Donald Trump’s newest round of tariffs on Chinese imports puts off the worst of the impact until after US retailers’ critical Christmas season and spares a few businesses, including smartwatches and high chairs, but corporate America still decried the move as costly and counterproductive.
Washington’s largest trade associations have spent months ramping up campaigns against the escalating trade war, identifying state by heartland state how many jobs and export dollars would be put at risk. In public hearings, small business owners making everything from fishing nets to wooden crates urged Washington to reconsider, but Mr Trump tuned out the chorus.
“As thousands of businesses have testified and explained in comments to the administration, tariffs are a tax on American families,” National Retail Federation president Matthew Shay lamented after the new 10 per cent tariff on $200bn of Chinese imports was announced. It was “disappointing” that the administration had ignored the voices of those affected, he said.
Gary Shapiro, president of the Consumer Technology Association, said his industry appreciated the exemption of some connected devices but was still worried about the impact on printed circuit assemblies, routers and networking equipment.
Tariffs were an ineffective — and possibly illegal — too, he argued. “Congress has not given the president or the [US trade representative] a blank check to pursue a trade war.”
The Trade Act of 1974 says that the president must consult with the private sector and “shall take the advice received” into account in setting trade policy, John Murphy, senior vice-president for international policy at the US Chamber of Commerce, echoed on Twitter.
Several US business groups support the idea of pushing China to open its markets to US imports, and penalising it for intellectual property infringements, but disagree with Mr Trump’ tactics.
“The administration has correctly identified the real problem of China’s discriminatory trade practices. But unilaterally imposing tariffs is the wrong way to achieve real reforms,” the Business Roundtable said, urging Washington to work with its allies to push for long-term reforms in China.
Craig Allen of the US-China Business Council, which represents about 200 US companies that do business with China, said the administration’s focus on market access, IP rights and technology transfer was correct but using tariffs was “counterproductive”.
Tom Donohue, the Chamber’s president, agreed the US had “serious issues to resolve with China on market access, unfair subsidies, technology theft, and cyber security” but expressed dismay that the administration did not heed US companies’ warnings about rising costs and lost jobs.
Before announcing the latest measures, Mr Trump played down the extent to which tariffs were increasing prices, tweeting that “cost increases have thus far been almost unnoticeable”. Companies from Coca-Cola to Whirlpool have announced price increases, however, expressing confidence in a strong economy allowing them to pass the burden to customers.
“We cannot afford further escalation, especially with the holiday shopping season right around the corner,” Mr Shay said. The administration’s decision “has not gone the way we hoped it would”, Macy’s chief executive Jeff Gennette told a CNBC conference on Tuesday: “We’re going to see how the customer votes on this.”
Some business groups said the biggest disruption came from the uncertainty produced by the trade dispute. “With every day that passes without progress on a rules-based, bilateral trade agreement with China, the potential grows for manufacturers and manufacturing workers to get hurt,” the National Association of Manufacturers said. “Now is the time for talk — not just tariffs”.
The escalation of the trade tensions comes at the start of the US reporting season, when companies are expected to spell out the impact on their earnings and outlook. FedEx, the Memphis-based courier that is seen as a bellwether of global business confidence, said on Monday it had started to see economic activity “moderate” in China as a result of the trade tensions.
Hours before Mr Trump announced the latest tariffs, Fred Smith, FedEx chairman and chief executive, told analysts that the US-China trade dispute was “worrisome to everyone . . . because history is very, very clear that countries that pursue the most open markets are the ones that prosper the most”.
Rajesh Subramaniam, FedEx’s chief marketing officer, said China-US business represented only about 2 per cent of the company’s revenues, of which only about a quarter could be affected by the promised new US tariffs. It had not yet seen significant shifts in customers’ supply chains, he added, but expected them to diversify their sources of supply if the trade tensions continued.
Several companies remain unsure of the administration’s next steps. Thomas Joyce, chief executive of Danaher, told analysts last week that the industrial group had no privileged insight into the administration’s thinking despite being headquartered in Washington. “The narrative out of the White House . . . and the US trade representatives changes as often in our minds as it does in yours,” he said.
Additional reporting by James Politi in Washington
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