Early Comments on Section 301 Nearly Unanimous for Removal

The early submissions to the Office of the U.S. Trade Representative on whether the 7.5% and 25% tariffs on Chinese goods should continue were heavily against continuing the action. More than 90% of the 27 submissions either said end all the tariffs or urged dropping the ones that affect businesses or workers.

Businesses around the country said either their sector was never subject to intellectual property theft or forced technology transfer, or that the tariffs have not caused China to change its behavior. And businesses, unions and politicians said the tariffs impose costs that damage businesses, workers and consumers, with no benefit.

Unions that represent workers at a Springfield, Massachusetts, railcar manufacturing plant, run by a Chinese firm, identified 22 Harmonized Tariff Schedule codes that are affected by Section 301 tariffs on Chinese goods. The International Brotherhood of Electrical Workers and SMART, or the International Association of Sheet Metal, Air, Rail and Transportation Workers, noted that the company would pay $41 million in tariffs as it imports the inputs it needs to manufacture rail cars for Boston, Philadelphia and Los Angeles public transit systems. The SMART union local represents 515 workers; IBEW represents 241 at the plant. IBEW said the tariffs put "the company at a competitive disadvantage in bidding future projects."

"I feel in taking a deeper look at this you would agree, the tariffs clearly will, and are, having the opposite effect of their intended goal," IBEW said. The local workforce board and the state representative for Springfield also asked that this group of tariffs be removed.

Savant Technologies, a company with 300 employees, listed 18 tariff lines it said tariffs should be removed from, mostly lamps, light fixtures and their components, but also solar panel cells and solar panels, thermostats, and:

8536.50.70 - Certain specified electronic and electromechanical snap-action switches, for a voltage not exceeding 1,000 V

8504.31.40 - Electrical transformers other than liquid dielectric, having a power handling capacity less than 1 kVA

8504.40.95 - Static converters (for example, rectifiers), nesoi.

Savant said if there are abuses by a specific company, it should be the one targeted, instead of all imports in a category. It argued that the goods should not be seen as central to countering the Made in China 2025 goal.

"Not necessary at all for consumer lighting related products," the comment said. "Nothing super high technology or secret."

However, China did identify advanced electrical equipment as one of the strategic industries it wanted to dominate in its Made in China 2025 plan.

Progressive Dynamics, a 92-person Michigan manufacturer of electric power conversion products, also complained about tariffs on electrical goods. "Our products include converters, inverters, and support products for the recreational vehicle, mobile home, marine, and specialty truck industries. Our products are designed, assembled, tested, warranted, and serviced in the United States of America," the company said.

It gave more details in a confidential submission about what it sources from China, but said in the public submission, "Given the nature of the products purchased, efforts to re-source to non-Chinese suppliers have not been successful or cost effective. The tariffs imposed since 2018 have had a major negative effect on PDI’s profitability. It is the belief of PDI that tariffs on Chinese components put us and other US manufacturers at a competitive disadvantage. PDI’s two major competitors are located in Asia, and we believe that our competition does not incur the financial impact of tariffs that are imposed upon US manufacturers. As a result of incurring section 301 tariffs of 25% on more than half of our components, PDI was forced to raise prices to our customers, all of whom are North American businesses."

Tower Products, an 185-person electronics firm, said that bringing manufacturing to the U.S. of the components it imports from China is not feasible, given the cost difference, and said moving production to Indonesia or South Korea would just be "shifting the manufacturing to another problematic region ... . Those countries have their own geopolitical instability concerns."

The company said it wants USTR to remove tariffs on subheading 8525.50.30 -- transmission apparatus for television, nesoi -- as there is no domestic source of the good. It said customs compliance has added expense to the firm and led to delays at the port.

Worksman Cycles, a 58-employee manufacturer, said tariffs on bicycle components have resulted in both lower profits and higher sales prices for the bikes it builds. It said it could import a complete bike without paying the same level of tariffs.

"The effect in our industry is the exact opposite of what was intended," the company said.

Bobrick Washroom Equipment, which did not disclose its domestic employment, said stainless steel fabricators like itself have been faced with increased costs of raw materials, components, semi-finished products and finished goods of 25% to 62%. "Bobrick absorbed some of the cost increase, reducing profitability, and passed the rest on to its customers, resulting in Bobrick increasing its selling price to U.S. customers by up to 30%."

Very small companies that import chair caning material, outdoor furniture, store fixtures, agricultural equipment parts, pumps, room deodorizers, flasks and travel bags all said the tariffs are harming them without changing where they purchase supplies.

Endless Luck, a two-person business, said it used to import under HTS 8714.99.80 -- Pts. & access. nesoi, for bicycles, and other cycles of heading 8712. The company's trademark, for an electric horn, goes to a no-longer-active webpage.

"We make electronic bicycle accessories and have tried to source these in multiple countries. No one can make them at all cheaper than the factory we contract with in China," the company said. It said the tariffs are so high, the business cannot continue to operate, because it can't sell its goods at appealing prices.

Clark Quip Associates, a six-employee firm, imports HTS 8481.80.50 - Taps, cocks, valves & similar appliances for pipes, boiler shells, tanks, vats or the like, hand operated, not copper, iron or steel, nesoi. It said it cut employees and froze the wages of those remaining because of the 25% tariffs.

Phase II Machine & Tool, a 9-person firm that tests hardness and roughness of industrial products, wants USTR to remove the tariffs on HTS 9017.30.80 - Gauges for measuring length, for use in the hand, and HTS 9024.10.00 - Machines and appliances for testing the mechanical properties of metals. The latter had an exclusion for a while, but it expired in 2020.

The company said the policies that are targeted aren't happening much any more in China.

"There is very little left where American companies cannot own 100% positions of a China enterprise. We have direct experience in this matter and can confirm this," it said.

"Intellectual theft will be handled with tariffs paid by USA small business importers? The end result shows a detachment of the tariffs from the overall policies' intent, to the detriment of the American economy."

The company said there should be import bans on specific companies that are bad actors. "As for the theft of intellectual property, strengthen networks and systems, educate the business community better, and employ our own govt teams to combat such group theft. BUT NEVER, NEVER penalize the American consumer/economy, as tariffs do, in such a case. Tariffs DO NOT WORK."

However, two submissions asked that tariffs remain, on plastic injection molds, HTS 8480.71.80. and on HTS 8480.20.00, mold bases.

Vincent Tool Technologies, a 34-person company, said tariffs "help to combat China's efforts to use cheap material and inhumane labor that ends up allowing them to underbid on mold bases and landing work that US companies could otherwise land and build solid mold bases for."

Commenter Timothy Stoll, who said the plastic injection mold tariffs should stay, also said the Section 301 tariffs are not high enough to counteract China's abuses.

"It's like fining someone $10 for stealing $1,000 and not making them return what they stole. It just becomes a cost of doing very profitable and strategic business," he wrote. He also said there should be whistleblower incentives for people who work in companies that are circumventing tariffs.

"The duties have increased the effective cost of purchasing from China, which keeps more of the work, technology, and innovation in the US, which also increases the number of high-paying jobs in the US while encouraging technology investment and innovation which lowers prices for consumers long term. This disproportionately affects small businesses, because small businesses are less likely to have subsidiaries or partnerships in China," he said.