Are You Prepared for Tariffs (Part 3)

Thursday, March 29, 2007 23:14

following our previous posts (Part 1 & Part 2), it looks as if something may happen soon as the Dept of Commerce is going to make an announcement on Friday about China.

For the first time in recent history, no anonymous sources are willing to give us any details on what that announcement will be, but you can bet it will be related to a new tariff policy, or at least the need for one.
I make this ASSumption based as the government of China just lost a case (see judgment here PDF)in the U.S. Court of International Trade on a case involving the paper industry (see IHT report here)

According to the IHT report, the case

was brought by NewPage Corp., which contends that its high-gloss coated paper is facing unfair competition from China because the Chinese paper companies are getting unfair government subsidies.

The article goes on to say

This trade dispute is being followed closely by a number of other American industries — from steel to furniture — that have been battered in recent years by a flood of imports from China.

Of course, those that read our write up of the recent USTR WTO assessment (Part I, II, III, IV, V, VI, VII, & VIII), will probably be able to pick out those industries which will be second movers on this precedent.

In addition to the above announcement by commerce, you can expect to see congress take action as well. As seen in the last few months, the rhetoric is heating up, and the positions are beginning to dig in.

Unfortunately, the U.S. consumer (and thus U.S. economy) is probably going to be the one that ultimately takes the hit. Very few supply chains will be able to move quick enough to avoid whatever duties/ tariffs/ quotas are put in place (U.S. or China side), and as such, it will be the end user who pays for it.

to learn more about other bills that are being considered, I invite you to see our previous post (How U.S. Politics May Affect Your Operations in China). Many of them are punitive, and few address the underlying issues.

You can leave a response, or trackback from your own site.

3 Responses to “Are You Prepared for Tariffs (Part 3)”

  1. rbrubaker says:

    March 30th, 2007 at 10:14 am

    and so it begins…. U.S. announces tariffs on Chinese paper products

    As we are now actually working with a client on a paper product, I hope that the full details come out soon so that we can figure out just how bad it will get.

    Stay tuned for more as members of congress prepare to seize upon this opportunity to gain votes for their own legislative… gotta strike while the iron is hot!

  2. Chris Corkery says:

    March 31st, 2007 at 10:52 am

    Hey Rich…if you want to figure out the next industries to get hit with a duty, just follow the ex-administration officials. The NewPage suit significantly happened within a week of John Snow leaving Treasury to become the Chairman of Cerberus Capitol, a private equity firm that happens to own NewPage. The Bush administration is certainly trying to help their friends here. Since Chinese imports are a mere 5% of the U.S. market and the suit was successfully brought against China, Indonesia and S. Korea (only China had the duty levied), Chinese coated paper wouldn’t seem to be the most likely place to start with duties. I wonder where Alberto Gonzalez will end up.

  3. rbrubaker says:

    April 2nd, 2007 at 3:08 am

    Chris,

    That is a very interesting theory, and I guess we now just need to track the others who have left, identify their companies, and place our bets in the stock market.

    R

Leave a Reply