Importers told government officials Monday that very little product manufacturing will return to the United States, saying Chinese manufacturers have the expertise to produce at high volume and lower prices.
The comments came as the Trump administration began public hearings on proposed tariffs on $200 billion in imports from China. While business leaders in some industries are hopeful that the tariffs will offer protection against competitors using cheaper imported Chinese goods, others worry about potential financial hardships.
More than 300 people are scheduled to testify during the six days of hearings by the U.S. Trade Representative’s Office, addressing whether the duties should be imposed and the level at which they should be set.
The hearings run through the week and conclude Aug. 27.
Administration officials say the tariffs are designed to push Beijing into talks about trade practices that the officials say discriminate against U.S. companies or allow the theft of intellectual property.
Midlevel talks between a Chinese delegation and Treasury Undersecretary for International Affairs David Malpass and other U.S. officials are scheduled in Washington this week, but it is unclear if the meetings signal a de-escalation of the tariff battle between the world’s two largest economies.
On Aug. 1, USTR announced that Trump had asked it to consider raising the rate used for the tariffs from 10 percent to 25 percent. The agency has extended the public comment period to give businesses and the public time to respond.
After USTR announced the possibility of raising the tariff rate, Beijing threatened to respond with tariffs on $60 billion of U.S. imports, including liquefied natural gas. China already has filed a challenge to the proposed duties on $200 billion in goods with the World Trade Organization.
The pending tariffs are the third phase of duties President Donald Trump has authorized under Section 301 of the Trade Act of 1974. The first phase of tariffs on $34 billion in goods took effect on July 6, and the second phase on $16 billion in goods is scheduled to take effect Aug. 23. Beijing responded July 6 with duties on $34 billion in U.S. imports and has released a list of $16 billion of products on which it plans to levy retaliatory tariffs on Aug. 23.
The combined U.S. tariffs on $250 billion in goods would cover more than half the value of Chinese goods in 2017, which tallied $505 billion. The U.S. exported $130 billion in goods to China that year.
For some trade associations, the hearings offer an opportunity to identify ways businesses could be hurt by the additional tariffs.
Ed Brzytwa, international trade director for the American Chemistry Council, plans to use his time on Monday to underscore the financial burden a third round of tariffs would put on an industry that will be affected by the Aug. 23 tariffs. The council calculates that those tariffs would raise the costs for imported chemicals and plastics by $2.2 billion annually.
China’s retaliatory tariffs on chemical products would raise the cost of U.S. chemical and plastics exports to China by $5.4 billion on an annual basis, the organization estimates. The council said it wants the administration to end the use of tariffs and engage in tough negotiations to force Beijing to end policies and practices that put U.S. companies at a disadvantage in China.
In prepared testimony, Brzytwa plans to say, “the $16.4 billion in tariffs on additional products of chemistry in List 3 would have a potentially irreparable impact on our industry’s economic structure and supply chain.”
But other witnesses will be arguing that the proposed tariffs fall short.
On Tuesday, Wayne Joseph, president of New Flyer of America, will argue in support of placing tariffs on lithium ion batteries and related components used to power electric medium- and heavy-duty buses. New Flyer produces electric-powered buses and relies on XALT Energy for batteries. XALT Energy faces competition from lower-priced lithium batteries from China. On Friday, Richard R. Cundiff III, president and chief executive of XALT Energy, LLC, will also lay out reasons he thinks tariffs on competing Chinese batteries would be good for his company.
In an earlier argument for extra duties on the bus lithium batteries, Joseph said his company needs a U.S. supplier like XALT in order to meet domestic content requirements for federally funded projects and purchases.
“New Flyer has established its manufacturing operations and supply chain to ensure that its buses and coaches always comply with the U.S. Department of Transportation Buy America requirements,” Joseph wrote to USTR in May.
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