CSCMP's Supply Chain Quarterly
July 23, 2019
Forward Thinking

Tariff tensions heat up

Trade association leaders urge Trump Administration to reconsider latest threat to increase tariffs on Chinese goods.

Retail industry leaders are urging President Trump to reconsider his threat to increase tariffs on Chinese imports as early as this week, citing the potential negative effects on U.S. consumers and small businesses.

The National Retail Federation (NRF) and the Retail Industry Leaders Association (RILA) reacted to President Trump's Twitter statement on Sunday that he could increase tariffs on $200 billion worth of Chinese imports to 25 percent from 10 percent this Friday. The President also said he may soon extend a new 25 percent tariff on another $325 billion worth of imports.

The President had delayed the tariff hike in February, citing progress on trade negotiations with China. In his statement Sunday, the President said the trade deal with China continues, but "too slowly."

Both NRF and RILA emphasized the importance of a trade deal with China, but said tariffs are not the way to achieve it.

"Tariffs are taxes American families pay—$24 billion and counting," said Hun Quach, RILA's vice president of international trade. "Raising tariffs means raising taxes on millions of American families and inviting further retaliation on American farmers, which jeopardizes domestic jobs. We want President Trump to successfully reach a deal with China that puts a check on anti-competitive behavior. But a deal that increases tariffs on everyday goods will be a loser for middle class families."

NRF's David French, senior vice president for government relations, emphasized the potential harm to small businesses as well as consumers.

"... A sudden tariff increase with less than a week's notice would severely disrupt U.S. businesses, especially small companies that have limited resources to mitigate the impact," French said. "If the administration follows through on this threat, American consumers will face higher prices and U.S. jobs will be lost."

"We want to see meaningful changes in China's trade practices, but it makes no sense to punish Americans as a negotiating tactic," French added. "If the administration wants to put more pressure on China, it should form a multinational coalition with our allies who share our concerns. We urge the administration to reconsider this tax hike on Americans and stay at the bargaining table until a deal is reached."

Earlier this spring, a coalition of trade experts weighed in on the negative effects of the potential tariff increase on the supply chain, as well. Members of the Coalition of New England Companies for Trade cited increased product costs, shrinking margins, and supply chain disruptions following the initial rounds of tariffs on Chinese goods, and warned of more pain on the horizon if the tariff increase takes hold.

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