Panasonic Hopes for ‘More Measured Use' of Tariffs Under Biden: VP

The Section 301 tariffs on Chinese goods imposed under President Donald Trump had “a significant impact” on Panasonic North America, Jeff Werner, vice president-corporate and government affairs, told CTA’s virtual Innovation Policy Summit Wednesday. “We did everything we could to sort of mitigate that, including a robust use of the exclusions process,” he said.

The tariff exemptions Panasonic landed were “helpful, but at the end of the day, we paid on the order of millions of dollars toward these tariffs as part of a trade war” with China, said Werner. “That impacts our competitiveness.” The tariffs make it “harder to justify” Panasonic investments in U.S. infrastructure and production, he said.

Panasonic hopes “a more measured use of tariffs is what’s going to emerge” under the Joe Biden presidency, compared with trade policies of the previous administration, said Werner. Tariffs are “an important trade tool for nations to use,” he said. “There are certain circumstances when that’s necessary. I do think that what we have seen in the last three or four years was really kind of a blunted instrument approach.”

U.S. Section 301 tariff policy “hasn’t really worked” to curb China’s unfair trade practices, Werner said. “It’s really just added costs to doing business.” Werner doubts that the Biden administration “right away” will “give up the leverage that’s created by the tariffs,” he said. “But I do hope that a more global approach” toward confronting China “might yield some relief,” he said.

Werner thinks “there’s a fairly good awareness” about the tariffs among Panasonic’s 15,000-employee U.S. workforce “because they can directly see it impacting us,” he said. “It has not been a hard sell within the company to talk about the importance that our government puts on tariffs.” Sowing a “broader understanding” within Panasonic that the U.S. supply chain and American consumers pay the tariffs, not China, “has been a little frustrating,” he said.

Panasonic deals with policy changes “all the time,” said Werner. “When I’m talking to senior management within our company, it’s all about certainty. When there are changes that can come quickly, as we saw with some of these tariffs, that adds unexpected costs.” No one knows when the tariffs are “going to go away,” he said. “We don’t know if we’re going to get an exclusion. That makes it difficult.” Less business “certainty” makes U.S. investment opportunities look “less attractive,” he said.

It will be “difficult” for the administration to square its goals of promoting high-paying U.S. manufacturing jobs with a protectionist trade policy toward China that continues to emphasize tariffs, Werner said. The 4,000-employee electric vehicle battery plant outside Reno that Panasonic runs for Tesla is successful, partly due to its “ability to bring inputs in,” he said. Panasonic welcomes the administration’s ambitions to build a U.S. supply chain for EVs and EV batteries. That’s “going to help” with “business certainty” and building “resiliency” in the supply chain, he said. But if there’s a “specialty steel” with 25% tariff exposure that Panasonic needs to import to produce EV battery housings, “we don’t have any other options,” he said.

Proposals for “incentivizing” investment in U.S. production of semiconductors and EVs are “going in the right direction,” said Werner. “The idea of maybe channeling some of these tariffs toward that -- I get a little nervous about that. Tariffs are not meant to be a revenue raiser. They’re supposed to be punitive. They’re supposed to be driving results. If you start to rely on tariffs as a revenue raiser, it essentially becomes another tax.”