Trade talks weigh heavily on Mass. companies

US Trade Representative Robert Lighthizer. Tom Brenner/The New York Times

Employers in Massachusetts are more optimistic in recent months than they’ve been in over a decade. But there’s a dark cloud hanging over the party: the potential for painful tariffs on imports from China.

Associated Industries of Massachusetts CEO Rick Lord joined the chorus of worried business leaders last week by sending a letter to US Trade Representative Robert Lighthizer, urging him to back away from a new round of tariffs on some $200 billion-a-year worth of Chinese goods.

Lord said he agrees on the need to address China’s unfair trade practices, but this is the wrong way to do it. AIM members can’t easily change their supply chains, and many face tougher competition from overseas rivals as a result of the tariffs. The extra costs on materials and components will limit new hires, pare back raises, or result in layoffs. None of these outcomes are good for the Massachusetts economy.

AIM isn’t alone, of course. A national coalition of some 120 business groups launched Americans for Free Trade on Wednesday, a multimillion-dollar campaign against tariffs. The group’s focus far exceeds the China situation, but the launch happens to coincide with word that the Trump administration has reached out to Chinese officials to make a deal on trade.

Kristen Rupert, AIM’s point person on international trade, says she is skeptical that the latest overture will prevent President Trump from approving another round of tariffs, of up to 25 percent on Chinese goods. These could be established within the next few weeks, and affect everyone from chipmakers to apparel designers. And she worries about the rumors that the administration is circulating an even bigger list of tariffs -- to top this one, if necessary.

AIM represents manufacturers. But the newest Federal Reserve survey shows retailers in New England are also concerned with how tariffs on Chinese goods will affect prices on items such as clothes, electronics, and furniture. (Worth noting: Most local manufacturers contacted by Fed researchers for the “Beige Book” poll said they don’t expect too much damage from the tariffs.) Retail sales are generally strong now. But merchants wonder how long the good times will last if the Trump administration sets off a full-scale trade war.