China Tariffs Background

The issue

Beginning in the summer of 2018, former President Donald Trump imposed multiple rounds of tariffs ranging from 10 percent to 25 percent on more than $500 billion in Chinese imports under Section 301 of the U.S. Trade Act of 1974, saying they were invoked because of China’s unfair trade practices including violation of intellectual property rights and forced technology transfers. China responded at each step with retaliatory tariffs on U.S. exports. The tariffs have remained in place under the Biden administration. NRF and other business groups have filed a brief in a lawsuit against the tariffs, saying they “have had a significant adverse impact on the U.S. economy.”

Following a 2019 meeting between Trump and Chinese President Xi Jinping and ongoing talks between trade negotiators for both countries, a “Phase One” trade deal was signed in January 2020 and took effect on February 14, 2020. The deal reduced a round of tariffs that took effect in the fall of 2019 and eliminated a round that had yet to go into effect but kept earlier tariffs in place.

NRF President Matthew Shay was at the White House with Trump and Chinese Vice Premier Liu He as they signed the agreement and welcomed the move, but said a Phase Two deal to end the tariffs “can’t come soon enough.”

“Tariffs … result in higher costs for American families and slow the U.S. economy.”

NRF Senior Vice President for Government Relations David French

Why it matters to retailers

Retailers rely heavily on imported merchandise to provide American families with products they need at prices they can afford, and China is perhaps retailers’ most important source of high-quality and affordable consumer products. Since tariffs are paid by American companies that import products – not by the foreign governments targeted by the tariffs – they ultimately drive up prices paid by consumers despite efforts by retailers to minimize the impact. Retailers have shifted some sourcing to other countries to avoid the tariffs, but doing so upends supply chains established over decades, and there is no other nation that can fully supply the breadth and depth of goods available from China at comparable prices. Most products affected by the tariffs are no longer made in the United States, meaning retailers cannot simply switch to U.S. suppliers. In addition to consumer merchandise, the tariffs apply to many raw materials, parts and supplies used by U.S. manufacturers, driving up the costs of domestic products and negatively impacting U.S. jobs.

Tariffs have cost Americans more than $120 billion since the trade war began, according to the Tariffs Hurt the Heartland campaign and Americans for Free Trade, a coalition of more than 150  trade associations formed by NRF to address the issue.

NRF advocates for fair tariffs

NRF has led the retail industry’s fight against the tariffs, saying they are punishing U.S. consumers, workers and businesses more than they are punishing China while doing little or nothing to create U.S jobs. NRF agrees that China and other trading partners need to live up to their trade commitments and that China has been a bad actor. But NRF strongly opposes both the tariffs imposed by the United States and the retaliatory tariffs implemented by China and believes constructive, multilateral engagement with trading partners would be a better solution.

NRF has taken an active role at each state of the trade war, repeatedly voicing concerns with the White House and Congress, testifying at hearings held by the Office of the U.S. Trade Representative and bringing together representatives of retail and other affected industries.

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