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Trump Should Add More China Tariffs, Some Small Manufacturers Say

April 24, 2018
They say duties the U.S. imposed on steel and aluminum imports raised their costs but didn’t affect finished goods made in China and sold here -- setting up a potentially damaging Catch-22.

Prominent U.S. business lobbies are begging the Trump administration not to impose tariffs on Chinese imports, but some small manufacturers are pushing the other way: trying to get more products on the proposed list.

Makers of steel wheels, safes and other products want the U.S. to impose tariffs on goods by their Chinese competitors, which aren’t among the products targeted so far. They say the duties the U.S. imposed on steel and aluminum imports raised their costs but didn’t affect finished goods made in China and sold here -- setting up a potentially damaging Catch-22.

“All we’re asking is that the table be leveled and the field balanced so the competition is fair,” said Jeffrey Pizzola, chief operating officer of Americana Development Inc., which employs about 400 people in Ohio, Georgia and Indiana to make steel wheels for products including lawn and garden equipment, recreational vehicles and trailers.

Pizzola’s call for expanded tariffs counters most requests being received by the U.S. Trade Representative’s office, which ask for the duties not to be imposed or for exemptions. Almost 160 comments have been made public so far. The comment period ends May 11.

Willing to Talk

More than 1,300 Chinese products, from biscuit ovens to backhoes to false teeth, have been targeted for tariffs in response to complaints about China’s theft of intellectual property. That’s separate from levies imposed in March on steel and aluminum imports from China and elsewhere on grounds they pose a threat to national security.

The Trump administration has indicated it’s willing to negotiate with China amid fears about a trade war that’s rattled financial markets and showed the sometimes unintended domino effects of protectionist trade actions. If steps toward a truce were to fail, the tariffs could be imposed after a public hearing May 22.

The National Retail Federation, Information Technology Industry Council and more than 100 other groups have formed a coalition to oppose the tariffs. They argue that the U.S. levies and possible tit-for-tat retaliation from China on U.S. goods will lead to higher prices for U.S. consumers that in turn hurt the U.S. economy and cost jobs.

Chinese Safes

The combination of trade actions proposed by Trump is prompting unique responses from the small manufacturers, said Dean Pinkert, a Washington trade attorney and former commissioner of the U.S International Trade Commission.

Americana Development and the Champion Safe Co. of Provo, Utah, said in comments to the Office of U.S. Trade Representative that their cost for steel has risen by about 25%. That creates an unfair price advantage for Chinese companies that sell finished steel wheels and safes to the U.S., and so far have escaped the lengthy tariff list, the companies said.

Without tariffs on Chinese steel wheels and wheel assemblies, Americana -- one of the last U.S. companies making steel wheels for RVs -- will have no choice but to reduce production and staffing, Pizzola said.

Ray Crosby, president of Champion Safe, said that if the playing field isn’t leveled, his firm may shutter its production facility in Utah, which employs about 100 people, and join other U.S. safe makers that now manufacture in China. “We’ve seen our industry disappear over to China,” Crosby said.

Walk-in Coolers

Other companies argue for tariffs on their Chinese competition because it would help their business and achieve Trump’s goal of boosting U.S. manufacturing and employment.

Kason Industries of Newnan, Ga., makes panel fasteners and hinges for walk-in coolers and freezers. It’s asking for tariffs on certain Chinese hinges and parts that contain steel as a large part of their value, said Burl Finkelstein, Kason’s vice president of operations.

Finkelstein said because Chinese companies are government subsidized, they’re able to sell a finished product for less than his cost to purchase steel. A tariff on fabricated products would help equalize the cost of making products in the U.S. he said.

“It’s much easier to go overseas,” Finkelstein said. “We’re not taking the easy way out.”

‘No End to It’

Radionic Industries Inc. is a 78-year-old Chicago company that’s the last in the U.S. to make fluorescent lighting ballasts, according to President and Chief Executive Officer Jeffrey Winton. He’s asking for a tariff of as much as 50% on magnetic ballasts imported from China, even while saying that history shows protectionist actions don’t work.

“A significant tariff increase on these products would clearly increase our production and sales volume, and bring about the hiring of more American workers,” Winton said.

The call for levies on a wider range of products validates the concern of tariff opponents that efforts to change Chinese behavior and protect U.S. industries can have unintended consequences and raise costs, said Rufus Yerxa, president of the National Foreign Trade Council and a former deputy director general of the World Trade Organization and deputy U.S. Office of Trade Representative.

“This can’t be a mechanism to start raising tariffs on everything,” Yerxa said. “There’d be no end to it.”

By Mark Niquette

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