U.S. MARKETERS COULD FEEL STING OF CHINA TARIFFS

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Marketers and retailers reacted with relief, disappointment and everything in between last week after U.S. Trade Representative Mickey Kantor proposed retaliatory 100% tariffs against Chinese-made products.

The tariffs are intended to compel China to enforce anti-piracy laws and reduce intellectual theft, and would take effect Feb. 26 unless a new U.S.-China trade pact is reached. The tariffs would double the prices of the $1 billion worth of Chinese-made cellular phones, bicycles, fishing rods, running shoes, kitchenware and other products exported to the U.S.

But the U.S.' targets, pruned from a laundry list worth $2.8 billion, left plenty of breathing room for the largest, most potentially vulnerable industries.

The showdown follows a reduction of tariffs against China and other most-favored-nation trade partners that took effect Jan. 1. Toys were exempted from the new threats, as were most electronic goods. China makes more than 40% of all toys sold in the U.S.

"Our members have great concerns about piracy in China ... but a lot of them like the business certainty [of manufacturing there], so there's a real split personality on this issue," said Gary Shapiro, group VP of the Electronic Industries Association.

The Sporting Goods Manufacturers Association, its members themselves hit by counterfeiting in China, has reservations about the tariffs.

"With a tariff, [U.S.-based] marketers could possibly find another source outside of China for manufacturing, but they might run into a shortage or a price change, which hurts a segment of the population," said Tom Cove, director of government relations.

Most marketers said they won't address any price advantages against Chinese-made goods in ads.

China retaliated against the proposed tariffs last week with a comparable list of its own, including U.S.-made film, computer switchboards, cigarettes and alcoholic beverages. U.S. and Chinese officials are scheduled to meet today in Beijing to discuss a compromise.

Raymond Serafin contributed to this story.

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