i3 - July/August 2018 - 27

By Sage Chandler

Policy

P O L I CY U P DAT E

The State of Tariffs and Trade

Narvikk/Getty Images

ou are probably aware of the months-long war of
words, threats, tariff actions and promises of retaliation between the U.S. and China. What began as a
Trump administration investigation into the Chinese theft of
American intellectual property (IP) quickly escalated into
$300+ billion in tariffs being threatened- and levied - against
imports and exports between the two nations. While it is true
that American companies doing business in China often face
business problems including IP theft, CTA has long argued
that any action taken to address these problems should not
include the use of tariffs that will harm our own economy.
CTA's communications with member
companies on the issue provided ample
evidence that tariffs - and resulting
retaliation - would wreak havoc on
global supply chains. Even companies
not immediately impacted by the initial
round of tariff levying would eventually
feel the strain as commodities become
more expensive, job losses rise, and consumers purchase less due to higher
costs and lost income.
Two studies commissioned by CTA and
the National Retail Federation tell a
troubling story. The first focused on the
targeted tariff categories of televisions,
monitors, batteries and printer cartridges. It found that, even accounting
for alternative sources of supply, tariffs
would increase U.S. consumer prices for
televisions imported from China 23 percent, forcing consumers to pay an additional $711 million.
The second study looked at overall
economic impacts. It found the administration's tariffs on $50 billion of
Chinese imports, coupled with retaliation
promised by China, would reduce U.S.
gross domestic product (GDP) by nearly
$3 billion and destroy 134,000 American
jobs. That means four jobs lost for every
one gained, and job loss could be
expected in every state, mostly for lessskilled workers. More, tariffs would significantly reduce the economic benefits of
the administration's recent tax reform
C TA . t e c h / i 3

and deregulatory efforts, bringing uncertainty to U.S. businesses and devastation
to workers in key states.
The overall trading relationship
between the U.S. and China is essential to
CTA and our member companies, which
rely on the global supply chain to conduct
business. Of the 1,000 products so far proposed to receive the additional 25 percent
tariffs, CTA members have identified
more than 200 products which would disproportionately impact their businesses.

The overall trading
relationship between
the U.S. and China is
essential to CTA and
our member companies,
which rely on the global
supply chain to
conduct business.

Of the companies that have responded
to CTA's surveys requesting information
on the economic and operational impact
of the proposed tariffs, 79 percent are
small businesses and four out of five said
they either cannot switch their sourcing
from China to another country or do so
without a costly disruption to their business. Some members said the tariffs put
them at a disadvantage relative to their
competitors in other nations. They fear
those competitors would be able to
undercut them in the market by continuing to import critical components
from China. Other startups fear that tariffs and the resulting economic uncertainty would prevent their products
from going to market entirely.
Ambassador Lightheizer, the President's
chief trade negotiator, has stated that tariffs are an important negotiations tool.
Although TV sets were removed from the
list of products which will now receive a
25 percent duty beginning July 6, most of
CTA members identified products that
will remain on the list. China's retaliation
will also take effect on July 6, which primarily targets agriculture products. The
administration's use of tariff measures
shows no sign of letting up in the near
future. The administration is considering
tariffs, not only on China, but on all foreign automobiles and, as with steel and
aluminum, affected nations have vowed
additional retaliation.

CTA is collecting information about the impact of tariffs on our industry. If your company
is impacted, please share your story by contacting me at: schandler@CTA.tech.

JULY/AUGUST 2018

http://www.CTA.tech

i3 - July/August 2018

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