Wed, Oct 10, 2018 - Page 10 News List

Small US firms plead for same relief as Apple

Bloomberg

Paul Shekoski thinks he presented a good case why the weather stations and other products his company makes in China should be spared from US President Donald Trump’s tariffs. As a small-scale employer, he is not optimistic he will win.

Shekoski, chief executive of the Primex Family of Companies in Lake Geneva, Wisconsin, is among the hundreds of US companies filing requests by yesterday’s deadline for exclusions from the initial round of tariffs imposed on Chinese imports.

While Shekoski has testified against the duties, asked elected representatives for help and filed for exclusions on almost 80 products, he puts the odds of getting them approved at less than 10 percent.

“It’s swimming upstream,” said Shekoski, whose business employs about 200 people. “At the end of the day, we’re fairly small and not very visible, so we’re kind of caught in the process.”

Companies including Apple Inc successfully avoided having tariffs imposed on products, and General Motors Co and HP Inc are among those seeking duty exclusions for goods such as the China-built Buick Envision and toner cartridges.

However, some smaller businesses such as Primex say they fear they lack the clout and resources to prevail, and they cannot afford to quickly switch suppliers.

Shekoski said his supply chain was built over three decades and the duties are enough to wipe out his annual profit, which would threaten the 75-year-old business.

Ohio-based Weastec Inc has filed more than 60 requests for exclusions from tariffs on switches and other automotive parts it imports from a sister company in China for warehousing and just-in-time delivery to Honda and other automakers in the US, said Doug Ernst, senior manager of operations at the firm, which employs about 190.

The parts are made with unique tooling and manufacturing processes that only exist in China and cannot be produced in a cost-effective manner in the US or any other country, Ernst said.

The initial round of duties would add U$635,000 in costs in the coming year, and the total with the third tranche of duties would be U$4.1 million, he said.

“I hope I’m wrong, but I would think that the bigger players would get more consideration than folks like us would,’’ Ernst said. “Money talks and the big businesses get more press and economically they’re more, I guess, critical to the overall country.’’

Each request for exclusion is judged by career trade experts on the same criteria, regardless of the requester, the US Office of Trade Representative (USTR) said in a statement.

Decisions are based on whether a product is available only from China, whether duties “would cause severe economic harm” to the company or US interests, and whether the item is strategically important.

The Trump administration has imposed three rounds of tariffs, starting with 25 percent on U$34 billion in goods on July 6 and on U$16 billion worth of products on Aug. 23.

A 10 percent duty on U$200 billion took effect last month and is set to increase to 25 percent on Jan. 1, while Trump has threatened even more duties on top of that.

The White House spared some categories of products, including those that cover the Apple Watch and AirPods, as well as fitness trackers from Fitbit Inc.

Exclusions are the final chance for companies to avoid the duties. Besides yesterday’s filing deadline for the initial tranche of tariffs, companies must file requests for exclusions from the U$16 billion list by Dec. 18.

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