New Section 301 Tariff List Further Concerns Trade Lawmakers; China Indicates Retaliation in Works

Brady said "it’s clear the escalating trade dispute with China will go one of two ways -- a long, multi-year trade war between the two largest economies in the world that engulfs more and more of the globe, or a deliberate decision by President [Donald] Trump and President Xi [Jinping] to meet and begin crafting an agreement that levels the playing field between China and the U.S. for local farmers, workers, and businesses." Senate Finance Chairman Orrin Hatch, R-Utah, said July 10 that the Office of the U.S. Trade Representative's announcement about new tariffs "appears reckless and is not a targeted approach." Both lawmakers have voiced similar concerns with other trade actions (see 1806150028).

A spokesperson for the China Ministry of Commerce called the new proposal "unacceptable" and suggested some type of retaliation is coming, according to an informal translation. "In order to safeguard the core interests of the country and the fundamental interests of the people, the Chinese government will, as always, have to make the necessary counter-measures," the spokesperson said. "At the same time, we call on the international community to work together to safeguard the rules of free trade and the multilateral trading system and jointly oppose trade hegemonism. At the same time, we will immediately file an additional lawsuit against the US unilateralist behavior to the World Trade Organization."

China views the administration’s latest tariffs threat as “quintessential trade bullying,” a Foreign Ministry spokeswoman said. “We will take necessary countermeasures to safeguard our legitimate and legal rights and interests.” Asked if it’s possible in the current environment for China and the U.S. to restart trade talks, the spokeswoman said: “Though a trade war is the last thing we want, we are in no way afraid of fighting one. The Chinese side will take resolute and forceful measures in a timely manner to safeguard its own legitimate and legal rights and interests and uphold the multilateral trading system and rules.”

House Ways and Means Democrats would like some more information on the administration's trade strategy and asked for a hearing on the subject in a July 11 letter to Brady. "With the proliferation and the escalation of tariffs, the U.S. economy and the global economy on edge," they said. "We cannot pretend that this is business as usual. The Administration owes answers to the Members of the Ways and Means Committee and, more importantly, to the American people about its trade policy goals and whether or not they are working."

The American Chemistry Council said the announcement "is a stunning and unfortunate development for U.S. manufacturers and consumers." The proposed 10 percent tariffs list includes a "significant amount of chemicals," it said. "As an industry that touches 96 percent of all manufactured goods and which has much to gain from a productive, respectful trading relationship with China, ACC and our members remain hopeful that the U.S. and China can resolve their differences and prevent further harm to U.S. manufacturers, farmers, and consumers."

The American Apparel and Footwear Association objects to the inclusion of "numerous textile, accessory, and travel goods products that will directly impact the apparel and footwear industry and its retail partners," it said in a statement. Rick Helfenbein, AAFA CEO, said that "with more than 84 percent of U.S. travel goods coming from China, this will hurt enormously." Proposing tariffs on "items such as handbags, hats, and textiles on this additional list of products, the administration has shown that it is not concerned about targeting the American public with its ‘Trump Tax,’" he said. "This will result in inflationary costs throughout the supply chain, ultimately paid for by American consumers."

The National Council of Textile Organizations supports the new list and would like to see "finished textile and apparel products on any future lists," it said in a news release. “The Trump administration is right to confront China’s unfair trade practices, " NCTO CEO Auggie Tantillo said. "Section 301 tariffs show the world that countries who cheat the United States on trade will be held accountable.”

The group will be further "vetting" the list, it said. "With the inclusion of virtually all fiber, yarn and fabric tariff lines, NCTO’s response will be on a line-by-line basis, with support or opposition to individual lines dependent on ... how the competitiveness of the U.S. textile industry is impacted,” Tantillo said. “NCTO is convinced that the Trump administration’s Section 301 tariffs would be far more effective if Chinese apparel and sewn non-apparel end products were included in the 301 list because that would benefit the entire U.S. textile and apparel supply chain.”

The National Retail Federation fears the latest round of proposed tariffs will “boomerang back to harm U.S. families and workers,” said David French, senior vice president-government relations. “Tariffs on such a broad scope of products make it inconceivable that American consumers will dodge this tax increase as prices of everyday products will be forced to rise.” Any “retaliation” from China that will follow “will destroy thousands of U.S. jobs and hurt farmers, local businesses and entire communities,” said French. The Trump administration “has been pursuing tariffs now for months and we still don’t know what the endgame is,” he said, urging the administration to “get back to the negotiating table with China while working through a global coalition” that shares U.S. concerns about allegedly unfair Chinese trade practices.

U.S. retailers “and the families we serve barely had time to process the barrage of tariffs implemented last week,” said Hun Quach, vice president-international trade at the Retail Industry Leaders Association, which represents big-box retailers. “Now, we will need to grapple with new tariffs on an additional $200 billion worth of imports, which are bound to include even more consumer products and everyday essentials.” RILA fears for those “left in the crosshairs of an escalating global trade war,” including consumers, businesses and “American jobs dependent on trade,” said Quach.

The administration is imposing more tariffs “without a clear objective or end in sight, threatening American jobs, stifling economic investment, and increasing the prices of everyday goods,” said Information Technology Industry Council CEO Dean Garfield. The U.S. has “the potential to cement lasting change in China’s unfair trade practices and policies -- and it would be a shame to squander it,” he said. “We urge President Trump to delay this unnecessary escalation before more consumers and workers are harmed and instead make a concerted effort to build a coalition while he is in Europe this week and then negotiate with China to achieve tangible commitments including accountability mechanisms and implementation timelines.”

The Telecommunications Industry Association is upset that the new tariff list “includes routers, switches and other telecom goods which are essential components of today’s high-speed networks,” said Cinnamon Rogers, senior vice president-government affairs. Imposing 10 percent tariffs on these items “will inflate the cost of internet access for American business and consumers and pose a needless burden on the U.S. economy,” she said.