U.S. shippers could get some holiday cheer if Congress passes legislation by the end of the year that would suspend tariffs on materials and products not available domestically.
Congress is expected to consider by the end of the year the Miscellaneous Tariff Bill, which had already gone through the Obama administration’s vetting process, according to National Association of Manufacturers spokesman Jeff Ostermayer. Without the extension, tariffs on more than 600 products will take effect next year, resulting in manufacturers’ decreased global competitiveness.
The legislation, which also includes new tariff suspensions, could be passed on its own or included within a “Grand Bargain” between Congress and the Obama administration to offset the so-called fiscal cliff. The NAM pointed to the nearly 2,100 tariffs bills introduced in Congress as evidence of the need for broader legislation.
“The MTB is one of the most important short-term actions Congress can take to preserve and expand good American jobs, boost America's manufacturing competitiveness, and increase our manufacturing exports,” the association wrote to House and Senate leaders in a Dec. 3 letter.
Passage of the bill will “bring raw material prices down so we can export and stay competitive in the U.S. market,” Exxel Outdoors CEO Harry Kazazian said. The U.S. outdoor gear manufacturers relies on low-cost polyester from China for its sleeping bags and faces 7.7 percent higher prices on the raw material if the bill isn’t approved.
The legislation would allow FMC Corp., a manufacturer of insecticides and herbicides, to invest more in its plants and expand its work force, said Mike Chlada, the company’s manufacturing excellence manager.
The Obama administration in late November ended its opposition to eight miscellaneous tariff bills that would reduce import duties by more than $30 million on outdoor footwear products. The Obama administration’s now-defunct opposition was likely tied to ongoing Trans-Pacific Partnership negotiations.
“We set our pricing on a six-month basis, so we would have had to absorb the increased costs,” said Jonathan Lantz, president of La Sportiva North America, a Boulder, Colo.-based outerwear manufacturer. “We would have taken a big hit, which would have limited our plans for hiring, marketing and employee appreciation programs in 2013."
The potential onslaught of tariffs comes as manufacturing optimism shrivels, largely because of concerns over the looming fiscal cliff.
Manufacturers’ outlook shrank by nearly 40 percent since the beginning of the year, according to a NAM survey. Association member forecasts on capital spending and hiring fell for the first time since late 2009.
U.S. manufacturing production in November slipped to its lowest rate in more than three years, as new orders shrank and businesses wrestled with Hurricane Sandy-related disruption, according to the Institute for Supply Chain Management’s Index.