WASHINGTON – Best Buy Inc. warned Monday that a Trump administration threat to tax all Chinese-made consumer electronics up to 25% "could be immediately passed on to U.S. consumers."
Jason Bonfig, Best Buy's chief merchandising officer, said in testimony to the U.S. trade representative (USTR) that companies are running out of inventory purchased at pre-tariff prices and can no longer absorb cost increases to Chinese-made consumer electronics critical to their businesses.
Bonfig was among speakers on the first of six days of pleas by more than 300 American companies and business organizations from a variety of sectors. The presenters are part of a last-ditch push by America's business community to stop a trade war between the world's two biggest economies.
The parade of speakers comes on the heels of a letter sent last week to the president signed by 150 businesses and groups, including Minneapolis-based Target Corp.
Trump is expected to meet with Chinese leaders at the end of the month during an economic summit in Japan. He believes the application of tariffs and the threat to continue their expansion will convince the Chinese to open their markets to more American businesses and stop stealing U.S. intellectual property. The president also said raising the cost of Chinese goods will encourage businesses to develop U.S. supply chains and expand employment in America.
Those assumptions prompted the current chorus of American businesses calling on the United States to settle differences with China before consumers take a beating.
Bonfig told the USTR that Best Buy and other electronics retailers did not saddle customers with earlier tariff-driven cost increases because many tariffs were only 10% and mostly limited to high-margin products.
Extending tariffs up to 25% on every Chinese import makes such a strategy unsustainable, Bonfig said.
He also said the short-term impact on China will be minimal because companies will struggle to quickly find or build alternative manufacturing facilities.
Best Buy's call to exempt smartphones, laptop computers, tablets, monitors, smartwatches, gaming consoles and televisions from tariffs spoke to the specific desires of a specific industry.
Other sectors are expected to offer their own list of industry-specific exclusions in the days to come.
A representative from Minnesota snowmobile and off-road vehicle manufacturer Polaris is scheduled to speak Thursday.
Polaris officials said they already face $90 million a year in added costs because of current 10% tariffs on some Chinese imports.
Extending levies to all Chinese-made products and raising them as high as 25% could push cost increases up to $200 million a year.
Also slated to appear is the Advanced Medical Technology Association (AdvaMed), a trade group representing Medtronic and hundreds of other Minnesota-run medical technology businesses.
Those companies employ thousands of state residents who depend on Chinese-made parts and products.
Currently $250 billion in Chinese imports are subject to protective levies.
But that number could more than double to $550 billion if Trump includes all Chinese imports. Also concerning to many businesses and economists are the levels of tariffs.
The National Retail Federation commissioned a report by the Trade Partnership consultancy which estimated that 25% tariffs on $300 billion more in Chinese imports could force American consumers to pay $4.4 billion more a year for apparel, $2.5 billion more for footwear, $3.7 billion more for toys and $1.6 billion more for household appliances, according to the business-sponsored group Trade Hurts the Heartland.
A scorched-earth approach like the one Trump threatens "will hurt China more than us," said University of Minnesota trade specialist Tim Kehoe. "But it is of such a magnitude that it could cause a worldwide recession."
Last week's business sector letter to Trump was direct in it criticism of taking that risk.
"An escalated trade war is not in the country's best interest, and both sides will lose," the letter said. "We are counting on you to force a positive resolution that removes the current tariffs, fosters American competitiveness, grows our economy and protects our workers."
As the parade of witnesses progresses at the USTR office this week, a variety of economic interests are expected to echo Best Buy's Bonfig.
He argued that broadening the reach and size of tariffs "will only serve to maximize the pain on U.S. consumers, workers, businesses and the economy at large."