By Alex Leary | Photographs by Hannah Yoon for The Wall Street Journal
President Trump's threatened new tariffs on Christmas
decorations from China won't take effect until next year -- but
that's no comfort to Mac Harman, who has to do his 2020 holiday
shopping now.
Mr. Harman is chief executive of Balsam Brands of Redwood City,
Calif., which sells artificial Christmas trees made in China. One
of the factories that he buys from has given him a Dec. 20 deadline
to place orders for next year.
That usually isn't a problem, but Mr. Harman says he can't
estimate demand until he knows whether Mr. Trump is serious about
imposing 15% tariffs on an array of consumer goods including
Christmas decor, starting at 12:01 a.m. Sunday.
"You never know what the next day or the next hour will bring,"
Mr. Harman said of the U.S.-China trade war's head-spinning turns.
"We've been growing and creating jobs, but two months ago we
stopped hiring because we have to assume the tariffs are going into
place and we will no longer be growing."
Other companies that import electronics, toys, apparel and other
goods that would be subject to the new tariffs share the same
predicament. Despite expectations that the tariffs will be delayed,
no one is certain of what the president will do.
"Everyone is kind of living on the edge," said David French, the
National Retail Federation's senior vice president for government
relations. "I don't think anyone has a lot of clarity, even inside
the administration, of what will happen."
Mr. Harman said the lighted Christmas trees sold under his
Balsam Hill brand are made only in China. The privately held
company expects $170 million in sales this year, up from $160
million in 2018, he said.
Since tariffs will force him to take either lower profit margins
or fewer sales, Mr. Harman's company is holding off plans to add 50
people to its U.S. workforce of 130.
"We have been growing as a company significantly, so just being
flat would be down," he said. "We're going to have to raise prices,
it's going to cut demand."
The Wall Street Journal has reported that the Trump
administration is likely to delay the scheduled new tariffs while
trade negotiations continue with China. But Mr. Harman says a delay
would simply extend the uncertainty for his purchases for the 2020
season.
Mr. Trump has defended tariffs as a necessary measure to force
China to end business practices that he says have cost American
jobs. Already, the U.S. has imposed tariffs on $361 billion of
Chinese goods, and the threatened new levies would add 15% tariffs
on $156 billion more in Chinese imports. That would leave about $20
billion of imported goods, in 2018 terms, not subjected to such
duties.
"Americans elected Donald Trump because they were tired of
excuses," White House spokesman Judd Deere said. "President Trump
is the first president to stand up to China and send a clear
message that the United States will no longer tolerate unfair trade
practices."
Mr. Harman, 43 years old, says he understands that point of
view. Raised in Cleveland, he said he saw his family's steel-wire
manufacturing business suffer against Chinese imports. Living in
Silicon Valley, the Stanford business graduate said he has seen
China steal intellectual property.
"I get it," he said, sipping hot chocolate in a hotel cafe in
Washington on a recent morning.
Still, Mr. Harman said he has no alternative to Chinese
suppliers. He pleaded his case before the Office of the U.S. Trade
Representative in June, only to learn in August that his trees were
placed on a list of products to be tariffed this month.
The USTR has yet to announce a formal exclusion process for the
December tariffs, but relief has been hard for many companies to
win.
More than 1,700 companies are still waiting for the USTR to rule
on requests to exclude products from the $200 billion tranche of
tariffs placed last year on Chinese goods. Those tariffs started at
10% in September 2018 and rose to 25% this past May.
So far, the USTR has ruled on just 17% of the 31,000 exclusion
requests under the $200 billion tranche. The vast majority of
rulings -- 96% -- were denials, according to a Journal analysis of
data posted on a public docket.
Mr. Harman in June was joined by executives at other
Christmas-related businesses, who portrayed the tariffs as a hit to
their employees and consumers.
"Who wants to place a tax on Christmas?" testified Doug Lauer,
CEO of Old World Christmas, which sells blown-glass ornaments made
in China. "Increasing the cost of celebrating Christmas will simply
hurt American families."
In 2011, the Obama administration faced sharp rebukes over what
critics called a "tax" on live Christmas trees. The 15-cent
assessment was pushed by real tree farmers who were losing ground
to artificial sellers and the money was for a marketing effort
similar to the "Got Milk?" campaign.
The assessment was put on hold but eventually implemented, and
the campaign continues today. "It's Christmas. Keep it real," goes
the slogan.
--
Anthony DeBarros
contributed to this article.
Write to Alex Leary at alex.leary@wsj.com
(END) Dow Jones Newswires
December 12, 2019 05:44 ET (10:44 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.