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MEMA Testifies Before USTR on Impact of China Tariffs

Date: June 21, 2019

The Motor & Equipment Manufacturers Association (MEMA) testified June 21 before the Office of the United States Trade Representative (USTR) in Washington D.C. regarding the Trump Administration’s proposal to implement Section 301 tariffs on China.

The hearing began on June 17 and will end on June 25. MEMA is one of more than 300 representatives speaking on behalf of a wide range of companies and organizations. MEMA requested to testify because of concerns over President Donald Trump’s decision last month to impose 25 percent tariffs on $300 billion worth of Chinese goods. The president further ordered the USTR increase tariffs from 10 percent to 25 percent on $200 billion in Chinese imports. In total, the Trump administration could implement 25 percent tariffs on $550 billion worth of goods.

“Make no mistake about it – these proposed tariffs are a tax on the American public,” said MEMA Senior Vice President of Government Affairs Ann Wilson during the verbal testimony.

“We have been contacted by Tier 2 and Tier 3 suppliers,” she added, “often the major employer in small communities across the country, with concerns about the large-scale 25 percent tariffs moving profitable companies into the red, precipitating bankruptcies and even posing existential threats.”

MEMA has repeatedly argued that China serves as an important resource for materials and parts needed to build components in the United States. “Forcing manufacturers to make low technology products domestically would have significant unforeseen consequences on U.S. global competitiveness,” Wilson mentioned in her written testimony. “These negative consequences impact companies of all sizes but are particularly burdensome on small- and medium-sized businesses.”

While MEMA opposes the wide application of tariffs, it does support the Trump administration’s efforts to end China’s practice of intellectual property theft, forced technology transfer, and other well-known market distortions. MEMA supports alternatives to imposing tariffs to achieve the administration’s goals, including:

“• Elimination of equity restrictions and local partner or technology transfer requirements in the motor vehicle sector;

• Elimination of cybersecurity-related policies that limit data flows and prevent the successful and secure data flows into and out of China, which will limit exposure to hacking or surveillance; and,

• More robust measures to combat counterfeiting, including higher valuation of seized counterfeits based on the value of the genuine branded product.”

MEMA argues that the USTR should remove some of the products listed in Tranche 4, including those that were originally exempted in Tranches 1 and 2. In addition, the organization urges that the USTR reverse tariffs for many of the tariff lines under Tranche 3.

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