Plastics Industry Association urges caution in China tariff tiff. Here's why it's wrong

U.S. China trade war as chessIt’s become a tit-for-tat in the tariff tiff with China. On Monday, Sept. 17, President Trump announced that he would impose new tariffs on about $200 billion in Chinese goods to pressure Beijing to change its ways regarding trade practices. According to news reports, a 10% tax on Chinese imports will take effect on Sept. 24 and will rise to 25% at the end of the year. 

While many people and industry trade organizations, including the Plastics Industry Association (PLASTICS; Washington, DC), are wringing their collective hands over President Trump’s hardball tariffs on Chinese goods, I say hooray! Someone is standing up for U.S. companies at last. How many years have I been writing about China and its trade dealings with the United States? At least the last 20!

It’s about more than just unfair trade practices, such as dumping steel or other commodities. In the late 1990s, the American Mold Builders Association called on the U.S. International Trade Commission to look into the dumping of molds into this country. Under the Tariff Act of 1930, U.S. industries may petition the government for relief from imports that are sold in the United States at less than fair value or which benefit from subsidies provided through foreign government programs. Molds fell into those categories. 

There’s also the issue of intellectual property theft resulting in the counterfeiting of high-end goods such as automotive parts, fashion accessories, pharmaceuticals, medical devices and more. Who’s the bad guy in this picture? It’s certainly not President Trump! 

China promises to ratchet up its retaliatory tariffs if Trump follows through on his latest threats. “If the U.S. imposes any additional tariffs on China, we will have to take necessary countermeasures and resolutely safeguard our legitimate and legal rights and interests,” said Geng Shuang, Chinese Foreign Ministry spokesman, early Monday in anticipation of Trump’s announcement.

Not to be one-upped, Trump, in anticipation of the Chinese response, was ready: “If China takes retaliatory action against our farmers or other industries,” said Trump, “we will immediately pursue . . . tariffs on approximately $267 billion of additional imports,” as mentioned in a Wall Street Journal article (Sept. 18). 

PLASTICS released a statement today, which is pasted below, urging presidents Trump and Xi to “engage constructively to develop a long-term solution that levels the playing field for American manufacturers and workers without harming U.S. consumers and companies in the process.”

China has already hurt U.S. consumers and companies with their counterfeiting and unfair trade practices. It’s time that we had a president who has the nerve to stand up to them and play hardball. Meanwhile, PLASTICS urges the administration to end its trade war and find a different approach to addressing China’s trade offenses.          

It’s ironic that in another Wall Street Journal article, it was noted that the tariff tiff is pushing Chinese companies to take actions that will make them more competitive with the United States, such as using more automation and moving low-end product manufacturing to low-cost Asian countries such as Vietnam. That strategy sounds strangely familiar: In the 1990s, U.S. moldmakers were pushed to be more competitive with Chinese moldmakers, and many adopted high-speed machining, multi-machine work cells with a single operator and other strategies to get the upper hand against Chinese molds. 

With nearly half of U.S. imports from China subject to tariffs, PLASTICS fears that many products important to the plastics industry might hurt the industry’s future growth. Part of what got the United States into this mess was the huge desire of U.S. manufacturers to race to China to build manufacturing plants, put in all the latest manufacturing technology and show the Chinese how to make everything we make to serve the burgeoning Chinese consumer market. That plan backfired in some major ways, including hundreds of millions of dollars lost to China’s unfair and often illegal manufacturing and trade practices.

President Trump’s decision to play hardball with the Chinese might inflict some pain on consumer prices, but in the long run, perhaps, consumers will realize the value in forcing the hand of a country that has paid little attention to copyright and patent laws, and shipped millions of dollars in counterfeit goods and parts into the United States to the detriment of the U.S. consumer.

I say let’s wait and see who blinks first. At this point in China’s economic life, they have more to lose than we do.

Statement from the Plastics Industry Association:

“The U.S. and China must meet at the highest levels of leadership to build a comprehensive new trading relationship that isn’t solely built on retaliatory tariffs. Businesses can’t invest without certainty and with these tariffs, the Administration is wagering with the U.S. economy and the livelihoods of millions of Americans. In this case nearly half of U.S. imports from China will be subject to tariffs. Many of these items are important to the U.S. plastics industry, which employs nearly one million workers and generates more than $400 billion annually for the economy. Continuing along this path and imposing new tariffs puts our industry’s future growth in jeopardy.

We ask President Trump and President Xi to engage constructively to develop a long-term solution that levels the playing field for American manufacturers and workers without harming U.S. consumers and companies in the process. The Administration should end its trade war and find a different approach to addressing China’s trade offenses.”

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