Back in 2018, the Wall Street Journal published an article outlining how many corporations were able to successfully argue for exemptions to tariffs by claiming that China was an “indispensable” supplier. Chuin-Wei Yap wrote of the situation:
Forget Apple Inc.’s smartwatch. When it comes to goods the Trump administration exempted from its latest blitz of tariffs on Chinese imports, the cases of fluorine salts and carbonate esters say more about where the U.S. is vulnerable in its reliance on Chinese supply.
The chemicals, used to make electrolytes for electric-car batteries, are among 297 dispensations sparing importers the new 10% levy. The mineral barite, which helps energy companies drill for oil and gas, and the painkiller ibuprofen—90% of which comes from China—were also beneficiaries, along with Apple’s far-better-known products, including its smartwatches and AirPods.
While the latest broadside from the U.S. in its tariff feud with China, covering 5,745 items worth some $200 billion, is a demonstration of America’s buying power, items cut from the initial tariff hit-list point to weaknesses across a range of businesses, from energy giants like Halliburton Co. to smaller suppliers of specialty parts, all of which sought waivers for raw materials and parts by arguing that China had become an indispensable supplier.
These businesses gained exemptions after intense lobbying by corporate chieftains during six days of public hearings in August and in a flurry of letters to the U.S. trade representative. Nearly 400 top executives showed up for the hearings, and thousands more wrote in; most failed to get exemptions, including giants Walmart Inc. and GE Appliances.
The letters and hearing transcripts show where the Chinese have become outsize global producers of relatively obscure industrial commodities—on which American industry has become reliant. In some cases, the U.S. companies say, substitute makers in other countries could be found—but were likely to raise price tags on American buyers as these rivals sought advantage in the escalating bilateral standoff.
Since then, not much has been done, and the new administration looks unlikely to pressure China at all. American corporations need to do a better job of diversifying their supply chains, or the government will never be able to put pressure on China if necessary.
Action Line: Buy local whenever possible.
E.J. Smith - Your Survival Guy
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