Second Round of China Tariffs Escalates Trade Concerns
The Trump administration earlier this month announced a second list of Chinese products on which it intends to impose tariffs. The move came after China announced retaliatory tariffs in response to earlier U.S. tariffs on Chinese products. The back-and-forth threatens to escalate into the type of trade war that business associations warned would be the result of punitive tariffs.
Retailers Worry About Prices, Demand Retailers’ most immediate concern about a trade war is the increased cost of imports, but they and other businesses also are affected if reduced trade slows the economy and reduces consumer demand. The National Retail Federation (NRF) responded to the U.S. Trade Representative’s (USTR) request for comment on the proposed List 2 tariffs.  “NRF strongly opposes any efforts to include or add consumer products to the list of products subject to additional tariffs. We do not recommend that any products be added to the proposed list, or that the proposed tariff rate be increased in any way, or that the level of trade affected be expanded,” the statement reads.
NRF also submitted a list of dozens of price-sensitive products that it requested be removed from the proposed tariffs list.

To read the full NRF comments, click here. To read the USTR request for comments, click here. Manufacturers Could Lose Access to Markets Manufacturers, many of whom import parts and supplies for the production process, also are affected if the cost of imports increases. But they are particularly vulnerable to reduced access to export markets. The National Association of Manufacturers (NAM) issued a statement that criticized China for unfair trade practices but also said imposing tariffs is the wrong way to purse a better trade agreement. “Tariffs will bring retaliation and possibly more tariffs,” said NAM President & CEO Jay Timmons. “No one wins in a trade war, and it is America’s manufacturing workers and working families who will bear the brunt of continued tariffs. Manufacturers in the United States succeed when the rules are clear and fair and markets are open.” To read the full statement, click here. Oregon Has More at Stake Than Many States Oregon relies more on trade than most states. Economist Josh Lehner of the Oregon Office of Economic Analysis analyzed Oregon’s trade exposure and determined that $800 million of Oregon exports are affected by tariffs that have been imposed or proposed. 

To read Leehner's analysis, click here.

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Given China’s reaction to the imposition of duties on the first list of products selected for 25 % tariffs, it appears to NRF that imposing additional tariffs on more products will not motivate China to change its practices or bring them to the negotiating table. In the meantime, the new tariffs imposed on product from List 2 (as well as List 1) will have a distinct negative impact on U.S. retailers and their consumers. This negative impact will only increase as we see an escalation in tariffs (List 3).
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