US warned tariffs will raise costs

US companies, retailers and trade groups have urged the Office of the United States Trade Representative to drop proposed tariffs on 60 countries and regions that the agency alleges have failed to curb trade in goods made with forced labor, arguing the measure would disrupt supply chains and raise costs.

The deadline for written comments was Monday, with public hearings set for Tuesday through Thursday at the US International Trade Commission in Washington. By the deadline, the USTR had received at least 980 submissions, according to its website.

Many businesses warned that additional tariffs would disrupt supply chains and increase costs for importers, manufacturers and ultimately US consumers.

"Layering additional tariffs on products that are already subject to existing trade measures can create unnecessary cost burdens and supply chain complexity for US manufacturers," said Eve Duchene, an executive assistant at Modules Technology in San Jose, California.

"As a supplier of advanced multilayer bare printed circuit boards …we are concerned that cumulative tariff actions on critical industrial inputs can increase costs without creating practical near-term sourcing alternatives," she said.

The USTR has proposed an additional 12.5 percent tariff on imports from 45 countries, including China, India, Nigeria, Japan and Australia, alleging they failed to address forced labor practices, Reuters reported.

Another 15 economies, including Canada, Ecuador, the European Union, Indonesia, Mexico and Britain, would face a 10 percent tariff because they have either adopted or committed to plans to tackle forced labor under US trade agreements, the USTR said.

The proposal, unveiled last month, followed a Section 301 investigation under the Trade Act of 1974, which concluded that the targeted economies had failed to ban or effectively prevent imports linked to forced labor, creating what the agency called an "uneven playing field" for US workers.

The proposed tariffs would exempt products already covered by Section 232 national security duties, including automobiles, steel, aluminum and copper.

"Chinese law fully prohibits forced labor," Xinru Huang of the China Association of Automobile Manufacturers said in comments submitted to the USTR. "If the United States insists on imposing tariffs, it will only raise costs for US importers and consumers."

The proposed tariffs would also exempt Canadian and Mexican imports that comply with the rules of origin under the North American trade agreement.

International trade groups and businesses warned in their comments that more tariffs will drive up costs.

Primary impact

Wei Zhao of the China Chamber of Commerce for Import and Export of Light Industrial Products and Arts-Crafts wrote that "American consumers will bear the primary impact" if the tariffs are imposed.

"Furniture prices will rise, exacerbating inflationary pressures and increasing the cost of living for ordinary households," Zhao said.

Reuters reported that other exemptions would include crude oil and petroleum products, rare earths and other specialty metals, beef, coffee, pharmaceuticals and aircraft parts.

Some US companies urged the USTR to revise the proposed exemption list. Leo Holt, president of Holt Logistics in New Jersey, whose affiliated companies operate marine terminals and logistics centers along the Delaware River, called for specialized dairy protein ingredients to be added.

"While we fully support the overarching US trade policy goal of ensuring market integrity and penalizing illicit labor advantages internationally, we write to urgently advocate for the addition of critical, specialized dairy protein ingredients to the Annex A product exclusion list," Holt said.

The proposal comes ahead of the July 24 expiration of a temporary 10 percent tariff imposed on Feb 20, the day the Supreme Court struck down earlier tariffs imposed under the International Emergency Economic Powers Act.