U.S. firms say China tariffs will raise costs, with few sourcing alternatives
WASHINGTON (Reuters) - A broad range of U.S. companies told a hearing in Washington on Monday that they have few alternatives other than China for producing clothing, electronics, and other consumer goods as the Trump administration prepares 25% tariffs on remaining U.S.-China trade.
The comments came on the first of seven days of hearings that began on Monday, held by the U.S. Trade Representative’s Office (USTR), on President Donald Trump’s plan to hit another $300 billion worth of Chinese imports with tariffs.
Sourcing from other countries will raise costs, in many cases more than the 25% tariffs, some witnesses told a panel of U.S. trade officials from USTR, the Commerce Department and other federal agencies.
In a letter addressed to the USTR ahead of Monday’s hearing, clothing retailer Ralph Lauren Corp asked for apparel and footwear to be removed from the tariff list, arguing that a rise in duties would lower sales and lead to U.S. workers losing their jobs.
Mark Flannery, president of Regalo International LLC, a Minnesota-based maker of baby gates, child booster seats and portable play yards, said that pricing quotes for shifting production to Vietnam - using largely Chinese-made steel - were 50% higher than current China costs, while quotes from Mexico were above that.
“Currently there’s no country manufacturing metal baby gates outside of China,” Flannery said.
The proposed list, which will be ready for a decision by Trump as early as July 2, includes nearly all consumer products, and could hit Christmas sales hard, particularly cell phones, computers, toys and electronic gadgets.
Marc Schneider, chief executive of fashion footwear and apparel marketer Kenneth Cole Productions, said 25 percent tariffs would wipe out the company’s profits and cost jobs. With China producing 70 percent of the shoes bought in the United States, there were no alternatives, including India and Vietnam, that could match China’s quality, price and volume, he said.
“We’re going to lower the quality of footwear, raise prices and accomplish nothing by moving it around to other countries,” Schneider said.
https://www.reuters.com/article/us-usa-trade-china-tariffs/u-s-firms-say-china-tariffs-will-raise-costs-with-few-sourcing-alternatives-idUSKCN1TI1MM
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