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Lawmakers call for product exclusion process for latest China tariffs

More than a third of the U.S. House of Representatives has called on the Trump administration to provide an exclusion process on the largest batch of tariffs on Chinese imports to date, warning that American companies may suffer mightily if subject to the Trump administration's measure.

A total of 169 members of Congress asked U.S. Trade Representative Robert Lighthizer to launch an exclusion petition process for companies impacted by the controversial 10% tariff —one that rises to 25% in 2019 — on $200 billion of Chinese goods that went into effect in September. The tariffs target imported furniture, mattresses, lamps, tilapia and other consumer goods from China.

The letter was signed by a number of Democrats, including Rep. Ron Kind, D-Wis.; and Terri Sewell, D-Ala.; as well as Republican members of Trump's own party, including House Majority Leader Kevin McCarthy, R-Calif.; Jackie Walorski, R-Ind.; Dave Reichert, R-Wash.; and Devin Nunes, R-Calif. The lawmakers called for a "fact-based" process with exclusion criteria to allow American companies to determine whether they meet the criteria and can devote resources to an exclusion effort.

The USTR allowed for an exclusion request process in the first two batches of tariffs implemented on Chinese imports: a 25% tariff on $34 billion of Chinese goods on July 6 and a 25% tariff on $16 billion of the country's imports on Aug. 23.

"However, the lack of such a process for this most recent list is a glaring omission, particularly given its size in relation to the first two lists," the members of Congress wrote in the Oct. 15 letter.

"Such a process would afford U.S. companies the opportunity to seek relief if tariffs harm their global competitiveness and would help target the effects of the tariffs on China rather than on U.S. companies and their customers," the letter added.

Throughout the public hearing process on the $200 billion batch, companies ranging from juice producers and bicycle manufacturers to consumer electronics-makers warned of supply chain disruptions, increased production, and consumer costs and job losses, and clamored to be removed from the lists. Although roughly 300 products, including smartwatches, Bluetooth devices, bicycle helmets, plastic and rubber gloves, high chairs and car seats were excluded following the six days of public hearings in August, the vast majority of the originally proposed products were kept in place and are now subject to a 10% tariff.

Besides that opportunity for companies to advocate for their products' removal from the list, there was no formal exclusion process for companies that rely on China for components and finished products.

The trade representative office did not immediately return a request for comment.

Americans For Free Trade, a coalition of more than 100 trade groups and retail associations launched in September to push an anti-tariff agenda, penned its own letter, dated Sept. 26, to Lighthizer urging for a product exclusion process.

"It can take months, if not years, for companies to successfully shift their supply chains to find new vendors who meet all of their requirements to produce safe, quality and compliant products under socially responsible conditions," the coalition, which includes the National Retail Federation, American Apparel & Footwear Association and Consumer Technology Association, wrote.

Although the three batches of tariffs imposed thus far on China have either been to punish Beijing for what the Trump administration has said is its market-distorting practices such as forced technology transfer of American companies doing business there, many U.S. companies argue that they are backfiring because they have been subject to higher importing costs. China has also retaliated on select U.S. exports for each batch of tariffs imposed against its country's goods thus far.

And the biggest blow of the escalating trade war between the two economic powerhouses may still be yet to come.

Trump has threatened on more than one occasion that he would impose tariffs on another $267 billion of Chinese goods should Beijing retaliate against the $200 billion batch, which it swiftly did. Trump has not said when those tariffs may occur.