The US tea industry drew a collective sigh of relief following President Donald Trump’s late-June decision to postpone levying tariffs on $300 billion in Chinese goods. Chinese President Xi Jinping agreed to a resumption of trade negotiations now underway.
Prior to the decision, the U.S. Trade Representative (USTR) heard testimony from two prominent tea industry leaders, Peter Goggi, president of the Tea Association of the USA and Jason Walker, marketing director at Firsd Tea, the New Jersey-based division of the world’s largest Chinese green tea exporter, Zhejiang Tea Group.
The June hearings spanned seven days and were attended by a broad range of industry leaders concerned that import taxes of up to 25% on Chinese made goods and agricultural products would harm consumers. Conducting the hearing were representatives of the State Department, the Commerce Department, the Treasury Department, the Labor Department and the U.S. Department of Agriculture.
Opposition was near unanimous. Tea and coffee were not included on the previous lists but are among the 3,805 subheadings on List 4. Imposition of the tax would have increased tariffs by up to 25% on tea and coffee imported from China.
During the next phase of negotiations, USTR will begin processing an estimated 60,000 requests from importers for exemption of goods that appear on Lists 2 and 3.
Goggi formally requested that Chinese green and black teas, instant tea, and extracts be excluded should List 4 be approved. Seventy percent of the green tea consumed in the U.S. originates in China, he said, adding “there isn’t one section of the tea market that is not touched by Chinese tea.”
Taxing Chinese tea will have no appreciable impact on China. U.S. consumption amounts to less than 1% of China’s total tea production, Goggi explained. Commercial tea growers in America do not need to be protected by tariffs. “Tea has been tax-free for many, many, many years and it should remain that way,” he said.
Walker said committee members listened attentively and asked follow-up questions regarding the testimony. “Questions posed by committee members indicated they had familiarized themselves with the testimonies prepared,” he said.
Transcripts of the hearings are posted on the USTR.gov website.
Walker explained that individuals providing testimony were organized into panels of five. “The panel that included Firsd Tea also heard testimony from the leader of an international business council and a university-level economics instructor. All members of our panel opposed the tariffs,” said Walker.
“Speaking with others who had attended hearings from the previous day(s), the overwhelming majority of witnesses opposed the tariffs,” he said.
Once hearings are concluded, there will be a period ending this week in which the Committee will await written materials related to witness testimony and deliberate before announcing their recommendations.
In July 2018 the U.S. imposed a 25% tax on 818 Chinese goods valued at $34 billion in the first round of actions designed to halt Chinese trade practices that the U.S. considers unfair. In August 2018 an additional 279 goods (List 2) valued at $16 billion were listed. On May 10 President Trump announced a 25% levy on 5,769 Chinese imports valued at $200 billion (List 3) and threatened to impose a 25% tax on the remaining 3,805 in Chinese goods (List 4).