A rare coalition of business groups are banding together to fight President Donald Trump’s proposed tariffs, arguing they will hurt U.S. consumers and the economy.
Retail, agriculture, technology, manufacturing and other industries say the tariffs on $150 billion in Chinese goods are counterproductive to the goal of holding Beijing accountable for intellectual property theft and other trade practices. The groups are working to keep specific products off the U.S. list and trying collectively to keep levies from being imposed at all.
The message they’re sending?
“This is nuts,” said David French, senior vice president for government relations at the National Retail Federation, which hosted a recent meeting of the coalition.
Trump’s surprise request for an additional $100 billion in tariffs on Chinese goods April 5, two weeks after proposing $50 billion, was “the alarm-bell that woke up every sector of the U.S. economy,” said Hun Quach, vice president of international trade for the Retail Industry Leaders Association.
‘Here We Go Again’
The next day, a meeting of the coalition at the NRF in Washington started with “Here we go again,” said French, referring to being buffeted by the second, unexpected round of proposed tariffs. Participants shared information and technical analysis and coordinated group outreach efforts, he said.
The coalition consists of more than 40 trade organizations, including the U.S. Chamber of Commerce. The different industries have come together to argue that the tariffs are the wrong approach, said Jose Castaneda, spokesman for the Information Technology Industry Council, which represents companies including Amazon, Google, Facebook and IBM.
The coalition sent a joint letter to Trump on March 18 opposing the tariffs before they were announced and followed up with the April 6 meeting at the NRF.
“Tariffs become trade wars, and trade wars have no winners,” said Steve Lamar, executive vice president of the American Apparel & Footwear Association, in an interview.
Latest Battle
The fight is just the latest battle bringing companies to lobby Washington since Trump became president. Between the corporate efforts against the proposed border-adjusted tax in 2017, renegotiation of NAFTA and the new tariffs, Lamar said companies that may have only made one trip to D.C. in the past 10 years have now visited 10 times in the last 15 months. New companies and industries are also entering the fray, he said.
“The existential threats, in general, that have been moving their way through Washington have really gotten a lot more people to focus on Washington as a place they have to pay attention to,” Lamar said.
A total of 34 clients registered lobbyists on issues related to NAFTA since the beginning of 2017, compared with none in 2016 — before Trump took office — according to filings with Congress. Lobbying reports mentioning NAFTA increased from 26 in the fourth quarter of 2016 to 427 in the same period last year.
On trade as a general issue, registrations increased by 133 percent from 2016 to 2017, and the number of lobbying reports were up by almost 20 percent in the fourth quarter last year compared with the same period a year earlier.
Trump Unpredictable
One of the challenges for U.S. companies and trade groups is that they’ve never experienced a president as unpredictable as Trump, who doesn’t always follow normal protocol, said Lee Drutman, a senior fellow at New America, a Washington think tank, who has written about lobbying.
Trump "seems to change his mind all the time and only listen to a handful of people right around him,” Drutman said. “So it makes lobbying more difficult.”
It’s still early stages for the coalition, which is considering the next steps its members might take together and individually, Castaneda said. They’re reviewing the more than 1,300 products on the list for proposed tariffs and plan to argue for exclusions during a formal comment period that ends May 11.
Groups are also meeting with the office of the U.S. Trade Representative and the National Economic Council in the White House as well as Speaker of the House Paul Ryan, Representative Kevin Brady and members of the Ways and Means and Finance committees on Capitol Hill, said the NRF’s French.
China’s Retaliation
The industry groups are warning that China’s retaliation with levies on products will ultimately be passed along to shoppers as price increases. That would hurt the U.S. economy, cost jobs and erase benefits from the tax overhaul last year, the groups said.
“The administration is rightly focused on restoring equity and fairness in our trade relationship with China,” Myron Brilliant, executive vice president and head of International Affairs at the U.S. Chamber, said in a statement. “However, imposing taxes on products used daily by American consumers and job creators is not the way to achieve those ends.”
The approach is consistent with the campaign the NRF and other groups waged successfully last year to keep a proposed “border-adjusted tax” out of the tax overhaul. The opponents said the BAT would hurt their businesses while increasing prices for U.S. consumers, and their campaign included a parody-style TV ad.
“That’s the type of messaging we thought would resonate the most,” ITIC’s Castaneda said.
Emerge Unscathed
Even industries whose products were largely left off the list are concerned they won’t emerge unscathed, because the tariffs are so far-reaching they’ll impact the entire global supply chain that retailers and other industries rely on to produce and sell goods, AAFA’s Lamar said.
For example, although apparel and footwear products weren’t on the initial list of Chinese items to be subject to the tariffs, in retaliation China slapped higher duties on cotton, which it imports from the U.S. to be processed and manufactured.
“Even though the cotton shirt might not be on the target list the U.S. proposed so far, the cotton shirt is itself made with cotton exports, and that’s on the list that the Chinese put out,” Lamar said.
The United States Council for International Business, which is participating in the coalition, won’t advocate on behalf of individual members, which include Apple Inc., General Electric Inc. and Microsoft Corp., because their interests differ, spokesman Jonathan Huneke said. But the council will make the case that no one wins in a tit-for-tat trade war, he said.
Trade War
Larry Kudlow, Trump’s top economic adviser, has said he doesn’t think there will be a trade war as China and the U.S. try to negotiate an agreement that forestalls the tariffs. But Trump has said there could be some short-term “pain.”
“We certainly hope they’re going to negotiate their way out of this, but I wouldn’t put it past either party to go to the mat and impose the tariffs and see what happens next,” Huneke said.
— With assistance from Bill Allison
