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2019.06.19 08:29 GMT+8

U.S. firms say China tariffs will raise costs, see few sourcing alternatives

Updated 2019.06.19 08:29 GMT+8
CGTN

A wide range of U.S. companies told a hearing in Washington on Monday that they have few alternatives other than China for producing clothing, electronics and other consumer goods as the Trump administration prepares new tariffs on remaining U.S.-China trade.

The comments came on the first of seven days of testimony on President Donald Trump's plan to hit another 300 billion U.S. dollars' worth of Chinese imports with duties of 25 percent.

Sourcing from other countries will raise costs, in many cases more than the 25 percent tariffs, some witnesses told a panel of officials from the U.S. Trade Representative's office, the Commerce Department, State Department and other federal agencies.

A move of manufacturing out of China? Not easy

Trump and top members of his cabinet have said that the tariffs, if imposed, would accelerate a move of manufacturing out of China.

But dozens of witnesses in oral and written testimony said that moving operations to Vietnam and other countries would not be feasible for years due to a lack of skills and infrastructure in those locations. China dominates global production in industries from shoes to electronics to port gantry cranes.

"That 25 percent is just going to whack us on the head," said Rick Helfenbein, president of the American Apparel and Footwear Association. "If we could move more product out of China we would, but we haven't been able to."

Mark Flannery, president of Regalo International LLC, a Minnesota-based maker of baby gates, child booster seats and portable play yards, said that pricing quotes for shifting production to Vietnam – using largely Chinese-made steel – were 50 percent higher than current China costs, while quotes from Mexico were above that.

"Currently there's no country manufacturing metal baby gates outside of China," Flannery said.

Child safety products such as car seats were spared from Trump's previous tariffs on 200 billion U.S. dollars' worth of Chinese goods, imposed in September 2018. But in the drive to pressure China in trade negotiations, USTR put them back on the list, along with other products spared previously, from flat-panel televisions to Bluetooth headphones.

A shopping mall displays festive goods during the Christmas holiday. /VCG Photo

Tariffs hit Christmas sales hard

The proposed list, which will be ready for a decision by Trump as early as July 2, includes nearly all consumer products, and could hit Christmas sales hard, particularly cell phones, computers, toys and electronic gadgets.

Marc Schneider, chief executive of fashion footwear and apparel marketer Kenneth Cole Productions, said 25 percent tariffs would wipe out the company's profits and cost jobs.

"We're going to lower the quality of footwear, raise prices and accomplish nothing by moving it around to other countries," Schneider said.

Jean Kolloff, owner of cashmere importer Quinn Apparel, said her reason for opposing the tariffs was more geographical – the Alashan goat that produces light-colored cashmere wool is only found in China's Inner Mongolia Autonomous region.

Source(s): Reuters
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