Since 2017, China has imposed a rule that U.S. companies must share their technology with their Chinese counterparts in order to do business in the country. The practice, according to the White House’s estimate, is costing U.S. companies $30 billion a year in intellectual property loss.
As part of a retaliation strategy to stop this unfair trade policy, the Trump administration last week proposed to increase tariffs on China imports to protect U.S. firms, particularly those with strong business ties in China.
Despite the good intentions, large U.S. retailers that have high-volume trade partnerships with Chinese suppliers and manufactures worry the plan will backfire at the cost of American consumers.
On Monday, Walmart, Ikea, Target and nine other large retail brands in the U.S. signed a petition to urge the Trump administration to halt the anti-China tariff plan.
The signers argue that benefits from the proposal will be wiped out by price surges on everyday consumer products, which eventually passes the burden to consumers.
“Investigating technology and intellectual property policies and practices is critically important to our innovative economy. Yet were this investigation to result in a broadly applied tariff remedy on imports from China, it would hurt American households with higher prices and exacerbate a U.S. tariff system that is already stacked against working families,” the petitioners, who collectively generate $1.5 trillion in annual sales, said in a letter addressed to President Donald Trump.
According to data from the American Apparel & Footwear Association (AAFA), 41 percent of clothing, 72 percent of footwear and 84 percent of travel goods sold in the U.S. are made in China. The U.S. already levies the highest tariff on consumer goods (as high as 32 percent on basic clothes and 67 percent on shoes) among all categories of products.
“Applying any additional broad-based tariff would worsen this inequity and punish American working families with higher prices on household basics like clothing, shoes, electronics and home goods. As you continue to investigate harmful technology and intellectual property practices, we ask that any remedy carefully consider the impact on consumer prices,” the petitioners wrote.
“As the industry closest to consumers, retailers know firsthand how high tariffs will hurt American families. We agree it’s time to address China’s unfair trade practices, but we can do so in a way that doesn’t destroy jobs, create uncertainty for businesses and increase every American’s cost of living,” Matthew Shay, president and CEO of the National Retail Federation (NRF), said in a statement.
Another petition signed on Sunday by organizations representing a broader mix of industries, including technology and agriculture, advised the White House to “work with like-minded partners to address common concerns with China’s trade and investment policies.”
Both the NRF and AAFA were signers on the Sunday petition.
A confrontational approach, warns Rick Helfenbein, president and CEO of AAFA, could result in retaliatory tariffs by China that target American businesses.
“Tariffs are a hidden tax on Americans—plain and simple,” he said in a statement.