Trump's China tariffs continue to vex small Minnesota importers

St. Paul-based manufacturer Dan Digre still suffers from the tariffs on imported Chinese goods put in place by former President Donald Trump, to the tune of 25% on the raw components his company uses to produce high-end industrial speakers.

"The Chinese don't pay it, as Trump said. We do," said Digre, who owns Misco.

Also, the tariff for finished products like speakers is only 7.5%, he said, further complicating his business.

The components Misco imports are not cost-effective to produce in the U.S.

It adds another layer of pressure for Digre's 80-person business, which has barely held its own in St. Paul for several years, thanks to the import tax.

"Our strength is the design and manufacturing and assembly of all the products into a finished good," Digre said. "Normally, because our [overall] sales have risen, we'd be growing here."

Some bigger industries and companies negotiated tariff reductions and exemptions.

Digre is a small, high-end producer in a speaker industry that has almost disappeared in the United States. And Misco, started by Digre's father as a radio speaker-repair business after World War II, doesn't have national clout.

Trade groups have pushed President Joe Biden to rescind the tariffs that were supposed to expire this month on the $350 billion of goods, from agricultural produce to vehicles, imported annually from China. But so far, China has only met 60% of its pledge to buy $200 billion more goods from the U.S. annually, according to Reuters.

"I'd like to be in a position where I can say they're meeting the commitments, or more of their commitments, and be able to lift some of it," Biden said at a news conference in late January. "But we're not there yet."

Trump commenced his controversial, costly trade war with China when he levied tariffs on $50 billion of Chinese-made goods. Trump upped the ante over time in response to Beijing's retaliation on American-made products.

U.S. businesses have paid nearly $125 billion in tariffs since 2018. The tariffs cover thousands of Chinese-made products, from TVs and shoes, to solar arrays, bicycles, fishing tackle, clothing and toys.

There have been some U.S. import taxes selectively reduced in one-off fashion through exemptions, on a case-by-case basis. U.S. importers are now calling for action across a united front.

Nearly 200 industry groups have petitioned Congress and the Biden administration to "resolve the ongoing trade war with China" that has increased inflation, burdened U.S. businesses and "negatively impacted their ability to invest in their companies, hire more American workers, and remain competitive globally," according to the business group Americans for Free Trade.

The businesses are calling for an across-the-board "transparent and fair exclusions process that would help alleviate the economic burden on American businesses and consumers."

This is somewhat unilateral trade-tariff disarmament. The thinking is maybe the Chinese will match us and buy more U.S. goods and services through a warming of the trade war.

Experts say this would not solve the U.S.-China trade imbalance or supply-chain problems overnight. It would help alleviate what companies believe is unfairness, on top of inflationary pressure facing importers. And it would benefit fast-growing U.S. industries that use Chinese components.

Eric Pasi, an executive at IPS Solar in St. Paul, one of Minnesota's legacy companies in a fast-growing industry, said the solar development and installation industry also needs relief from tariffs on imported Chinese solar panels.

"Supply continues to be low, prices have jumped by 20 to 30 percent at a time when the Biden administration wants to increase the adoption of clean energy," Pasi said.

"Most solar companies assumed the tariffs would sunset in a more favorable regulatory environment," he said. "We're at an inflection point with the climate crisis where we need to act boldly over the next decade. Without major federal policy supporting the energy transition, we will continue to see slower than needed growth, especially if the tariffs are reimplemented.''

President Joe Biden on Friday extended tariffs imposed by former President Donald Trump on most solar panels imported from China and other countries. But in a nod to his efforts to combat climate change and boost clean energy, Biden excluded tariffs on so-called bifacial solar panels, used in large-scale utility projects. He also doubled an import quota on solar cells — the main components of panels that go on rooftops and utility sites — to 5 gigawatts, allowing a greater number of imported cells used by domestic manufacturers.

The Biden administration said last fall it would reinstate some China tariff waivers. More than 2,000 exclusions were granted under the Trump administration, but only 549 are eligible for another extension by Biden.

Thousands of businesses are looking for relief, according to the Americans for Free Trade group.

Asking for a transparent, meaningful tariff-exemption process, the group said it had mustered support of 140-plus members of Congress.

"Congress must act," the group said in a statement. "We therefore urge the House to include language in the 'America Competes Act' that would require [the U.S. trade representative] to reinstitute a meaningful exclusions process."

The Associated Press contributed to this report.