Retail giants like Walmart, Target and Best Buy and their powerful lobbying groups on Monday urged the Trump administration to hold off new tariffs aimed at punishing China for its intellectual property practices, saying that such an aggressive step will only make matters worse.
The White House is preparing to wrap up its sweeping audit of China’s IP regime, focusing mainly on Beijing’s policies requiring U.S. companies to hand over their proprietary technology as a condition of market access. The administration is said to be readying steep tariffs to punish China.
A coalition of retail titans wrote a letter to the White House urging President Donald Trump to rethink the move, saying that while China’s IP policies deserve scrutiny, sweeping tariffs are not an effective remedy for the problem.
“Investigating technology and intellectual property policies and practices is critically important to our innovative economy,” the companies wrote Monday. “Yet were this investigation to result in a broadly applied tariff remedy on imports from China, it would hurt American households with higher prices and exacerbate a U.S. tariff system that is already stacked against working families.”
The administration kicked off its investigation of China under Section 301 of the Trade Act of 1974 last year. The law allows for a wide variety of responses if the U.S. finds that a foreign country is violating its trade obligations.
Supporters of the multilateral trading system had hoped that the White House would use Section 301 as a pretext for a new World Trade Organization case against China, but it looks as if the administration is leaning in favor of bypassing the WTO and imposing unilateral tariffs.
A day before the retailers sent their letter, the White House received a similar missive from business associations including the Information Technology Industry Council, the National Retail Federation and the U.S. Chamber of Commerce.
Much like their individual member companies, the organizations pleaded with the White House to moderate its response and build a coalition with its allies to counter China.
“Imposition of unilateral tariffs by the administration would only serve to split the United States from its allies, hinder joint action to effectively address shared challenges, and ensure that foreign companies take the place of markets that American companies, farmers and ranchers must vacate when China retaliates against U.S. tariffs,” the groups said.
Both letters said that while tariffs will affect Chinese imports, they will also raise costs that will eventually be passed down the supply chain to U.S. consumers.
