Business Groups Warn Against a Section 301 Enforcement Relying on Tariffs

Tariffs are a tax on consumers, and not the right way to address China's industrial policies and unfair trade practices, the U.S. Chamber of Commerce says. U.S. Chamber CEO Thomas Donohue said March 15 that sweeping tariffs against China "could lead to a destructive trade war with serious consequences for U.S. economic growth and job creation. The livelihood of America’s consumers, businesses, farmers, and ranchers are at risk if the administration proceeds with this plan." Administration officials say the Section 301 technology transfer and intellectual property investigation response will be released in the coming weeks.

The administration is reportedly considering a tariffs package of $30 billion or more. "Tariffs of $30 billion a year would wipe out over a third of the savings American families received from the doubling of the standard deduction in tax reform. If the tariffs reach $60 billion, which has been rumored, the impact would be even more devastating," Donohue said. Some observers to expect the effects of the Section 301 investigation started last year (see 1708210024) to be greater than the tariffs on steel and aluminum (see 1803130026).

Chinese foreign ministry spokesman Lu Kang spoke to reporters in Beijing after Donohue's statement was released, and said the Chamber leader is right, Reuters reported. “In fact, U.S. trade with China in the past 40 years very objectively reduced American families’ per capita spending burden,” Lu told reporters. “We have said many times, there are no winners in a trade war.”

Such tariffs could especially hurt the information and communications technologies (ICT) industry, the Information Technology and Innovation Foundation said in a March 16 report. "Artificially raising the cost of ICT products by levying tariffs on ICT imports from China would reduce growth of U.S. ICT investments, which would lower productivity growth, and thus economic growth," ITIF said. The report examined "the economic impact of tariff rates of 10 percent and 25 percent on ICT imports from China," which "include products like computers, servers, smartphones, semiconductor manufacturing and testing equipment, software and scientific instruments, as well as most of the parts and accessories of these."

Footwear Distributors & Retailers of America is also nervous about the possibility of tariffs coming under 301. "Shoe tariffs are already among the highest placed on any product -- almost 11 times higher on average than those on all other goods," FDRA CEO Matt Priest said in a news release. "They can reach up to 67.5 percent, on a necessity that families can't live without. We have to ask ourselves ‘how much is enough?’ How much is enough when it comes to taxing American footwear consumers? How much is enough when it comes to increasing costs on families that can least afford it? How much is enough when it comes to tariffs that stifle innovation and American job creation? We adamantly oppose this potential action and call on the Trump Administration to explore other ways to combat intellectual property concerns in China and around the world.”