While most witnesses at ITC hearing said Section 301 duties punish their companies, some spoke in support of the proposed measures.
Lawn and garden equipment manufacturer Brinly-Hardy Co. has initiated layoffs, pay cuts and weeklong shutdowns and is producing at its lowest level since 2009 — since the first round of Section 301 tariffs on goods from China and global U.S. metal tariffs were implemented this year, company President Jane Hardy said during an interagency committee hearing on the second planned round of tariffs Tuesday.
“We can’t sustain it,” Hardy said during first day of the Section 301 Committee hearing at the International Trade Commission in Washington, D.C., to explore a planned round of 25 percent tariffs on $16 billion worth of goods. “USTR Section 301 duties punish a company such as ours for smartly diversifying.”
Hardy added that if the Office of the U.S. Trade Representative (USTR) follows through with a 25 percent tariff on products under Harmonized Tariff Schedule (HTS) Subheading 8432.42.00, fertilizer distributors, “it could be the nail in our coffin.”
The president of the Jeffersonville, Ind.-based company was one in a vast majority of testifiers who requested that the USTR scale back its tariff plans to respond to unfair Chinese intellectual property policies and to remove specific products from a list of 284 tariff lines marked for 25 percent tariffs.
Nathan Walker, senior vice president of Goodman Manufacturing, a subsidiary of the Japan-based air conditioning manufacturing company Daikin, which has operations in China, said he understands the Trump administration’s philosophy of short-term pain for long-term success, but noted this is only feasible when all competitors in a sector are located in the U.S. and can share the tariff burden.
He noted that Goodman’s competitors that have moved production to other countries like Mexico won’t share in the “same short-term pain as Goodman.”
In an apparent criticism of the tariffs’ notice-and-comment process, Josh Kallmer, the Information Technology Industry Council’s senior vice president for global policy, argued that the burden of proving the usefulness of Section 301 tariffs should be on the U.S. government and that the executive branch should develop metrics, collect data and show evidence if it genuinely believes tariffs are helping to create a more level business playing field between the United States and China.
“It shouldn’t be up to industry and up to the constituents and up to the people that are affected by the government’s policies to prove that it’s a bad idea,” he said. “I mean, we can do that, and I think we have done that.”
Richard Baillie, president of Newark, Del.-based Baillie Advanced Materials, a global fluoropolymers supplier, said small and medium-sized businesses would suffer in the absence of global resources to remain competitive, as proposed 25 percent tariffs proposed on fluoropolymers would cause “irreparable” harm to that chemical industry, which touches more than 4,000 businesses on U.S. soil.
Representing the Fluoropolymers Trade Alliance, Baillie noted that the U.S. enjoys a large and growing trade surplus with China regarding the products, which are used in production of goods including dental devices, solar cells and batteries.
In addition to the majority of testifiers who argued against the tariffs, several witnesses spoke in support of the proposal, including Charlie Murrah, president of the power systems and solutions group at Carrollton, Ga.-based Southwire Company, who billed the company as North America’s “leading producer” of electrical wire and cable. Southwire employs 7,500 people.
Murrah commended the Trump administration for adding cable products to the list of goods intended for duties, after originally omitting those products from 1,333 tariff lines included on a proposed list published on April 6.
Cable products added to the list include HTS subheadings 7614.10.10 (aluminum, stranded wire, cables and the like with steel core, not electrically insulated, not fitted with fittings and not made up into articles), 7614.90.20 (“aluminum, elect. conductors of stranded wire, cables and the like (o/than w/ steel core), n/elect. Insulated, n/fitted w/fittings or articles”) and 9001.10.00 (optical fibers, optical fiber bundles and cables, other than those of heading 8544).
Section 301 tariffs are likely to change the policies and practices of the Chinese steel industry, American Institute of Steel Construction Board Chair David Zalesne said.
The proposed tariffs would protect the interests of U.S. downstream steel fabricators and mid-level producers, who are losing entire infrastructure projects to foreign-fabricated steel, he said.
Global tariffs of 25 percent on steel imposed earlier this year pursuant to Section 232 of the Trade Expansion Act of 1962 drove Chinese manufacturers to produce more downstream fabricated steel products that aren’t subject to the tariffs, Zalesne said.
Products included in the proposed $16 billion worth of tariffs cover fabricated components, including basic structural steel products like columns, beams and spurs, he said.
The due date for submission of post-hearing rebuttal comments is Tuesday, with any tariffs on the list of $16 billion to take effect presumably sometime afterward.
An initial tranche of Section 301 25 percent tariffs covering $34 billion worth of Chinese products in 2017 import value took effect July 6.
USTR is planning to collect 10 percent tariffs on another $200 billion worth of goods from China in 2017 import value after holding another hearing Aug. 20-23 at the ITC and collecting rebuttal comments through Aug. 30.
More tariffs could be fatal for some U.S. businesses
