Biden administration’s tariff relief plan fails, companies say

WASHINGTON — US companies are reviewing the Biden administration’s new trade policy in China, saying it does not provide the tariff relief they expected for importers who lack profitable alternatives to Chinese products.

The complaints come from companies that depend on Chinese electronic components and other parts to make products, retailers that import shoes and skirts from China, and people like Michael Mojica, who owns a camping equipment business in Englewood, Colorado.

Mr. Mojica’s Outdoor Element LLC sells carabiners, handles and other equipment that he designs and manufactures in China. He said his profits were sharply reduced by having to pay the 25% import tariffs, forcing him to dip into his retirement savings to manage the bills.

SHARE YOUR THOUGHTS

Should the Biden administration expand the list of goods eligible for tariff relief? Join the conversation below.

“The tariffs are just a burden on the backs of Americans,” he said. “It’s either small businesses paying it, which I am right now, or passing it on to consumers to pay for it.”

The tariffs were imposed by the Trump administration, which gradually extended the levies to cover most imports from China.

The Biden administration has kept the tariffs in place, and following a long-awaited review, U.S. Trade Representative Katherine Tai said last week that the levies would continue for the time being.

For importers, the news was mixed. On the bright side, Ms Tai said her office would once again allow companies to appeal for tariff exemptions, a process that had mostly expired at the end of last year.

The U.S. Trade Representative’s office said it would consider granting exemptions to the exclusion on 549 product categories, a fraction of the more than 2,200 items that were eligible for tariff relief earlier in the Trump years. Their beneficiaries were mostly small businesses, according to trade experts.

High hedges

Various types of importers have submitted requests for tariff exclusions to the USTR, but most have been denied

Exclusion requests submitted

Exclusion request approved

Exclusion requests submitted

Exclusion request approved

Exclusion requests submitted

Exclusion request approved

Exclusion requests submitted

Exclusion request approved

Mr Mojica, for example, said that a tariff exemption his company initially received for certain products expired in March 2020 and was not included in the new list of products eligible for extensions.

Industry groups had hoped the Biden administration would expand the waiver program.

“It is disappointing that the administration did not go much further,” said Stephen Lamar, general manager of the American Apparel and Footwear Association. “There are a number of other exclusions that are no longer on the table.”

China is by far the most important manufacturing center for the US garment industry, which relies almost entirely on imported products. China accounted for 36.6% of clothing imports by volume in 2020, more than double the shipment from Vietnam, the second largest supplier, according to the association. Almost two-thirds of the shoes imported came from China.

China’s new trade policy was outlined by US Trade Representative Katherine Tai last week.


Photo:

Craig Hudson / Bloomberg News

Manufacturers, on the other hand, buy a variety of metals, chemicals, semiconductors, and other products from China to make products in US factories.

“Manufacturers would like to see more opportunities to seek tariff relief and not just for expired and extended exclusions,” said Ken Monahan, vice president of international economic affairs at the National Association of Manufacturers.

Describing China’s trade policy last week, Tai said her office would keep open the possibility of further exclusions. The office of the U.S. Trade Representative has not commented on complaints from importers.

Ms. Tai emphasized what she calls a “worker-centered” trade policy, aimed at putting the interests of American workers first.

Ted Murphy, a commercial lawyer at Sidley Austin LLP, said it was surprising that the USTR did not put in place a new tariff program to reflect this priority. “It is striking that they focus on exclusions that the Trump administration has essentially approved twice,” Murphy said. “You would think they might want to apply a more ‘worker-centered’ lens to this.”

The United States and China began re-engaging on trade issues late last week with a virtual meeting between Tai and Chinese Vice Premier Liu He. During this meeting, the Chinese side again insisted that the United States lift the tariffs.

The tariff exclusion process has been criticized under the Trump administration. Since the process was first implemented in 2018, the USTR has been inundated with requests.

The companies described the process as cumbersome and opaque. Many said they weren’t sure what information the USTR really wanted to assess or how best to classify it. One company filed more than 10,000 individual claims. Many companies have been left in limbo for months awaiting decisions.

When those decisions came in, the companies said they had no idea why some requests were accepted and others were not.

The process ultimately sparked an investigation by the US government’s watchdog agency, the Government Accountability Office. In a July report, GAO blamed the USTR, saying the agency had not fully documented its procedures and performed many steps of the exclusion review inconsistently.

The GAO said that of approximately 53,000 exclusion requests submitted between 2018 and 2020, 46,000 requests were denied.

Some companies have identified examples where tariffs have inadvertently helped Chinese companies to the detriment of their US competitors, such as when there is a tax on an item that a US company uses in its supply chain, but none tariff on finished products manufactured. by a Chinese company.

The USTR said it would assess exemption requests during a 50-day comment period starting Tuesday, focusing on whether the particular product remains available only from China and whether tariffs cause serious economic damage to American interests, including small businesses, jobs, manufacturing, and critical supply chains.

The reinstated exclusions will be applied retroactively to the start of the comment period.

Write to Yuka Hayashi at yuka.hayashi@wsj.com and Josh Zumbrun at Josh.Zumbrun@wsj.com

Copyright © 2021 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8

Source link

About Shelia Wilson

Check Also

Steel and aluminum can unlock the US-India trade agenda

On November 22, India’s Minister of Trade and Industry Piyush Goyal is due to meet …