From Seafood to Mattresses: How the U.S. Tariffs Affect Businesses

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The latest U.S. tariffs proposed on Chinese goods would put duties on dozens of varieties of seafood, including tuna.

The latest U.S. tariffs proposed on Chinese goods would put duties on dozens of varieties of seafood, including tuna.


Photo:

Wei Peiquan/Zuma Press

The White House on Tuesday said it was weighing imposing tariffs on a further $200 billion in Chinese products, a move that could expose $450 billion of Chinese goods to U.S. import taxes—or nearly all the $505 billion in exports China sends to the U.S.

Here is a look at how U.S. businesses might be affected by the proposed levies:

Seafood

The latest U.S. tariffs proposed on Chinese goods would put duties on dozens of varieties of seafood including tilapia, salmon, cod and tuna. Some lawmakers and seafood groups had also sought the inclusion of Chinese crawfish, shrimp and other seafood on a list of products targeted for tariffs, saying Chinese companies have for years dumped substandard products onto the U.S. market to the detriment of local industries and U.S. consumers.

The U.S. imported $2.7 billion worth of fish and seafood from China last year, according to federal data. Food manufacturers could have to pay more for many varieties commonly sold in U.S. supermarkets and restaurants, and consumers might see increased prices as well, said

John Connelly,

president of the National Fisheries Institute trade group. Mr. Connelly said that U.S. seafood producers are also contending with China’s retaliatory tariffs on Maine lobsters, squid from New Jersey and California, and cod, pollock, and salmon from Alaska, raising concerns about lost sales.

Chemicals

U.S. chemicals makers say the Trump administration’s latest round of proposed tariffs could make raw materials more expensive while threatening access to a key export market. China has emerged as one of the top global suppliers of basic chemicals, and the U.S. on Tuesday outlined potential tariffs on a wide swath of Chinese-made products, from pesticides to photographic developer. Those tariffs will increase costs for U.S. firms that rely on Chinese chemicals imports to create more complex products in the U.S., said

Ed Brzytwa,

international trade director for the American Chemistry Council. That could mean higher costs for farmers and consumers. The trade group estimates about $9 billion in chemicals-based exports are already exposed to retaliatory tariffs outlined this spring by the European Union, China, Canada, and other countries.

Switches and routers

The new list of proposed tariffs targets switches and routers, finished products that are used to set up wired and wireless networks. Those products are key infrastructure in new technology, said Cinnamon Rogers, senior vice president of government affairs at the Telecommunications Industry Association, an industry trade group. The tariffs put the U.S. at a competitive disadvantage to China, Ms. Rogers said.

Cisco Systems
Inc.,

among the biggest makers of switching and routing gear, didn’t respond to questions about the impact of the potential tariffs.

Cars and car parts

The latest round of proposed tariffs on Chinese-made goods targets dozens of auto products, including everything from struts and parts for gearboxes to brake pads and windshield glass. A 10% levy, if imposed, would likely inflate costs for both manufacturers purchasing these parts to put in factory-assembled vehicles, as well as car owners who need replacement parts, such as windshield wiper blades. “Escalating this back-and-forth with a major trade partner will not resolve the issue,” said the Motor & Equipment Manufacturers Association, a trade group for auto parts suppliers.

The new list of proposed tariffs targets handbags, but the companies with the biggest exposure don’t include big U.S. brands, which produce mainly leather handbags.

The new list of proposed tariffs targets handbags, but the companies with the biggest exposure don’t include big U.S. brands, which produce mainly leather handbags.


Photo:

Richard B. Levine/Zuma Press
Handbags

The new list of proposed tariffs targets handbags, but the companies with the biggest exposure don’t include big U.S. brands such as Coach, Kate Spade and Michael Kors. Those brands produce mainly leather handbags, and leather bags account for only about 27% of U.S. imports of Chinese-made handbags, according to global trade data tracker Panjiva Inc.

Coach and Kate Spade, both owned by

Tapestry
Inc.,

have been moving production away from China amid rising labor costs.

The larger chunk of Chinese handbag imports are made of plastic. These non-leather bags account for 54% of all handbag imports, or $540 million worth of products, according to Panjiva. Those bags are largely sold in mass merchants under brands that aren’t household names.

Top of the List

The U.S. on Tuesday released a new list of Chinese exports facing potential 10% ​tariffs. Here are the top 20 U.S. imports from China on that list, by 2017 value.

