. Trump also repeated his point that tariffs are putting more pressure on China, where economic growth is slowing.
“Now, we’ve had conversations over the last few days,” Mr. Trump said, referring to a resumption of informal talks with the Chinese. “They are negotiating, but, you know, my attitude is I’m very happy either way. The tariffs are—there’s no way you’re going to beat the tariffs.”
Although many companies have applauded the president’s stance, business groups have generally opposed the escalation of tariffs and are urging the president to show restraint.
“The profound impact can’t be just defined by the tariffs—it’s the unintended consequences we’re also watching,” said Myron Brilliant, the head of international affairs at the U.S. Chamber of Commerce. “The fallout is just beginning to be felt. Over time it will be felt in even more profound ways.”