American giants warn higher tariffs on India & others may backfire on US' manufacturing

Top companies, including American giants, have cautioned USTR that its move to impose additional tariff of up to 12.5% on 60 countries, including India, will push up costs for consumers and businesses, with several of them seeking exemptions for specific products.

"The practical effect would be to make it more expensive to build in America than to build elsewhere, which runs directly counter to the administration's goal of expanding domestic manufacturing," Intel said in its submission. IBM, Dow Chemicals Thailand and GE Appliances, which is now a Haier company, also argued against the move.

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"Dell wants to express the importance of leveraging policy tools that achieve the administration's laudable goals without rapidly increasing production and end-user costs or risking operational delays of key products and components," Dell Technologies stated.

Pointing to its reliance on imports for critical minerals, rare earths, scarce metals, and metal-containing aerospace inputs, and "other hard-to-source components", including electronics, chips, displays, and specialised commercial components, Honeywell Aerospace said, "...a tariff would primarily increase the cost of maintaining and producing aerospace products rather than accelerate a feasible sourcing transition."

Given the US dependence on imports, De Beers said, "...additional duties on natural diamonds would function primarily as a cost increase for US manufacturers, retailers, and consumers rather than encouraging domestic upstream substitution."

Ford said it backed exemption for the four product categories already facing up to 50% tariff under Section 232, arguing that additional section 301 tariffs would impose "excessive and overly burdensome costs on US auto manufacturing without contributing substantially to the elimination of practices related to forced labour".

India asks US to reconsider additional tariff

Meanwhile, India has asked the US to reconsider a proposal to slap an additional 12.5% tariff on New Delhi for alleged failure to bar imports made with forced labour, expressing willingness to engage the US Trade Representative (USTR) to address any specific concern through dialogue.

In its submission, New Delhi said "a mere absence of a forced labour import prohibition, without meeting the evidentiary basis of other statutory requirements, cannot be construed as 'unreasonable' within the meaning of Section 301 of the Act". The USTR, India underscored, has not undertaken an economy-specific analysis of laws and practices across the 60 investigated economies. Instead, it has made a sweeping determination that all such approaches are inadequate without considering the specific measures being implemented by the economies.

"In relation to India, there is inadequate and insufficient evidence that the lack of forced labour import ban causes an alleged unfair comparative advantage to the detriment of the US industry. Evidence across sectors of major exports of India to the US does not suggest any linkage with forced labour inputs," it added.

The evidence cited by the USTR does not establish the required causal link between the alleged absence of forced labour import prohibition and its impact on US commerce, it said.

(With inputs from TOI)