The Trump administration wants to make it easier for businesses to import medical equipment from China. Food and kitchen gear companies are trying to claim that includes them.
What do frozen buns, drip coffee makers, and lemon flavoring have in common? They all play a medically important role in America’s response to the coronavirus pandemic—at least, that’s the case their producers are trying to make to the federal government.
A flood of companies are currently requesting tariff relief via a program specifically meant to reduce trade barriers on medical products needed to address the coronavirus pandemic. But many of these companies, it turns out, are not in the healthcare business, ProPublica reported. Among the applicants are biking co-ops, shoe companies, and essential oil producers. And a significant number of them are in the food industry. If successful, their appeals could help hundreds of American businesses sidestep the steep financial cost of something that has relatively little to do with Covid-19: the U.S.-China trade war.
In 2018, President Trump imposed high import duties on products from China, in response to years of what he called “unfair trade practices” on Beijing’s part. The move resulted in an ongoing cascade of retaliatory tariffs between the two governments, which has significantly impacted the food industry: A wide range of products—including meat, seafood, produce, spices, oils, and raw materials used in manufacturing—have been caught in the trade war’s crossfire.
“During this crisis of Covid-19, Hamilton Beach’s Blend-in-Cup and Mix-in-Cup are essential to provide blended drinks and milkshakes.”
In March, the Office of the U.S. Trade Representative (USTR), the federal agency that oversees trade policy, announced it would accept applications for tariff exemptions, citing the health care needs of Americans during the Covid-19 public health emergency. (A lot of medical supplies are imported from China, from masks to drugs.) In its guidance, USTR urged applicants to limit requests to “products that are relevant to the medical and public health related response to the COVID-19.”
Last week, Eastland Food Corporation, a Maryland company that imports ingredients from Asia, filed an application with USTR for a tariff exemption on imports of rice noodles, canned lychee fruit, and frozen parathas, a flatbread commonly found in South Asian cuisine. It’s hard to see where this fits in even the widest definition of “medical-care products.” However, the company argues that disrupted supply chains and increased stockpiling has unexpectedly forced it to import more food from China. Additionally, it points out that the high costs of tariffs may have to be absorbed by grocery shoppers, many of whom are on increasingly tight budgets and at risk of food insecurity as the economy continues its downward slide.
“With the unemployment rate soaring due to furloughs, layoffs and shutdowns, U.S. citizens are conscientiously looking for economical food choices that can withstand the uncertainty of the pandemic,” its application reads.
Other companies that want in on tariff relief designated for medical products include manufacturers of kitchen gear. Food service brand Hamilton Beach is requesting exemptions on products from drip coffee makers to rice cookers, from toasters to blenders. The company goes so far as to argue that some of its products could reduce the spread of disease.
Other food companies arguing that their products are essential to Covid-19 response, include canned oyster producer Crown Prince and canned tuna giant Bumble Bee, which was recently caught up in price-fixing litigation.
“During this crisis of Covid-19, Hamilton Beach’s Blend-in-Cup and Mix-in-Cup are essential to provide blended drinks and milkshakes that can be prepared in a more automated and hands-free fashion, relative to conventional blenders that require significant handling of the blender jar & an increased probability of contamination,” it wrote in its application.
Other food companies arguing that their products are essential to Covid-19 response, include canned oyster producer Crown Prince and canned tuna giant Bumble Bee, which was recently caught up in price-fixing litigation. Other food-adjacent businesses include Nature’s Bounty, which produces dietary supplements that are supposedly essential in supporting our immune systems; Camp Chef, which producers camping grills (“outdoor activities are essential to both physical and mental health,” it argues); and the Flavor and Extract Manufacturers Association, which represents the flavoring ingredient industry.
Tariffs don’t always increase prices for shoppers, says William Rieber, professor of economics at Butler University. Sometimes, companies will absorb their cost in order to stay competitive with domestic producers. After all, the whole point of tariffs is to incentivize sourcing within America. But those shrinking profit margins explain why companies are so eager to apply for trade war relief.
“It takes some effort to request [a tariff] exclusion,” says Rieber. “But the potential benefits of getting the exclusion are very high …. These are not minor taxes by any means. They’re significant in terms of the costs of importing.”
According to ProPublica, USTR has received almost 53,000 requests for tariff relief during the trade war, and approved 6,400 so far. To be sure, many of the exemption requests actually do pertain to medical products, from plastic medical gowns to medicinal ingredients.
Applications for relief closed last week. Now we’ll have to wait and see just how essential the feds think parathas are.