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Trade war

US companies say price hike inevitable at China tariff hearing

From toys to clothes, American manufacturers warn of widespread impact

Ralph Lauren says an additional round of tariffs on Chinese imports would impact the availability and prices of its products.   © Reuters

WASHINGTON/NEW YORK -- A proposed new round of tariffs on more Chinese goods as part of U.S. President Donald Trump's trade war with Beijing will immediately lead to higher prices for his country's consumers, American companies told a public hearing Monday.

The hearings in Washington, held by the Office of the U.S. Trade Representative, will continue until June 25 with 320 representatives from companies and industry groups expected to voice their views. 

In written opinions submitted to the USTR ahead of the hearings, companies that offer products ranging from smartphones to clothes and toys mainly opposed the Trump administration’s plans to impose an up-to-25% levy on $300 billion of Chinese goods.

"As a global company we are reliant on a broad supply chain that includes China," New York-based fashion brand Ralph Lauren wrote. "Due to difficulty in finding alternative sourcing options, the imposition of additional tariffs on these products would be detrimental and would directly impact product availability and prices on these consumer goods and our U.S. consumers," the company said.

Los Angeles-based fast fashion retailer Forever 21 said, "While Forever 21 has a diverse sourcing base, the company often has no choice but to import the products from China."

It would be difficult, and in many cases impossible, the company said, "to move production of the impacted goods outside of China in this short window. Additional tariffs would either have to be absorbed by Forever 21 or passed on to its customers," it warned.

Shoe brand New Balance said that the tariffs would impact operations of U.S.-based factories.

"We must import certain footwear components, such as soles, inserts, kits, and uppers, from China to keep our five New England factories open and growing," the company wrote. "Punitive tariffs on imports of footwear components from China will... threaten our ability to continue manufacturing and investing in our U.S. footwear factories."

Tampa, Florida-based bridal boutique White Closet Bridal said, "Raising our prices by a couple hundred and more dollars per wedding dress will immediately give our already cost-conscious consumers sticker shock."

The company talked of Chinese rival factories shipping dresses into the U.S. in small packages labeled as "sample" or "gift" to avoid paying tariffs, noting that additional levies would further widen the advantage gap.

The USTR’s initial plan targets 3,800 items, including many consumer goods that have not been targeted to date. Some items may be exempt from the list if products are deemed difficult to procure from alternative sources.

The impact is expected to be especially big for information technology items such as smartphones and notebook computers, which the U.S. market relies 80% and 90%, respectively, on Chinese imports.

Best Buy has requested that five items, including computers, tablets and TVs, be excluded from tariffs.

Only a few participants, such as the aluminum industry, have expressed support for the new round of tariffs. 

The USTR will decide on the final tariff list after mid-July. In previous rounds of China tariffs, the administration has shown flexibility, such as exempting Apple Watches from the list, and in the last round that targeted $200 billion of Chinese goods, the rate was initially held to 10% and not 25%.

Trump looks eager to meet Chinese President Xi Jinping at the Group of 20 summit in Osaka at the end of June, but has also threatened to slap a new round of tariffs if the meeting does not take place. The president has a difficult balancing act, as higher prices would be a headwind entering into his own reelection bid.

To date, USTR has received more than 1,500 comments opposing the tariffs.

Alex Fang in New York contributed to this report.

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