Tariff Relief Plan From Biden Administration Falls Short, Businesses Say

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Companies lacking cost-effective alternatives to Chinese imports complain that the new trade policy is not as helpful as they had hoped

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Mr. Mojica’s Outdoor Elements LLC sells carabiners, panhandles and other equipment that it designs and manufactures in China. He said his profits have been sharply cut by paying 25% import duty, forcing him to dip into his retirement savings to handle the bills.

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“Tariffs are just a burden on Americans’ backs,” he said. “It’s either small businesses paying for it, which I’m doing now, or giving it to consumers so they can pay for it.”

The tariffs were imposed by the Trump administration, which gradually expanded the levy to cover most imports from China.

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The Biden administration has upheld the tariffs and, after a long-awaited review, US Trade Representative Catherine Tai said last week that the levy would continue.

The news for importers was mixed. On the positive side, Ms Tai said her office would again allow companies to appeal for exemptions from tariffs, a process that mostly ended by the end of last year.

The Office of the US Trade Representative said it would consider granting exclusion exemptions on 549 product categories, a fraction of the more than 2,200 items that were previously eligible for tariff relief in the Trump years. According to trade experts, their beneficiaries were mostly small businesses.

For example, Mr. Mojica said his company had initially received tariff exemptions for some products expiring in March 2020 and were not included in the new list of products eligible for the extension.

Industry groups expected the Biden administration to expand the waiver program.

“It’s disappointing that the administration hasn’t gone much further,” said Stephen Lamarr, chief executive officer of the American Apparel and Footwear Association. “There are many other exclusions that are no longer on the table.”

China is by far the most important manufacturing hub for the American apparel industry, which is almost entirely dependent on imported products. According to the association, China imported 36.6% of apparel by volume in 2020, more than double that of Vietnam, the No. 2 supplier. About two-thirds of imported shoes come from China.

Meanwhile, manufacturers buy a variety of metals, chemicals, semiconductors and other products from China to make goods in American factories.

“Manufacturers want to see more opportunities to seek tariff relief, not just those eliminated and expanded exclusions,” said Ken Monahan, vice president of international economic affairs at the National Association of Manufacturers.

In an outline of China’s trade policy last week, Ms Tai said her office would keep the possibility of additional exclusions open. The US Trade Representative’s office did not comment on the importers’ complaints.

Ms Tai has emphasized what she calls a “worker-centered” trade policy, which aims to put the interests of American workers first.

Ted Murphy, a trade attorney for Siddeley Austin LLP, said it was surprising that USTR did not establish a new tariff program to reflect that priority. “It’s amazing that they’re focusing on exclusions that the Trump administration briefly approved twice,” Murphy said. “One would think they wanted to apply a more ‘worker-focused’ lens to this.”

The US and China began late last week to reconnect on trade issues with a virtual meeting between Ms Tai and Chinese Deputy Prime Minister Liu He. During that meeting, the Chinese side put pressure on the US to re-impose tariffs.

The tariff-exclusion process came under criticism during the Trump administration. Since this process was first being implemented in 2018, the USTR was flooded with requests.

The companies described the process as cumbersome and opaque. Many said they were unsure of exactly what information USTR wanted to assess or the best way to file. One company filed more than 10,000 individual requests. Several companies remained in limbo for months as they awaited the verdict.

When those decisions came, the companies said they did not know why some requests were granted and others were not.

The process eventually led to an investigation by the Government Accountability Office, the US government’s oversight agency. in a July report, the GAO blamed the USTR, saying that the agency did not fully document its procedures and that it took inconsistently several steps in the exclusion review.

The GAO said that of the approximately 53,000 exclusion applications submitted between 2018 and 2020, 46,000 requests were denied.

Some companies have identified instances in which tariffs have inadvertently helped Chinese companies at the expense of their US competitors, such as when there is a levy on an item that a US company uses in its supply chain but is ready. No tariffs on goods are created by a Chinese company.

The USTR said it would evaluate requests for exemptions during a 50-day comment period beginning Tuesday, focusing on whether the particular product is only available from China and whether the tariffs would be applicable to small businesses, jobs, including manufacturing output. cause serious economic damage to American interests. and critical supply chain.

The reinstated exclusions will be applied retrospectively at the beginning of the comment period.

write to Yuka Hayashi at [email protected] and Josh Zumbrun at [email protected]

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