TheU.S.InternationalTradeCommissioninWashington,D.C.,wherepublichearingsregardingproposedtariffsonapproximately$200billionworthofChineseproductswereheldontheworkingdaysbetweenAugust20and27XINHUAEdwardBrzytwa,DirectorofInternationalTradewiththeAmericanChemistryCouncil(ACC):OnbehalfofchemicalmanufacturersproducinggoodsintheUnitedStates,werespectfullyrequestthattheadministrationremoveallchemicalsandplasticsproductsfromU.S.List3,whichincludesasignificantnumberofproductsinHTSChapters27to29and31to39,equat-ingto$16.4billioninimportsfromChina.
BeforeIexplaintheimpactofthesetariffsandChina鈥檚retaliationonourindustryandthesupplychainsthatunderpinU.S.manufacturing,IwouldliketonotetheACC鈥檚disappointmentthattheadministrationdidnotheedourrequestinJulytoremoveapproximately$2.2billioninChineseimportsofchemicalsandplasticsfromU.S.List2.
Previously,wenotifiedtheadministrationthatthetariffsonList2substanceswouldhurtourindustry鈥檚abilitytodobusinessintheUnitedStates.Wecautionedthattheywouldjeopardizenearlyhalfofthe$194billioninannouncedinvestmentsandchemicalsmanufacturingthathavebeenannouncedoverthepastdecade,andweexplainedthatthecostintheUnitedStateswillgoupnotjustforourmembercompaniesbutalsothedownstreamindustriesthatbuyU.S.-madechemicals,includingfarmersandmanufacturers.
Iftariffsonthe$2.2billioninchemicalsandplasticsimportsthatappearedonList2wouldweakenthecompetitivenessoftheU.S.chemicalsindustry,thenthe$16.4billionintariffsonadditionalproductsofchemistryinList3wouldhaveapotentiallyirreparableimpactonourindustry鈥檚economicstructureandsupplychain.
Manufacturingsupplychainsdonotexistinavacuumbutmovewiththeebbandflowofmarketforces.Theyarecomplexandintricateandrelyoninterconnectednetworksandchannelsthatworktogetherasonetobringfinishedproductstomarket.Thatiswhatmakessupplychainsvulnerabletothedisruptiveeffectsthattariffandnontariffbarrierstotradecanhaveintheglobalmarketplace.Supplychainsarenotplugandplay.TheycannoteasilybereconfiguredtomeetthewhimsofU.S.tradepolicy.Forcingcompaniestoreconfiguretheirsupplychainswouldthreatentheviabilityoftheirbusinesses.
WereiterateinthestrongestpossibletermsthatthebestwaytopreservetheinterestsoftheU.S.chemicalsindustryandindeedtheentiremanufacturingsectorisbyremovingchemicalsfromthefrontlinesofthistradewar.
China鈥檚new$60-billionproductlistsissuedinresponsetoU.S.List3include987chemicalsandplasticsproducts.ThesetariffswillcloseoffChina鈥檚markettoU.S.exportsjustwhenourindustrywasreadytosupplyChina鈥檚largeandgrowingdemandforchemicals.
TradeflowsbetweentheUnitedStatesandChinawillcontractastariffsareimposedoneachside.Tariffsraisethepriceofimportsand,asaresult,quantitydemandedwilldecline.Howmuchdemandfallsoffforeachproductimpactedwillbedirectlyrelatedtotheavailabilityofsubstitutesandalternativesuppliersoftherightquality,quantityandspecifications.
Chinesecustomersmayhavealternativesmorereadilyavailable,giventheirpositionwithintheAsianmanufacturinghub.Ifthatisthecase,thenegativeimpactfromtariffsontheChinesesidewillbelesssevere.Still,bothsideslosewhentariffsareintroducedandsupplychainsareinterrupted.
Asurprisingproportionofinternationaltradeisactuallyintra-companytransfers.ImportedinputstotheUnitedStatesfromChinakeepAmericanfirmscompetitiveintheUnitedStatesandintheglobalmarketplace.TariffswoulderodethecompetitivenessofU.S.manufacturersandincentivizeoffshoringandtradediversion.
IfU.S.manufacturersarelesscompetitive,thentheyareunlikelytobeinapositionwheretheycouldincreasedomesticsalesorexportstoChinaorEuropeoranywhereelse.
AtradewarwillneitherachieveamorebalancedtradingrelationshipbetweentheUnitedStatesandChina,noradvancetheinterestsoftheU.S.economy,manufacturersandconsumers.
AndyMissan,GeneralCounselofFitbit:Webelievethata25-percenttariffonsmartwatchesandfitnesstrackersimportedfromChinawillharmU.S.workersandconsumers,undermineU.S.nationalsecurityinterests,stifleinnovationanddigitalhealth,andfailtoadvancetheadministration鈥檚policyobjectives.
Therefore,werequestthat8517.62.00beremovedfromtheproposedlist.Attheveryleast,wristwearableproductsunderthissubheadingshouldberemoved.
