US Businesses to Make Their Case Against China Tariffs

The U.S. trade representative’s office will hold three days of hearings from Tuesday on the proposed tariffs. The hearings will not only feature businesses facing supply-chain disruptions because of the tariffs proposed for $50 billion of Chinese imports, but will also feature exporters—from farmers to manufacturers—which are likely to suffer from retaliatory tariffs on U.S. exports threatened by China.

The hearings are part of a busy week on trade for the Trump administration. The team of U.S. trade representative Robert Lighthizer is also trying to finish negotiating with Mexico and Canada over a rewrite of the North American Free Trade Agreement. Congressional leadership has set a deadline of May 17 to be notified of a deal that would be eligible for a vote this year, an administration goal.

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The U.S. business community has often been skeptical of the Trump administration’s trade initiatives, particularly its threats of tariffs, which are being contemplated under Section 301 of the Trade Act of 1974. Executives from big companies, from electronics retailer Best Buy Co. to Swedish appliance maker Electrolux AB, have asked to testify at the hearings and are expected to raise complaints.

Some manufacturers support the tariffs, and are even calling on the Trump administration to add more to the list of Chinese imports that would face duties. Supporters of the tariffs include manufacturers facing barriers to selling goods in the Chinese market or higher steel costs because of separate tariffs on the metal.

The Trump administration argues that the threat of tariffs is necessary to bring China to the negotiating table over what businesses generally agree are Chinese economic practices in need of reform. But business groups worry the administration may accept a pledge from Beijing to buy U.S. goods without addressing worrisome Chinese practices, such as erecting barriers to China’s domestic market or forcing U.S. businesses to transfer technology as a condition of entering into partnerships in China.

“The administration has attempted to assure Americans that it has a strategy to resolve trade frictions with China without excessive collateral damage to U.S. economic interests,” the U.S. Chamber of Commerce said in a written submission ahead of the hearings. “However, these assurances lack the coherence that would provide comfort to those businesses, farms and workers whose livelihoods are being put at risk.”

General Electric is representative of the sort of discontent the Trump administration will hear from the corporate sector. Company officials say that, should the U.S. follow through on the threats to charges tariffs on Chinese imports, GE will face potential tariffs on parts the company’s imports into the U.S. to manufacture products from aircraft engines to medical machinery.

GE officials plan to raise specific examples of the challenges. One instance: magnetic-resonance-imaging machines that GE makes in Wisconsin will suffer if tariffs are placed on parts imported from China. High standards for quality, and the need to keep parts sterile, mean it would take “well over a year” to find new suppliers of the MRI parts outside China, according to Karan Bhatia, GE’s president for government affairs and policy.

GE is arguing that companies with wholly owned units in China should be exempt from paying tariffs when they bring intermediate goods to the U.S. to make into finished products at American assembly plants.

Even smaller companies are grappling with challenges related to tariffs on Chinese imports. Entrepreneur Mary Buchzeiger found recently that her Auburn Hills, Mich., business was in trouble because it imports hinges for Fiat Chrysler’s Jeep Wrangler models. Automobile hinges are on the tariff list for the $50 billion trade case, which blames China for intellectual-property violations.

“We’re just a tiny little piece of the supply chain,” said Ms. Buchzeiger, adding that the collapse of her business would cause delays that will, in turn, “cause Chrysler not to make those hot-selling vehicles for a hot minute.”

Executives at Emerson Electric Co., a St. Louis-based conglomerate, have offered support for targeted tariffs. Emerson’s InSinkErator division, which manufacturers garbage disposals at two Wisconsin factories, is asking for those devices to be added to the 301 tariff list. Emerson says the garbage disposals it exports to China face tariffs, while those made in China don’t face U.S. tariffs.

However, Emerson faces higher steel costs because of new tariffs on that metal under another trade case filed by the Trump administration. “That could cause problems for all of us in the industrial world,” Emerson Chief Executive David Farr said in a May 1 call with analysts. “Right now, it’s under control, but it’s a wild card that I worry about.”

Circuit Interruption Technology Inc., a small, Minnesota maker of electrical components for products including dishwashers and remote controls, warned it may lose half its business and lay off at least half its 25 employees.

“Essentially if the tariff passes it will reduce U.S. employment while bolstering China and other countries’ employment base,” Rick Hampton, CIT’s chairman, wrote in a letter to Mr. Lighthizer’s office.

Write to Andrew Tangel at Andrew.Tangel@wsj.com and William Mauldin at william.mauldin@wsj.com

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