NEMA Urges Administration to Minimize Collateral Damage from Tariffs

NEMA Urges Administration to Minimize Collateral Damage from Tariffs

This piece was originally published in the August 2018 issue of electroindustry.

Craig Updyke, Director, Trade and Commercial Affairs, NEMA

In formal statements to an interagency committee chaired by the Office of the U.S. Trade Representative (USTR), NEMA called on the Administration to minimize collateral damage on NEMA Members from additional U.S. import tariffs proposed on Chinese-made products.

Although NEMA agrees with the Administration’s goals and concerns about China’s intellectual property practices and industrial policies, tariffs are a blunt instrument that delivers a tax increase for U.S. manufacturers and their industrial, commercial and residential customers, according to NEMA President and CEO Kevin J. Cosgriff.

“NEMA Members have remained competitive in the open global economy of the 21st century in part by investing in extensive international supply chains based on comparative advantages,” he said. “Broader market access has fostered innovation, productivity, and growth opportunities for manufacturers, enabling them to service a larger, more diverse customer base and tap the highest quality inputs. These developments have benefitted consumers in the United States and around the world.”

In comments filed July 23, Mr. Cosgriff said that the benefits of openness to international trade are diminished to the extent that trading partners violate internationally agreed trade rules and norms.

He voiced NEMA’s support for USTR actions to defend the U.S. market from unfair practices but called for a targeted approach that supports U.S. manufacturing while also bringing about change in Chinese policies and practices.

“We would suggest that steps taken should minimize collateral damage associated with higher tariffs and be narrowly targeted and time-limited so as to produce negotiated outcomes that restore and, whenever possible, advance openness and fairness,” Mr. Cosgriff concluded. “If the purpose of these tariffs is to get the other party to the negotiating table, our industry for one would like to know when those negotiations are to begin.”

Read NEMA’s full written comments.

NEMA-Scope Chinese Products Targeted for More Tariffs

On June 20, USTR issued a draft list of 284 products from China, representing a value of $16 billion that could face 25 percent tariffs. Of those products, at least 30 are of direct interest to NEMA Members, including certain electric motors, electronic components, wireless lighting dimmer units, integrated circuits and electricity meters.

Tariffs on these 30 items would amount to $500 million in import taxes, in addition to the $2 billion in tariffs on Chinese NEMA-scope products implemented on July 6, NEMA said in formal written comments to USTR.

“NEMA recommends any tariffs be applied for as short a time period as possible, as a precursor to a negotiated outcome that addresses the Chinese practices,” testified Craig Updyke, NEMA Director for Trade and Commercial Affairs, at a public hearing on July 24. “NEMA also urges the Administration to narrow the scope of the proposed tariff list, so it does not do disproportionate harm to NEMA Members’ U.S. production.”

Specifically, NEMA called for exclusion from the tariff list of inputs for which non-Chinese substitutes are not readily available, that come from wholly owned U.S. facilities within China or that have a high percentage of U.S.-made content.

NEMA is also consulting with Member companies and preparing testimony, and written comments on a third round of tariff proposals from the Administration announced July 10, targeting $200 billion in Chinese products. A public hearing on the proposals is scheduled for August 20-23; pre-hearing written comments are due to USTR by August 17.

In addition to a wide range of industrial metals and materials, including some rare earth materials and permanent magnets, the list includes NEMA-scope products including single-phase electric motors, aluminum stranded wire, ceramic insulators, carbon electrodes, certain electrical transformers, static converters, plugs and sockets, halogen lamps, lighting ballasts, luminaires, and certain types of primary batteries.

For more information, contact Craig Updyke.

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