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Birth control and beer kegs: How Trump’s tariffs will hit middle America

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Birth control pills, lawnmowers and flat-panel televisions are among a long list of goods that could get more expensive after President Donald Trump slaps 25 percent tariffs on a list of Chinese imports.

The final list of items facing penalties is due out Friday, and a wide range of U.S. consumer favorites is likely to be on it, despite a scramble by many affected businesses to get their items removed – or to get competitors’ products on.

The intense activity was on display during three days of hearings in late May, when the Trump administration heard testimony from more 100 witnesses. Many predicted higher prices and shortages of everything from pharmaceuticals to snow blowers.

Prasad Pinnamaraju, chief operating officer of Novast Laboratories, a U.S. subsidiary of Chinese pharmaceutical company Novast Holdings, said women could have trouble getting birth control pills, which were on a preliminary target list Trump released in April. Pinnamaraju’s company supplies about 10 to 20 percent of the U.S. market, he said.

“Given our market share and the heavily regulated nature of suppliers to the market, there is a high risk of a shortage of supply, at least for some period of time,” Pinnamaraju said. “This means, at some point, a woman will go into her pharmacy and not be able to obtain her birth control medication.”

U.S. trade officials said they went through a multi-step process to ensure any product hit with the tariffs will have a minimal impact on consumers, while hurting Chinese producers in sectors such as information, robotics and biomedicine that Beijing has targeted for world dominance.

The result is an approximately $50 billion list that includes about $34 billion of machinery, mechanical appliances and electrical equipment. Other broad categories include $2.7 billion of transportation equipment and $6.8 billion of other miscellaneous manufactured products, according to an analysis done by the Peterson Institute for International Economics.

But many industries are pushing back. The U.S. Trade Representative’s office received more than 3,000 comments from the public on the action. By POLITICO’s count, close to 80 witnesses at the hearings either asked for specific items to be removed from the list or urged the administration not to impose the tariffs at all.

Companies desperate to get items off the list included makers of advanced medical technology — even though the category squarely falls into the area that China is trying to dominate as part of its so-called Made in China 2025 initiative. The sector believes it already is making headway addressing some of its biggest problems in China and doesn’t want to jeopardize that work.

“We do not want progress to stop or, even worse, go backwards because of medical technology products on a USTR retaliation list,” said Ralph Ives, executive vice president of global strategy and analysis at the Advanced Medical Technology Association.

Some small firms, such as Snow Joe, which designs and sells snow removal equipment, are worried about not being able to find other suppliers if duties are imposed.

“When I launched the company, I looked for U.S. suppliers of gas-free-powered snow products in the United States but found none. I have not found any such U.S. suppliers over the past 14 years,” Snow Joe CEO Joseph Cohen said.

Meanwhile, Best Buy, a brick-and-mortar retail company that is feeling intense competition from online stores like Amazon, pleaded with USTR to remove flat-panel TVs from the list.

But others weighed in favoring the tariffs. U.S. Steel Corp. asked for tin mill products to be added to the China list, and several other steel companies that asked for fabricated steel to be added.

At least one company, American Keg, is seeking import protection partly because it is facing higher costs for steel as a result of Trump’s previous decision to impose a 25 percent duty on steel imports from China and other suppliers to protect U.S. national security. In fact, the company said duties of 76 percent would be justified to help make its sector competitive.

“As our prices rise for domestically produced steel, these imported kegs are coming into the United States with zero percent tariff,” American Keg Company CEO Paul Czachor said. “So the price is continuing to increase for our production and to our customers, while imported kegs are coming in with zero percent tariff.”

USTR officials also heard from a wide range of domestic manufacturers. They included American makers of flatware, garbage disposals, blackout curtains, window treatments, lighted mirrors, safes, glass, plywood, container chassis, steel grinding balls and other parts.

“It is clear our industry has a target on its back. And we need the U.S. government to act through the Section 301 process,” testified Chad Severson, president of InSinkErator, a leading garbage disposal manufacturer.

U.S. textile manufacturers also hope to use the action to win additional duties on clothing imports from China.

But clothing importers and retailers also warn that consumers, especially those with lower incomes, will undoubtedly feel the impact of higher prices if Trump extends the tariffs — intended to address technology and copyright issues — to wardrobe items.

“Additional tariffs on clothing, footwear and other fashion products would constitute a huge regressive tax increase,” said Julia Hughes, president of the U.S. Fashion Industry Association. “For many of these products, China remains the No. 1 supplier in the world with no realistic options for other sourcing destinations.”

Some companies also warned of unintended consequences of imposing the tariffs, because China is expected to retaliate by imposing duties on around $50 billion worth of U.S. agricultural, chemical and other exports — including more than $12 billion worth of soybeans.

If China retaliates, American farmers will plant fewer soybeans and the amount of nitrates seeping into drinking water will increase, warned Eric Heath, a senior policy counsel at the Northeast-Midwest Institute’s Mississippi River Basin Program. That’s because soybeans are planted in rotation with corn, and absorb much of the nitrates left behind by corn production.

As a result, “these proposed tariffs will harm American consumers, American business and the American environment,” Heath said.

Source: https://www.politico.com/story/2018/06/13/trump-tariffs-middle-america-644687