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Companies in furious bid to prevent new China tariffs as summit looms

A cargo ship prepares to dock June 10 at PortMiami in Miami Beach, which saw China as its top trading country in 2018, as trade tension continues between Washington and Beijing. (Joe Raedle/Getty Images)

President Trump’s plan to impose tariffs on virtually all products from China is running into a wall of opposition from the business community, amid fears that what began as a temporary negotiating tool is becoming a permanent feature of trans-Pacific trade.

Starting Monday, hundreds of companies are scheduled to testify before the Office of the U.S. Trade Representative (USTR) over seven days of hearings on the president’s proposal to expand tariffs to an additional $300 billion in imports from China. After a year-long trade war, those are the only imports from China that remain duty-free.

The USTR has received more than 1,600 written comments on the plan, with the overwhelming majority warning that additional tariffs would raise prices for consumers, cost American jobs and disrupt production at companies across the nation.

“If we are forced to move production from China, it will take a long time to make sure that new factories will make the garment correctly and can get the proper materials. The costs may be too great too, as we are barely profitable now,” wrote Mark Corrado, president of Leading Lady, a bra maker in Beachwood, Ohio, who was among the first witnesses.

The avalanche of complaints suggests that industry patience with the president’s tariff-heavy trade policy is evaporating. His sudden threat last month to impose tariffs on Mexican imports in a dispute over border security, coupled with fading prospects for a comprehensive trade deal with China, explains the increasingly vocal opposition, according to trade analysts and executives.

“The tone has changed since the Mexican tariff episode,” said Edward Alden, an economics professor at Western Washington University. “The level of concern in business is going up, and the willingness to challenge the president more directly on this issue is increasing.”

Senate Republicans, including Senate Finance Committee Chairman Charles E. Grassley of Iowa, are considering legislation tohat would limit the president’s ability to impose tariffs.

Trump began imposing import taxes on more than $250 billion in Chinese goods a year ago to compel China to treat American companies fairly, particularly by respecting their intellectual property rights.

As the confrontation with China intensified, many industry groups swallowed their tariff concerns in hopes that the president would succeed in forcing Beijing to change its practices. Until early May, that seemed a good bet, as Trump repeatedly said a historic trade deal with China was imminent.

But talks abruptly stalled six weeks ago, after the president’s chief trade negotiator, Robert E. Lighthizer, accused China of reneging on a tentative deal. Trump has said he wants to meet with Chinese President Xi Jinping at the end of this month at the Group of 20 summit in Japan to revive discussions, but no meeting has been scheduled.

In Paris on Monday, Commerce Secretary Wilbur Ross played down prospects for an early accord. “We will eventually make a deal, but if we don’t, the president is perfectly happy with continuing the tariff movements that we’ve already announced, as well as imposing the new ones that he has temporarily suspended,” Ross told CNBC.

The deadlock increases the likelihood that Trump will proceed with additional tariffs.

“A substantial, enforceable and sustainable agreement could really help both sides. Further tariffs could really hurt both sides,” emailed Craig Allen, president of the U.S.-China Business Council. “Let’s hope that the two governments can get back to the table as soon as possible.”

If the president does follow through with his threat, he will be risking not only a clash with business groups but also consumer unease as he begins his reelection campaign. The initial tariffs on Chinese products were calibrated to minimize pain for American shoppers. Taxing almost all of the $540 billion in Chinese goods that the U.S. imports each year makes such pain difficult to avoid.

“Companies have tried to shield customers from tariff increases, but that will no longer be possible,” said John Veroneau, a partner at Covington & Burling and a U.S. trade negotiator under President George W. Bush. “To the extent possible, companies are working hard to diversify supply chains, but it’s easier said than done.”

Larry Kudlow, director of the National Economic Council, said Thursday that the tariffs’ impact on American consumers would be “very, very small” and that any costs would be worth bearing if they secured a rebalancing of the U.S.-China trade relationship.

But that same day, 661 companies — including retail giants Costco and Walmart — wrote the administration warning that the tariffs would destroy 2 million U.S. jobs and cost the average family $2,000 each year.

“We know firsthand that the additional tariffs will have a significant, negative and long-term impact on American businesses, farmers, families and the U.S. economy,” the companies said. “Broadly applied tariffs are not an effective tool to change China’s unfair trade practices. Tariffs are taxes paid directly by U.S. companies, including those listed below — not China.”

The new levies will hit laptop computers and tablets, cellphones, smartwatches, computer displays, televisions and gaming consoles, Nathaniel Bolin, an attorney representing Best Buy, told USTR in written comments.

The company iRobot said it raised prices on its Roomba vacuum cleaner at the beginning of this year because of earlier Trump tariffs. Additional import levies will lead to higher prices on its new robotic mops and lawn mowers, delaying their adoption by consumers and “preventing us from hiring more well-paid, high-skilled American workers,” wrote Glen Weinstein, iRobot’s chief legal officer.

The president says that companies can evade the tariffs by moving production from China to countries such as Vietnam or the United States. Based in Bedford, Mass., iRobot, which has switched some of its orders to factories outside China, told the USTR it “will not be able to entirely relocate our manufacturing and supply chain in the short to medium term.”

Graco, which makes car seats, strollers and high chairs, says that by raising prices, the tariffs will encourage consumers to buy used products that may not be safe. Products bought on the secondhand market could be subject to government-ordered recall without a consumer’s knowledge or might lack the most up-to-date safety features, warned Russell Torres, group vice president of Newell Brands, Graco’s corporate parent.

The tariffs could have a wider impact on overall U.S. trade, according to SSA Marine, which operates terminals at major ports including Long Beach, Calif.; Seattle; and Savannah, Ga.

The company told the USTR that it is “totally dependent” upon China to supply the 160-foot-tall cranes that lift shipping containers from cargo vessels to the pier. Without the newest models, some American ports would be unable to handle the largest vessels.

“This puts U.S. exporters and importers at a distinct disadvantage in global markets,” Ed De­Nike, who heads SSA’s domestic container operations, wrote to the USTR.

In previous tariff rounds, the administration allowed companies to seek waivers permitting them to continue importing specific products if there was no alternative to a Chinese supplier. A similar process is likely if additional tariffs are imposed, though executives have complained about the red tape, uncertainty and delays involved in obtaining those exemptions.

Some trade analysts are skeptical that administration officials will heed the warnings that will be aired at this week’s hearings.

Riley Waters of the Heritage Foundation tweeted: “7 days, 321 witnesses, $300 billion worth of goods, and a waste of everyone’s time. Witnesses’ testimonies will fall on deaf ears as @realDonald­Trump had made it clear it’s his decision that matters. For Americans, the cost of these and previous tariffs will be real.”