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Trump's proposed tennis ball tariff represents a grand slam of terrible trade policy
Source: Washington Post
Trump’s proposed tennis ball tariff represents a grand slam of terrible trade policy
By Catherine Rampell
Columnist
June 27 at 3:24 PM
Want to know how ill-conceived President Trump’s proposed China tariffs are? Look to the tennis ball tariff.
-snip-
Multiple Head products would be affected, including higher-ticket items. But Mason is especially concerned about tennis balls. Given the thin margin on balls, the company could not eat the cost of the tariff or expect the retailer to do so; instead, the 25 percent tariff would be passed along to consumers.
-snip-
Last week, Mason testified in hearings held by the U.S. Trade Representative, in which he politely begged the administration to take tennis balls off its proposed tariff list. He explained that the tariffs would lead to an expected sales decline of 50 percent, a loss of $22 million in revenue for Head. That would require a layoff of about 15 percent of its U.S. workforce — affecting people in sales, marketing, warehousing and customer service.
Now Trump might spin this sob story as evidence that more offshored manufacturing should return home. But Mason says the economics of a U.S.-based tennis ball factory in the 21st century are impossible. There is just no way to offer American workers a competitive wage to make a product that retails for about $2.50 per three-ball can.
Head also can’t move to another low-cost country, at least not overnight.
“It’s not hard to make a tennis ball, but it is hard to make one consistently within the specs the International Tennis Federation requires for a tennis ball,” Mason says. Balls need a certain weight, circumference, bounce and resistance to humidity, requiring lots of testing and training.
-snip-
By Catherine Rampell
Columnist
June 27 at 3:24 PM
Want to know how ill-conceived President Trump’s proposed China tariffs are? Look to the tennis ball tariff.
-snip-
Multiple Head products would be affected, including higher-ticket items. But Mason is especially concerned about tennis balls. Given the thin margin on balls, the company could not eat the cost of the tariff or expect the retailer to do so; instead, the 25 percent tariff would be passed along to consumers.
-snip-
Last week, Mason testified in hearings held by the U.S. Trade Representative, in which he politely begged the administration to take tennis balls off its proposed tariff list. He explained that the tariffs would lead to an expected sales decline of 50 percent, a loss of $22 million in revenue for Head. That would require a layoff of about 15 percent of its U.S. workforce — affecting people in sales, marketing, warehousing and customer service.
Now Trump might spin this sob story as evidence that more offshored manufacturing should return home. But Mason says the economics of a U.S.-based tennis ball factory in the 21st century are impossible. There is just no way to offer American workers a competitive wage to make a product that retails for about $2.50 per three-ball can.
Head also can’t move to another low-cost country, at least not overnight.
“It’s not hard to make a tennis ball, but it is hard to make one consistently within the specs the International Tennis Federation requires for a tennis ball,” Mason says. Balls need a certain weight, circumference, bounce and resistance to humidity, requiring lots of testing and training.
-snip-
Read more: https://www.washingtonpost.com/opinions/trumps-proposed-tennis-ball-tariff-represents-a-grand-slam-of-terrible-trade-policy/2019/06/27/75c08518-98df-11e9-916d-9c61607d8190_story.html
1 replies
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