Machinery/electrical

Furniture

3.87

Transportation

Other

11.64

4. Metal

furniture

2. Data processing

circuit boards

3.15

$23.02B

4.48

1. Phone apparatus

5. Miscellaneous

circuit board

equipment

3.01

3. Processing

units

6. Wooden

furniture

2.25

2.28

1.78

2.37

2.69

10. Chairs

for children

9. Vehicle

wheels

1.63

13. Vinyl

flooring

8. Electric

converters

7. Miscellaneous

seats

1.94

15. Upholstered

chairs

1.64

1.81

1.46

11. Electric

lamps

14. Brake

parts

1.63

1.47

1.56

12. Vacuums

20. Motor vehicle

accessories

16. Electrical

panels

1.48

19. Iron and

steel goods

17. Travel and

sport bags

18. Electrical

conductors

Machinery/electrical

Furniture

Transportation

11.64

3.87

Other

4. Metal

furniture

2. Data processing

circuit boards

$23.02B

3.15

4.48

3. Processing

units

3.01

1. Phone apparatus

5. Miscellaneous

circuit board

equipment

6. Wooden

furniture

2.28

1.78

2.25

2.37

2.69

9. Vehicle

wheels

13. Vinyl

flooring

10. Chairs

for children

8. Electric

converters

1.64

7. Miscellaneous

seats

1.94

1.63

14. Brake

parts

1.81

1.47

15. Upholstered

chairs

11. Electric

lamps

12. Vacuums

1.63

19. Iron and

steel goods

1.56

1.48

1.46

16. Electrical

panels

17. Travel and

sport bags

18. Electrical

conductors

20. Motor vehicle

accessories

Machinery/electrical

Furniture

3.15

Transportation

11.64

3.87

Other

4. Metal

furniture

5. Miscellaneous

circuit board

equipment

2. Data processing

circuit boards

2.28

$23.02B

4.48

2.25

3. Processing

units

3.01

9. Vehicle

wheels

1. Phone apparatus

6. Wooden

furniture

10. Chairs

for children

1.64

1.81

1.78

14. Brake

parts

1.63

12. Vacuums

2.69

2.37

13. Vinyl

flooring

15. Upholstered

chairs

1.47

1.56

8. Electric

converters

7. Miscellaneous

seats

19. Iron and

steel goods

17. Travel and

sport bags

1.46

1.63

1.94

20. Motor vehicle

accessories

1.48

16. Electrical

panels

11. Electric

lamps

18. Electrical

conductors

Machinery/electrical

Furniture

4.48

Transportation

3. Processing

units

Other

$23.02B

1. Phone apparatus

3.15

11.64

2. Data processing

circuit boards

5. Miscellaneous

circuit board

equipment

3.87

3.01

4. Metal

furniture

6. Wooden

furniture

2.69

7. Miscellaneous

seats

2.37

2.28

8. Electric

converters

2.25

9. Vehicle

wheels

1.94

10. Chairs

for children

1.81

11. Electric

lamps

1.78

12. Vacuums

13. Vinyl

flooring

1.64

1.63

14. Brake

parts

1.63

15. Upholstered

chairs

16. Electrical

panels

1.56

1.48

17. Travel and

sport bags

18. Electrical

conductors

1.47

1.46

19. Iron and

steel goods

20. Motor vehicle

accessories

Note: The descriptions of items on the tariff list have been simplified, and the corresponding values​ don’t include all items within those descriptions.

Sources: trademap.org; International Trade Centre

Semiconductors

Semiconductors and related products were among the tech goods hardest hit by last week’s levies on $34 billion of Chinese exports of machinery, components and electronics.

Those duties targeted China’s young chip industry, a segment Beijing wants to emerge as a global power. But the tariffs also sting some U.S. chip makers that participate in the complex supply chain in which manufacturing often starts in the U.S., before products are shipped to China for assembly, testing and packaging, and then shipped back to the U.S.

Mattresses

Chinese-made mattresses would be subject to tariffs, according the latest list of proposed levies. The U.S. imported $1 billion worth of mattresses in the 12 months ended May 31, and about $850 million of that was imported from China, according to Panjiva.

But many of the big mattress brands are produced domestically.

Tempur Sealy International
Inc.,

the biggest U.S. manufacturer, says the mattresses it sells in the U.S. are made in the U.S. The company has more than 20 manufacturing sites in North America.

Even upstart online sellers such as Casper and Leesa, which have been challenging incumbents and traditional stores, tout that their products are made in the U.S.

Rare-earth minerals

The latest proposed tariffs include scandium and yttrium, two rare-earth minerals that defense companies source almost entirely from China. Pentagon chief weapons buyer Ellen Lord has previously called the U.S. reliance on China’s rare-earth supplies “quite alarming.” Industry officials expect defense firms to lobby for an exemption to continue those purchases tariff-free.

A bigger concern for the industry is that China may seek to restrict supplies, and delay regulatory approval for deals. China has also previously indicated it could levy tariffs on some business jets.

Mobile phones

The U.S. tariffs—both in effect and proposed—include some mobile-phone components, such as semiconductors and circuit boards. Mobile phones themselves, though, aren’t targeted. Finished devices made in China such as iPhones, for example, aren’t among the products currently facing U.S. tariffs. American consumers might not completely escape the higher costs. Some parts that could be used to fix mobile phones are earmarked for the new duties, which might affect the repair market in the U.S.

China’s 25% tax on U.S. soybeans set in last week, fueling concern that tariffs would shut U.S. farmers out of the world’s biggest soybean market.

China’s 25% tax on U.S. soybeans set in last week, fueling concern that tariffs would shut U.S. farmers out of the world’s biggest soybean market.