Fitbitisoneoftheworld鈥檚leadingwearablebrandswithmorethan80milliondevicessold.OurmissionistogivemillionsofAmericansthedata,inspirationandguidancetheyneedtoimprovetheirhealthwhiletransformingthehealthcaresystemandreducinghealthcarecosts.
ImposingtariffsonwearableswillharmU.S.retailers,consumersanddownstreamindustries.Overonethirdofwearableshipmentsin2018willoccurinthefourthquarterandtheoverallglobalmarketisalsoexpectedtogrowatover200millionunitsshippedin2022.
Theproposedtariffswouldmakewearablescostlierand,inmanycases,inaccessibletoconsumers,makinglessexpensiveofferingsfromChinesecompetitorsmoreattractiveandallowingthemtogainmarketshare.TheresultinglowerrevenuesforthecompaniesthatbuildthesedevicesfortheU.S.retailersthatsellthemcouldaffectmillionsofAmericanworkers.
NicoleVasilaros,SeniorVicePresidentfortheNationalMarineManufacturersAssociation(NMMA):TheNMMAisthelargestmarineindustrytradeassociationintheworld.Our1,300NorthAmericanmembersrepresentboat,engine,accessoryandtrailermanufacturersandmakeupnearly85percentofthemarineproductssoldintheUnitedStates.
BoatingcontributessignificantlytotheU.S.economy,with$39billioninannualsales,supporting650,000jobsand35,000U.S.marinebusinesses.OurindustryprovidesauniquelyAmerican-madeproduct.Ninety-fivepercentoftheboatssoldintheUnitedStatesaremadeintheUnitedStates.
IurgethiscommitteeandtheadministrationtoceasetheimplementationoftariffsonU.S.manufacturers,workwithouralliesinsteadandfocusonnegotiatingadealwiththeChineseGovernmentthatisinthebestinterestsofAmericanconsumers,workersandbusinesses.
FromtariffsonrawmaterialsandcomponentstoretaliatorytariffsthathavefrozeninternationalmarketsforU.S.marineexports,therecreationalboatingindustrycontinuestobearthebruntoftheadministration鈥檚tradepolicies.
ChinaisnowthefourthcountrytoretaliateagainstU.S.-madeboats,joiningCanada,MexicoandtheEuropeanUnion,threemarketsthatmakeup70percentofU.S.marineexports.
CompoundingtariffshaveledtothecancellationofmillionsofdollarsofordersfornewboatsbeingbuiltinAmericanfactoriesbyAmericanworkers,resultinginemploymentchanges,cancelledexpansionplansandhaltedgrowth.
Nearly350marine-relatedproductsarebeinghitbythiscommittee鈥檚Section301actions.TheSection301tariffshavealreadyincreasedthecostofsmallervesselsbyupwardsof$2,000to$5,000,which,foranelasticproductlikeaboat,hasnegativeconsequences.
TheenactedtariffsonmarineproductshurttheUnitedStatesmorethanChinabydisruptingtheprofitabilityofU.S.businesses,employmentopportunitiesandtheaffordabilityforAmericanconsumers.
Thecurrentlyproposedlistincludessuchitemsasboats,inflatablevessels,marineparts,trailertiresandfiberglass.OurU.S.marinemanufacturersutilizetheglobalsupplychaintoachieveeconomiesofscaleanddeliverhigh-quality,affordableproductstothe62percentofboatownerswithahouseholdincomeoflessthan$100,000.
Furthermore,95percentofboatsintheUnitedStatesaresmall,towableboatsunder26feet.Hard-working,middle-classAmericanstowtheirboatstothewatereveryday.Andtheproposedtariffsonthislistwillmakethatexperiencesignificantlymoreexpensive,targetingentry-levelvesselsandtheirtransportationmethods.
Fifty-sixpercentofboatsmadeintheUnitedStatesusefiberglassastheirmainbuildingmaterial.Theproposedtariffonfiberglassincreasesthecostofmanufacturingtheseboats,ultimatelyincreasingthecostpaidbytheconsumer.Withsmallnetmarginsandcompoundingtariffs,marinemanufacturersaresimplynotabletoabsorbthesecosts.
Notonlydoesthelistproposetariffsontrailertires,italsoincludesallcomponentsforuseontrailers.AtrailermanufacturerinFloridawith170employeeshasindicatedthatifthisnextroundoftariffsgoesintoeffect,materialcostswillrisebetween4and10percent.Thesetariffswouldaddtotheincreasedcoststheyarealreadyexperiencingduetodomesticsteelandaluminumtariffs.
Asanotherexample,afamilyboatbusinessinLongIsland,NewYork,with30employeeswouldbesignificantlyimpactedbytheimpositionofthesetariffs.Thisbusinesshasutilizedaglobalsupplychaintosendsmall,inflatablefishingboatsfromChinatotheUnitedStatesforfinalassembly,andsellthemtoconsumersatanaffordablepricepoint.Thebusinessprovidestheiremployeeswithhealthcareatnocostandpridesitselfondeliveringhigh-qualityproducts.Unfortunately,thereisnotnearlyenoughU.S.capacitytomeetthedemandfordomesticfabrication.
CopyeditedbyLaurenceCoulton
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