Two Georgia companies have asked the U.S. government to slap hefty tariffs on golf carts being imported from China, arguing that they are receiving unfair subsidies that undercut U.S. competition and workers.
More than 3,000 Georgians work for the companies making golf carts.
“We are seeking a level playing field for all competitors,” said Rob Scholl, chief executive of Textron Specialized Vehicles. “These actions also will help maintain the health of an industry that has been a significant contributor to Georgia’s manufacturing base for decades.”
Club Car and Textron Specialized Vehicles, both based near Augusta, have asked for a 100% tariff on the imported golf carts, as well as other low-speed personal vehicles made in China. If approved, that would equal the U.S. tariff now set to phase in over three years on electric autos from China.
The Georgia companies are getting hurt in the market and it’s not a fair fight, said attorney Robert DeFrancesco, a partner with Wiley Rein, the law firm representing the two.
“The Chinese imports have increased the past three years, while U.S. industry profits have declined rapidly,” he said. “There haven’t been layoffs, not yet, but companies have reduced shifts and work hours, which means less income for workers.”
The two companies have a lot to lose: They account for the lion’s share of the roughly 407,000 golf carts that are sold each year in the United States, he said.
Club Car has three facilities in Georgia with 1,000 employees. Textron Specialized Vehicles has 1,400 workers in the state in two locations.
A tariff is a tax that is imposed on goods coming from another country.
The idea is to protect U.S. manufacturers by making the imports less competitive. Historically, tariffs have been justified as a way to insulate new, growing industries, penalize foreign competitors that are getting improper assistance or, sometimes, to punish nations at odds with U.S. policy.
Economists are generally skeptical about the value of tariffs. Sometimes companies will cut their prices to absorb at least part of a tariff, but they often pass much of it along.
“It’s not clear how much of the 100% tariff on golf carts would be paid by American consumers, but almost certainly a very large part of it,” said economist Raymond Hill, professor emeritus of finance at Emory’s Goizueta School of Business. “And quite likely the price of golf carts in America would go up considerably.”
Under the Trump administration, tariffs were aggressively raised against China, and on other imports. The Biden administration has retained many of those tariffs.
A third Georgia manufacturer, Yamaha, makes golf carts and similar vehicles in Newnan with a workforce of more than 1,000. Yamaha, which is based in Japan, is not part of the filing. The company did not return calls from The Atlanta Journal-Constitution.
However, Club Car’s chief executive, Mark Wagner told Bloomberg News that he felt pressured to ask the government for protection.
“Chinese import volumes have rapidly increased, taking greater consumer vehicle market share while using price benefits from Chinese government subsidies to drive their advantage,” he said. “We had to take action.”
Efforts to reach several Chinese golf cart makers were not successful.
Credit: NYT
Credit: NYT
However, the Global Times, a publication owned by the Chinese Communist Party, harshly criticized the U.S. golf cart makers’ request for tariffs as part of “a damaging addiction” that the United States should abandon.
“These excessive demands made by US golf cart producers highlight a troubling reality,” wrote Wang Yi, identified as a reporter, in the Global Times. “The US, initiating a harmful trend of tariffs and protectionism worldwide, is now heavily reliant on these lose-lose tactics. It appears that the US has lost sight of where to draw the line when it comes to tariffs.”
The endorsement of such protections by both political parties is “a dangerous game,” Yi wrote.
At a July hearing with trade officials from the U.S. Commerce Department, attorney DeFrancesco argued that the Chinese imports — made by a slew of companies — are sold parts at below-market prices with “preferential” lending from Chinese government-backed banks.
On Friday, the International Trade Commission will vote on whether there is “a reasonable indication” that the Chinese imports are hurting — or threatening to damage — domestic manufacturers, he said.
If they vote yes — “and the bar is fairly low” — the case would continue and a deeper investigation would begin, DeFrancesco said.
The entire process would take about 13 months, he said.
While high-end golf carts can cost upwards of $20,000, the typical U.S.-made cart costs about $12,000. But because they have unfair help, the imports can price their golf carts cheaper than those made in America, DeFrancesco said.
The Chinese typically charge between 20% and 40% less, he said. “That is a pretty substantial price differential.”
And that means more sales for the Chinese and fewer for the Americans, he said. “The Chinese are gaining market share. The China market share went from the middle double-digits to well above 30%.”
The issue of tariffs of late has crossed partisan lines.
The Biden administration has become more combative on trade issues, especially in its aggressive tariff efforts to stem the flow of electric vehicles from China. Presumptive Democratic presidential nominee, Vice President Kamala Harris, has not weighed in on the question, but has thus far said nothing about reversing trade policy if she is elected.
Meanwhile, Republican nominee Donald Trump made higher tariffs central to his trade policy when he was president and has, thus far in the campaign, continued to propose much higher tariffs as a counter to Chinese imports.
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