According to a Reuters report on June 14, the "Americans for Free Trade," a coalition of 173 trade associations, recently sent a letter to the Office of the U.S. Trade Representative, urging the Biden administration to extend the exemption of tariffs on electric vehicles, batteries,solarand other goods imported from China to July 28. The letter emphasizes that granting more time aligns with public interest and calls for public hearings to allow stakeholders such as manufacturers, retailers, technology companies, agribusiness groups, energy companies, and transportation firms to fully express their views.

Call for Public Hearings

The "American Free Trade Association" pointed out that public hearings were held before the U.S. government imposed additional tariffs on China in 2017 and 2018, and therefore the Office of the U.S. Trade Representative should hold hearings again. The organizations that jointly signed the letter include the Semiconductor Industry Association, the Information Technology Industry Council, the American Chemistry Council, the Beer Institute, the National Retail Federation, the Halloween & Costume Association, and the American Trucking Associations, among others. These groups import and sell large quantities of goods from China and employ tens of millions of Americans through extensive supply chains. As a result, they are concerned that imposing higher tariffs on these goods could have widespread effects on the U.S. economy.

The letter states that they are actively surveying member companies to gather feedback on the expected effects of the proposed tariff adjustments. However, due to the involvement of 387 product categories and submission format requirements, member companies need more time to collect and evaluate this information. As of now, the USTR has not commented on this request.

Divisions Between Support and Opposition

Meanwhile, another policy group led by the United Steelworkers and domestic manufacturing firms is advocating for stricter trade barriers on Chinese imports. The group claims that the U.S. should reinstate a long-expired legal tool enacted when China joined the World Trade Organization (WTO) in 2001 to prevent surges in Chinese imports.

Background on Further Tariff Increases on China

On May 22, the Office of the United States Trade Representative announced that, under the President's directive, it would maintain the "Section 301" tariffs imposed on China during the Trump administration and significantly increase tariffs on Chinese "targeted strategic products," including electric vehicles and their batteries, semiconductors, steel, and aluminum products. The new regulations will take effect on August 1, with a 30-day public comment period ending on June 28. The Associated Press and Reuters analyzed that Biden's move aims to demonstrate a tough stance toward China, but this strategy could trigger broader trade conflicts.

Chinas Response and Countermeasures

Regarding the U.S. decision to impose additional tariffs on Chinese goods, a spokesperson for the Chinese Embassy in the United States stated that the Chinese government will "take all necessary measures to safeguard its legitimate rights and interests." The spokesperson noted that raising tariffs will not only disrupt normal economic and trade cooperation between China and the U.S. but also significantly increase the cost of imported goods, imposing further losses on American businesses and consumers. A spokesperson for China's Ministry of Foreign Affairs also pointed out that the U.S. continues to politicize economic and trade issues, and further increasing tariffs on China is compounding mistakes. This will only substantially drive up the cost of imported goods, forcing American businesses and consumers to bear even greater losses.

Economic Impact and Prospects

According to Moodys estimates, U.S. consumers bear 92% of the cost of additional tariffs on Chinese goods, increasing annual expenses by approximately $1,300. The protectionist measures by the U.S. will further disrupt the security and stability of global production and supply chains. Against this backdrop, the appeal from 173 U.S. trade associations undoubtedly reflects the deep concerns of the American business community about potential trade conflicts and their economic impacts. Increased tariffs may not only lead to higher prices for goods in the U.S. market but also negatively affect normal trade relations between China and the U.S., ultimately harming the overall interests of the U.S. economy.