American businesses and farmers are bracing for impact. Washington will fire the first volley in a trade conflict with Beijing at 12:01 Eastern Standard Time on Friday. Washington’s tariffs apply to more than 800 Chinese product lines, mainly chemicals, heavy construction vehicles, and components for manufacturing equipment.
Beijing has promised to respond.
"The U.S. measures, in fact, are attacking the global industrial chain and value chain. It simply proves that the U.S. is opening fire on the world and on itself," said Chinese Ministry of Commerce spokesperson Gao Feng.
China’s retaliatory tariffs will target more than 540 categories of U.S. products – mainly in agriculture such as pork, soybeans and tobacco – but also whiskey, salmon and off-road vehicles.
The White House wants to make American companies less reliant on Chinese manufacturing and to persuade China to strengthen protection for intellectual property rights. But a Peterson Institute of International Economics (PIIE) study shows that the negative impact of American tariffs will be felt more by U.S. companies than Chinese ones.
"This approach is fairly useless," said Mary Lovely of PIIE, "but it has an efficiency cost on the U.S. economy, so therefore we are doing no good, while incurring potentially unknown cost. So, they make no sense."
China has warned the White House about this boomerang effect. "If the U.S. starts to impose tariffs, there will actually be more taxes on not only Chinese enterprises but also enterprises from other countries including American enterprises," Gao told reporters Thursday.
On this point major U.S. corporations agree.
"Tariffs that beget tariffs that beget more tariffs only lead to a trade war that will cost American jobs and economic growth… We should seek free and fair trade, but this is just not the way to do it," wrote Thomas J. Donohue, president and CEO of the U.S. Chamber of Commerce in a report from the Chamber titled "Trade Works. Tariffs Don’t."
The report said the tariffs could "derail our nation’s recent economic resurgence." The chamber is the world’s largest business federation.
U.S. boat industry under fire
Last week, the National Marine Manufacturers Association (NMMA) and other recreational industry officials met with U.S. Commerce Secretary Wilbur Ross to communicate their concerns. Canada, Mexico and the European Union have put U.S.-made boats on their target lists for retaliatory tariffs. That puts jobs at risk. NMMA says boating supports 650,000 jobs.
According to NMMA, many of the electronics and navigation equipment in U.S.-made boats come from China. U.S. tariffs on the foreign equipment going into the boats will drive up costs for consumers. Canada, Mexico and the EU are imposing duties on U.S. finished boats. Higher prices will likely mean fewer sales.
"We’ve made it clear that the boat industry is being hit from all angles," said Nicole Vasilaros, vice president of the NMMA. "We have members who are looking at layoffs if things don’t change in the next 60 to 90 days," Vasilaros said.
The Association of Equipment Manufacturers issued a statement that warned of possible job losses too.
"Our industry supports 1.3 million jobs and contributes roughly 159 billion dollars a year to the U.S. economy but much of that could go away if this tit-for-tat trade dispute continues. We again call on the Trump administration to de-escalate this unnecessary and costly trade war," the equipment manufacturers said.
Right now, U.S. President Donald Trump is still headed in the other direction. He has threatened to slap duties on a total of 450 billion U.S. dollars' worth of Chinese goods.
U.S. officials have yet to say how long the administration expects to pursue this course in the face of strong foreign and domestic opposition.
U.S. companies and associations seem to be pushing back.
Since the beginning of 2017, at least 18 American companies and trade associations have lobbied on tariff issues related specifically to the U.S. metals tariffs and those on Chinese goods. That’s according to an analysis of lobbying disclosure data provided by the non-profit, Center for Responsive Politics.