Photo:

daniel acker/Reuters
Soybeans

The trade fight is exacting a heavy toll on U.S. soybean farmers. China’s 25% tax on U.S. soybeans set in last week, fueling concern that tariffs would shut American farmers out of the world’s biggest soybean market. Since the beginning of June, prices for the oilseeds have fallen 19% to the lowest levels in a decade. That is sapping incomes for U.S. farmers already trudging through a multiyear slump in the agricultural economy and prompted concerns that U.S. soybean exports to China could drop by at least half, shrinking U.S. production by as much as 15%.

In a tweet on Wednesday, President Trump said he is “always thinking about our farmers,” promising to fight “for a level playing field.” Some farmers are giving President Trump the benefit of the doubt, saying they are prepared to absorb some economic losses if the U.S. agricultural sector—or the economy as a whole—emerges stronger in the long run.

Device parts

The growing list of tech products targeted for levies—some already tariffed, others proposed—includes many of the mundane components in modern gadgets. These items include disk drives used in servers and storage devices, as well as printer and copier components—parts most people generally wouldn’t buy on their own. But these device parts go into making products such as remote controls and automated-teller machines. Tariffs on some items, such as printed-circuit assemblies, could boost the cost of consumer-electronics repairs. The list of tariffs proposed July 10 adds to the collection of parts that would be taxed, including such components as television antennas and some parts for TV receivers.

Dairy

The new list of proposed U.S. tariffs on Chinese goods doesn’t directly hit dairy producers, according to trade groups, but milk futures and cheese prices have fallen since Mexico and China imposed retaliatory tariffs on U.S. goods in the past month. Mexico is the largest importer of U.S. cheese, and China is the top destination for U.S. whey byproducts. Concerns are also growing that China could retaliate with a fresh set of tariffs that include key dairy exports that escaped the previous round of duties imposed last week, including lactose and infant formula, said

Nate Donnay,

director of Dairy Market Insight for INTL FCStone Financial.

The Trump administration announced tariffs on imported solar cells and panels in January.

The Trump administration announced tariffs on imported solar cells and panels in January.


Photo:

rick wilking/Reuters
Solar Panels

The Trump administration announced tariffs on imported solar cells and panels in January, levies mainly affecting Chinese manufacturers. Companies have cited the tariffs, which start at 30% in the first year and decline to 15% in the fourth, as a factor in rising prices for U.S. solar installations and slower solar growth. But the tariffs do appear to be achieving a main objective: boosting solar manufacturing in the U.S.

An analysis by GTM Research showed prices for some utility-scale systems rose from 98 cents a watt in the first half of 2017 to $1.03 a watt in the second half. Meanwhile, some companies are pursuing investment in U.S. solar manufacturing, most recently the North American subsidiary of South Korea’s

LG Electronics
Inc.,

which announced last month that it was planning a new solar panel assembly plant in Alabama.

Meat

Retaliatory tariffs implemented by China and Mexico since this spring are cutting deeply into the U.S. meat industry, with pork so far taking the biggest hit. U.S. pork producers now face a 62% tariff on exports to China—which last year bought nearly a fifth of all U.S. pork sold abroad—while Mexico’s retaliatory tariff on U.S. pork climbed to 20% this month. The National Pork Producers Council estimates four of every 10 pounds of U.S. pork sold overseas now faces tariffs, spelling “financial crisis” for U.S. hog farmers. Through May, they already faced losses of $18 per pig, Iowa State University estimates, and prices have fallen further since.

Sneakers weren’t listed among the latest round of proposed tariffs.

Sneakers weren’t listed among the latest round of proposed tariffs.


Photo:

don emmert/Agence France-Presse/Getty Images
Sneakers

The footwear industry has again dodged the escalating trade fight between the U.S. and China, as sneakers weren’t listed among the latest round of proposed tariffs. Still, the expanded list of duties “will hurt our economy and take away disposable income from consumers who could buy more shoes,” said

Matt Priest,

chief executive of the Footwear Distributors and Retailers of America, the industry trade association. The vast majority of footwear sold in the U.S. is imported, and roughly 70% of imports come from China, according to the association. “While footwear was not on this new round of tariffs,” Mr. Priest continued in his statement, “the American footwear industry is very familiar with the negative impact tariffs have on consumer goods, having paid $1.5 billion in duties from China in 2017 alone.”

Home Improvement

Plywood, carpets and tools are on the latest list of proposed tariffs. Large U.S. home improvement retailers don’t import much of the lumber and carpet products they sell, said executives familiar with the industry. Other items like grills, patio furniture, tools and hardware are often imported, they said. The U.S. imported about $1.7 billion in tools and metal products from China, or about 40% of total tool imports in the 12 months ending with May, according to data from Panjiva.

After the latest tariff list was released, retailers scrambled to assess their ability to raise prices or absorb the cost by reducing margins, said one executive at a large retailer.

“If prices are passed through we’ll do our best to find offsets and minimize the impact to consumers,” said a spokesman for Home Depot.

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