The call from U.S. businesses to end the trade conflict with China is growing louder. “Tariffs aren’t paid by the Chinese government or by Chinese exporters,” Anna Ashton, Vice President of Government Affairs at the U.S. China Business Council, said in an online panel hosted by the China Corner Office last month. “They’re paid by U.S. importers, and also passed on to U.S. consumers. So this really hasn’t had the effect of hurting Chinese businesses, or the Chinese government. It has hurt our own industry. U.S. business and consumers have absorbed the impact of the tariffs”, Ashton said. On November 12 the Business Council and other associations wrote to U.S. Treasury Secretary Janet Yellen and Trade Representative Katherine Tai highlighting the damage the trade conflict is causing U.S. businesses, workers and consumers. The groups urged the U.S. to continue working with China to ensure full implementation of the phase one trade agreement, reduce Section 301 tariffs, and broaden the tariff-exclusion process.
“The Section 301 and retaliatory tariffs put in place over the last several years continue to disproportionately cause economic harm to U.S. businesses, farmers, workers and families,” the letter said. “We agree with Secretary Yellen’s recent comments that tariffs tend to increase domestic prices and raise costs to consumers and businesses due to higher cost inputs. Lowering U.S. and Chinese tariffs could help ease inflation.” According to an estimate of the Congressional Budget Office, the tariffs would have cost the average U.S. household nearly USD1,300 in 2020.
U.S. importers have paid more than USD110 billion in Section 301 China tariffs since their inception, of which about USD40 billion during the Administration of U.S. President Joe Biden. These costs, compounded by other inflationary pressures, impose a significant burden on U.S. businesses, farmers and families trying to recover from the effects of the pandemic, tariff opponents argue. “The top challenge that our companies have reported the last four years running businesses in China is the political dynamic between the United States and China,” Ashton said.
Jeffrey Heller, Founding Partner of the San Francisco-based firm Heller Manus Architects, said the company had been “extremely busy up to the previous administration, when the politics started getting colder, nationally, and internationally. Being from California and being on a group called the Bay Area Council, we’ve always been very pro trade and relations with China,” Heller said in the online meeting. “One of our core beliefs is that the people-to-people relationship is extremely important.” Heller started working in China in 2004.
Greater Pacific Industries, based in Bellevue, Washington state, and with offices in Philadelphia, San Diego and Shanghai, has imported products from Asia for 26 years. Ben Zhang, Founder and Chief Executive, said that due to the political atmosphere, he had to change part of the company’s name from “China” to “Pacific” last year and expand the supply chain beyond China. “Most of these products are manufactured in China. Because of the tariffs imposed on Chinese goods the last several years, we’ve been forced to take some of those projects out of China to Southeast Asian countries such as Vietnam, Cambodia and the Philippines. But those countries still are heavily dependent on China for raw materials.”
According to a report by the U.S. China Business Council on November 1, U.S. goods exports to China rose almost 18% in 2020. The Chinese market was alone among the U.S.’ major export markets to register growth that year. The finding was contained in the 2021 Congressional Districts’ Goods and Services Exports to China report. One major reason is the phase one trade deal, which was finalized in January last year with China granting many exclusions for U.S. goods exported to China in 2020. The U.S. exported just under USD105 billion in goods to China in 2019, and last year, after China instituted tariff exclusions following the phase one trade deal, that figure rose to USD123 billion, the second-highest amount in a decade, the China Daily reports.
