WASHINGTON: Washington is planning another tidal wave of tariffs on Chinese imports that represent a worst-case scenario for markets and major industries on both sides of the Pacific.
And on Monday, seven days of public hearings are due to begin as major businesses issue their loudest warnings yet about layoffs, lost business and America’s waning industrial predominance.
Some industries, such as steel and aluminium producers, have benefitted from President Donald Trump’s trade policies and strongly support tariffs.
But the lion’s share so far are pleading with his administration to spare the imports they depend on – if not to step back from the brink of an unprecedented all-out trade conflict that economists say would prove dire for global growth.
Should they take effect, the newest US$300 billion round of tariffs – which follow last month’s sudden crackup in trade negotiations with Beijing – would mean stinging duties cover just about all of the more than half trillion dollars in goods that Americans buy from China every year.
Major trade bodies share Trump’s principle grievances with Beijing, accusing it of rampant industrial espionage and massive state intervention in markets.
But in a letter to Trump on Thursday, hundreds of US companies large and small, including retail giants Target and Walmart, warned Trump the new tariff round could cost two million jobs and cut US GDP growth by a full percentage point.
So far, Trump has imposed tariffs on more than US$250 billion in Chinese goods but this has spared most consumer items from major price increases.
Still, William Reinsch, a trade policy expert at the Centre for Strategic and International Studies, told AFP the new tariffs were likely to pinch ordinary consumers far more.
“Unlike the previous times, I think there’ll be a sharp negative reaction from the public,” he said.
“If these things go into effect in July, what you’re going to see is fairly immediate price increases on a whole bunch of things right at the point where people are gearing up to shop for the fall season, for winter clothes and for Christmas.”
Trump has pinned hopes for resolving the impasse on a planned meeting with his Chinese counterpart Xi Jinping later this month at the Group of 20 Summit in Japan.
America makes no tea
Should Xi fail to attend, Trump told CNBC this week, he could impose the new tariffs “immediately” – although the period for public comment on the tariffs extends beyond the conclusion of the summit.
At the hearings, more than 300 people are scheduled to testify. And the US Trade Representative’s office has collected more than 1,200 written comments and requests to appear in person.
“We are not able to quickly or simply shift all manufacturing to other sourcing countries, resulting in price increases for the average US consumer,” wrote Patrice Louvet, CEO of Ralph Lauren Corporation. “This ultimately undermines American competitiveness.”
Oilfield services giant Halliburton warned of job cuts and decreased US oil-and-gas exploration if duties rise to 25% on barite, a key mineral used in drilling fluids for which China has the world’s largest reserves.
Smaller businesses also came forward.
“We would like it to be known that the retail segment of the economy is preparing for a big hit and pray that the present administration consults God,” said an anonymous retailer in western Kentucky that imports outdoor seating and artificial Christmas trees, among other items, but supported Trump’s trade policies overall.
Lu Yu, vice president of the China Chamber of Commerce of Food Stuffs, Native Produce and Animal Byproducts, said putting tariffs on Chinese tea made no sense.
“The USA is not a tea producing country,” she wrote.
“The tea industry of the USA does not need to be protected by tariffs and there is not any tea grower or group that would be protected.”
Trump’s departing chief economist Kevin Hassett told CNBC on Friday the possible Trump-Xi meeting at the G20 summit could yield rapid improvements.
“I think the hope is that at the G20 meeting the two presidents can get together to start to get closer to where we were a few months ago where we really, really close to having a deal,” he said.
But Trump’s commerce secretary, Wilbur Ross, told the Wall Street Journal on Sunday he thinks “the most that will come out of the G-20 might be an agreement to actively resume talks.”
“At the presidential level they’re not going to talk about the details of how do you enforce a trade agreement,” Ross said.
And the spectre of such a massive hit to consumers’ wallets holds political peril for Trump.
Polling last month by Monmouth and Quinnipiac universities showed majorities disapproved of Trump’s trade policies and expected his tariffs to raise prices.
Reinsch of CSIS said Trump was left with a dilemma, as Beijing was not likely to meet his toughest demands.
“The president has a choice: accept a weaker agreement or continue the war,” he said, adding that either outcome would leave him vulnerable to attacks from Democrats.
“I don’t see a clean way out of this.”