US cos wary of Trump's fresh tariff plan under 301

New Delhi: From Delta to Dell, Caterpillar, Ford and Jockey, American companies have opposed fresh tariff under Section 301, where the US Trade Representative has launched two investigations. They have argued that fresh duties will make it harder for them to compete and increase cost for consumers.

There are others, such as Cheese Importers Association of America, that have asked the administration not to impose fresh 301 duties on cheese or other dairy products from EU and Switzerland and warned that American consumers will have to pay more. Cigars Association of American has also sought an exclusion and so have some of the sea food businesses that rely on imports.

The responses come amid higher tariffs stoking inflation in the US, which rose to 3.3% in March. While Trump has been forced to withdraw reciprocal tariffs, USTR is looking at other ways to levy duties on imports. India is among countries facing section 301 probes related to structural capacity and failure to act against forced labour, charges govt has dismissed.

"The current administration is well-positioned to implement innovative trade policies that can increase the growth and reshoring of US manufacturing and increasing the value of US content in IT products. There are a myriad of policy tools that can be used to achieve these goals without rapidly increasing production and end-user costs or risking operational delays of key products and components," Dell said in its filing.

Some companies went on to cite higher cost of production as a key barrier. "Even if structural excess capacity is found for apparel manufacturing in the countries being investigated, such excess capacity benefits the American consumer by keeping apparel costs low and supporting US job creation in warehousing, retail, and management positions. Attempts to mass reshore apparel manufacturing jobs through section 301 tariffs is not a realistic outcome and will only create inflationary pressures on the economy and hurt job growth in higher paying jobs," said innerwear maker Jockey International.

Others such as the US Chamber of Commerce said that there is a need to make a distinction between China and other trading partners. "The metrics provided in the notice (trade balances and capacity utilisation) do not provide a reasonable analytical basis for imposing tariffs or other trade restrictions under section 301," it argued.

Besides, industry bodies representing toy manufacturers and solar energy players, have petitioned the Trump administration against tariffs when imports are already subject to section 232 tariffs. Companies, such as Cummins, have also asked US authorities against "tariff stacking".

"The April 2 modifications to the Section 232 tariffs on steel, aluminium and copper apply duties to the full value of an import rather than solely to the metal content, increasing costs for many steel-using manufacturers and industrial equipment producers. Stacking additional Section 301 tariffs on these same products would further exacerbate cost pressures, disrupt supply chains, undermine US export competitiveness and fail to address the specific practices under Section 301 is intended to address," added Caterpillar, the construction and mining equipment major.

While complaining about supply chains of Japanese and Korean rivals, Ford has made a case for protecting its import sources, from Mexico and Thailand, and also suggested a system of credits that help it offset section 232 tariff against any duties levied under Section 301.

"...tariffs would not remedy excess capacity or overproduction, but would instead exacerbate existing shortages, undermine aviation safety and supply-chain resilience, jeopardise US aviation jobs, disrupt the ability of US airlines to meet govt service and mission requirements, and weaken US competitiveness in a globally critical industry," Delta Air Lines said while urging USTR not to apply tariffs to civil aircraft, engines, or aircraft parts.

Indian entities ranging from Reliance Industries to Adani Group's Mundra Solar, Indian Solar Manufacturers Association, Acma, Confederation of Indian Textiles Industries and Texprocil have said that the Constitution prohibits all forms of forced labour and laws have specific provisions too.

"India does not maintain structural excess capacity in this sector. There are no acts, policies, or practices, aimed at creating or sustaining such excess capacity," Indian Pharmaceutical Alliance said.

"The USTR should consider the broader strategic partnership between the US and India. India serves as a critical partner in US efforts to de-risk and diversify global supply chains away from non-market economies," CII said in one of its submissions.
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