Since taking office in 2016, President Donald Trump has prioritized renegotiation of international trade deals as part of his “America First” agenda. Trump’s campaign promised “fair trade” practices. The White House’s particular focus has been commerce between the United States and countries, like China, that devalue their own currency to unfairly influence global business practices.
In an attempt to pressure the Chinese government to negotiate more favorable trade conditions with the United States, President Trump has levied significant tariffs on hundreds of billions of Chinese imported goods. These items include clothing, appliances, technologies, building supplies and agricultural products, just to name a few.
While the imposed tariffs impact some Chinese-owned companies, many of the tariffs more directly hurt American businesses. These companies source products that are only, or more abundantly available, in China.
Take bamboo for example. While bamboo plants grow all over the world, there are specific varietals with superior qualities necessary for bamboo construction materials that can only be found in the pristine mountains of China. American companies source the bamboo from China, manufacture it into products and distribute solely within the United States.
In the last year, these bamboo products were subject to a 15% tariff rate, much of which was ultimately passed on to the American consumer. There is no alternative for these companies. They cannot purchase materials of this quality from America or any other country. If not granted an exclusion, their choice is to put a price increase on consumers and lose market share or to close their bamboo product distribution line all together. These Chinese imports are necessary to keep American businesses running.
Stainless steel is another commodity that has been caught up in the trade wars. Carbon steel has a robust international marketplace both domestic and abroad. However, the stainless market is much smaller, accounting for just three percent of overall steel imports in 2019. In the United States, there are only four companies that manufacture stainless steel products and an extremely limited domestic mining operation of nickel alloy, needed for stainless production.
One company in particular sources raw stainless slabs directly from a country that is a strategic foreign ally and has not been a target of tariffs by the Trump Administration to date. However, because a Chinese individual owns the mine, these stainless steel slabs are subject to the 25 percent tariff intended to penalize the Chinese government. Instead, it is threatening hundreds of American jobs.
Current law allows the President to impose restrictions on imports if the United States Department of Commerce concludes by investigation that the product “is being imported into the United States in such quantities or under such circumstances as to threaten to impair national security.”
While the Trump Administration has created an “exclusions process” to account for those companies that can only source goods directly from countries impacted by these tariffs, it has unfortunately been a slow and unreliable process at best.
At the Ridge Policy Group, we have helped companies garner Congressional support for specific tariff exclusions on Chinese good imports that are necessary to protect the American economy. We help ensure that they have every advantage possible when pursing an exclusion from cost prohibitive import tariffs.
The last option is for these companies who manufacture or distribute one of the thousands of products included on the retaliatory tariff lists to seek an exemption from the Department of Commerce. In some cases, Congress has come to the support of American companies, and their employees, who have been caught up in the trade wars.
I understand and agree in principle that America must take measures to restrict countries like China from undermining fair international trade practices. That is the intent of the China tariffs. However, we need to be thoughtful about the implementation of such measures to ensure that American companies, and ultimately American consumers, are not the ones penalized in this scenario.
Unfortunately, for many American companies, this has not been the case.
This blog post was written for Ridge Policy Group by Becky Wolfkiel, Director of Federal Affairs.