“President Donald Trump’s tariffs are crimping supply chains for chemicals used to manufacture disinfectants and cleaning products—items that are needed to combat COVID-19 and that will be in even higher demand as the economy reopens.
In a letter sent last week to U.S. Trade Representative Robert Lighthizer, the American Chemistry Council, an industry group, highlighted dozens of items that are subject to the Trump administration’s tariffs. The list sent to Lighthizer includes various chemical building blocks used to manufacture everything from soap to detergent, and surface cleaners to bleach.”
…
“The Trump administration took action in March to exempt medical equipment—including face masks and personal protective equipment (PPE)—from its tariff regime. But those exclusions did not apply to chemicals, like isopropyl alcohol and the dozens of other items on the council’s list that are not strictly defined as medical equipment but remain crucial to many products used by health care workers.
Trump’s tariffs are also affecting companies that need to purchase disinfectant wipes and other cleaning products. “According to the CDC guidelines…to prevent the spread of COVID-19 it recommends the use of EPA approved disinfectant wipes,” wrote Daniel Marquardt, principal owner of Hilo Industries LLC, a Virginia-based construction contractor, in a tariff exemption request filed last month. Hilo, like many other businesses across the country, needs to import tubs of disinfectant wipes that will be “used by our customers, employees, and their customers to enable them to work and patronize safely to help combat and control COVID-19,” Marquardt wrote.
But the tariff exemption process is opaque and slow—far from the ideal way to relieve the stress tariffs are causing. Sens. Tom Carper (D–Del.) and Pat Toomey (R–Pa.) have urged the Trump administration to move more quickly and issue more tariff exemptions in order to speed the response to the pandemic, but White House trade adviser Peter Navarro has laughed off those concerns as “fake news.””
…
“the tariffs are making it more expensive for American businesses to make those purchases, and therefore leaving them unable to purchase as much as they might otherwise choose. Much of the Trump administration’s trade war has been a real-life lesson in what economists call a “deadweight loss”—that is, a market inefficiency that creates losses for some participants but no gains for anyone else—but rarely does it appear this obvious.”
…
“The Trump administration has delayed tariff payments for three months as a way to boost liquidy for American importers, but that’s little help over the long term. Tariffs on products that are necessary components of disinfectants will only make it more difficult to achieve the reopening that Trump desperately seeks.”
“This “phase one” deal, which the US and China reached in December, will cool trade tensions between two economic superpowers that have rattled the globe.
But it stops short of the comprehensive trade and reform agreement the Trump administration wanted when it launched its trade war with China in 2018.
Instead, China has agreed to make purchases of about $200 billion worth of US goods over a two-year period, including almost doubling its agricultural purchases to $40 billion.
China also made concessions on intellectual property, currency, and access to financial services, and it’s promised to halt the practice of forcing companies to turn over their technology, according to the United States Trade Representative.
The US, in exchange, will call off and reduce some tariffs, though taxes on $360 billion in Chinese goods will stay in place.
President Donald Trump is selling this deal as an enormous win, but the administration did not get the structural changes to China’s economy that it wanted, including tackling things like Beijing’s huge subsidies to Chinese companies. It’s still not clear if China can or will totally fulfill this obligation to buy US products, and even if it does, the guarantee is only for two years.
Given all that, this partial trade deal might not be able to make up for the pain the trade war caused.”
…
“few experts think such a phase two is possible. It’s much more likely the US settled because this is all it could get out of China — and for Trump, it was worth it to have something he could brag about ahead of the 2020 election.”
“Allegheny Technologies, which employs about 100 people, is the type of company that is especially vulnerable to Trump’s tariffs. It imports stainless steel slab from Indonesia and turns it into sheet metal, which it then sells to other manufacturers who incorporate it into car parts, kitchen appliances, and more.
Being in the middle of the supply chain is rough when you’re also in the middle of a trade war. Companies like Allegheny Technologies have to pay for Trump’s 25 percent tariffs on imported steel, and then have little choice but to pass on that cost increase to their customers. But, as Wetherbee laments, that makes it difficult for a company like his to compete against foreign manufacturers who can make and sell sheet metal without having to account for an extra 25 percent import tax.
Buying American doesn’t work, either, since U.S. steel is more expensive. One domestic supplier, Wetherbee writes, “quoted us a price for 60-inch slabs that was so high, the raw materials would have cost us more than we charge for the finished product.””
“Economists Aaron Flaaen and Justin Pierce, who describe their study as “as the first comprehensive estimates of the effect of recent tariffs on the US manufacturing sector,” argue that the data shows that any benefits from protection from foreign competition have been more than canceled out by retaliatory tariffs from trading partners and an increase in the cost of components sourced from abroad.
As a result, US manufacturing has seen job losses and higher prices for consumers.”