U.S. Corporations Face China Tariffs as Exclusions Expire

WASHINGTON – American companies have to pay higher taxes on some of the products imported from China as the tariff bans that protected many companies from President Trump’s trade war expired at midnight Thursday.

Mr Trump began imposing tariffs on Chinese goods valued at more than $ 360 billion in 2018, prompting thousands of companies to ask the administration for temporary exemptions exempting them from the duties. Companies that met certain requirements received a tax return that ranged from 7.5 to 25 percent. These included companies that import electric motors, microscopes, salad spinners, thermostats, breast pumps, ball bearings, forklifts and other products.

The majority of these exclusions, which could run into billions in revenue for US-based companies, automatically expired at midnight on Thursday. After that, many companies will again have to pay a tax to the government to import a variety of goods from China, including textiles, industrial components and other miscellaneous products.

The Trump administration’s lack of clarity on whether it would extend bans left many companies in the balance.

The United States had announced some extensions – on December 23, the sales agent announced that it would extend the exclusions for a small category of medical care products, including hand sanitizers, masks, and medical devices, to March 31 to help fight the US help coronavirus pandemic.

However, Ben Bidwell, the director of US Customs at freight forwarder CH Robinson, who has assisted customers with filing for exclusions, said “the vast majority” of those granted would expire by the end of the year and importers would either one depending on the product additional tariff of 7.5 percent or 25 percent.

The United States sales agent “remained fairly silent about any extension,” Bidwell said.

The legislature campaigned for the administration to extend the exemptions. On December 11th, more than 70 members of Congress, including Republican Jackie Walorski of Indiana and Democrat Ron Kind of Wisconsin, sent a letter urging United States sales representative Robert E. Lighthizer to extend all of their active bans to help businesses affected by the pandemic.

“Our economy is still in a fragile state due to the ongoing Covid-19 pandemic,” the letter said. “The extension of these exclusions provides employers with the security they need and helps save jobs.”

Mr Trump introduced tariffs to protect some American industries from foreign competition and encourage others to move their supply chains out of China. The tariffs have partially achieved these goals, although most of the companies have relocated their activities to other low-cost countries such as Vietnam or Mexico rather than the USA.

Updated

Jan. 1, 2021, 5:22 p.m. ET

However, most economists say these gains resulted in a high price tag and hurt American manufacturing as a whole, greatly increasing the cost of imported components and making US manufacturers less competitive with other companies overseas.

Some companies say the elimination process was particularly unfair. While large corporations have invested large sums of money in hiring Washington law firms to lobby the administration and request exemptions, some small businesses have stated that they lacked the resources to request and win disqualifications.

“The expiration of these exclusions – especially because the facts supporting their original purpose remain unchanged – shows how arbitrary and capricious the process was,” said Stephen Lamar, executive director of the American Apparel & Footwear Association, the makers of footwear and footwear represents clothing.

“These companies could poorly afford a tax on their imported intermediate consumption and US workers when they originally applied for these exclusions, and they certainly can’t now,” he added.

Two other long-term programs that have exempted imported products from tariffs also expired on Thursday.

The Various Tariffs Act, which temporarily suspends tariffs on some imported goods, including inputs used by American manufacturers, and the Universal System of Preferences, which gives thousands of products from developing countries duty-free access to the US market, are ending Year expired the year. There has been little momentum in Congress to revive the programs as public opinion has gradually turned against initiatives to give foreign companies cheaper access to the American market in order to encourage free trade.

Company executives are unsure whether the future administration will adopt a different tactic, but President-elect Joseph R. Biden Jr. is unlikely to make any material changes in the near future.

In a December interview with the New York Times, Mr Biden said he would conduct a full review of the United States’ trade relations with China and consult with allies in Asia and Europe to develop a coherent strategy before changes are made.

“I’m not going to take any immediate steps, and that goes for tariffs too,” he said.

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