September 14, 2018 – Walking the Tightrope on Tariffs: The Case of Mobile Mini
Tariff increases and Mobile Mini
On July 6, the U.S. imposed tariffs of 25 percent on over $30 billion worth of Chinese goods entering the country. The same day, China responded by imposing tariffs of its own on U.S. goods.
Unfortunately, one of the businesses caught in the middle was Mobile Mini, a portable storage company of some two thousand employees in Phoenix which imports shipping containers from China. These shipping containers were among the hundreds of items subject to new tariffs, and as a result they became considerably more expensive for Mobile Mini to acquire after July 6.
A glitch in our nation’s tariff policy
In general, I targeted tariffs on China: after all, free trade is only truly free if all major parties are following the same rules, and for decades China has flouted these rules by manipulating its currency and stealing our nation’s intellectual property. Sometimes the stick, rather than the carrot, is necessary to prod our trading partners into fairer practices, and I am cautiously optimistic that with time the tariffs will convince China to change its behavior.
However, it is almost inevitable that when tariffs are imposed on hundreds of products, some companies will bear the brunt of unanticipated consequences. Mobile Mini is a case in point. While the trade officials who imposed tariffs on shipping containers may have assumed that Mobile Mini and other U.S. companies had been purchasing cheap storage containers from China at the expense of domestic manufacturers, the reality was both very different and much simpler: there were no domestic competitors in the first place. China has been producing 99 percent of the world’s shipping containers for decades—long before companies like Mobile Mini even existed.
Considering the enormously important role shipping containers play in transporting goods throughout the country, continued tariffs on these products would have ended up hurting the U.S. economy without providing any benefits. Because no domestic manufacturing would be able to spring up overnight to meet the enormous demand of the U.S. market, Mobile Mini was left with only bad options after the tariffs were announced: raising its prices, cutting its labor force, or shutting down altogether.
How did the Mobile Mini case end?
Fortunately, the Mobile Mini case had a positive outcome. On July 20, I sent a letter to the Office of the U.S. Trade Representative (USTR) arguing that shipping containers should be exempt from tariff increases. At the same time, company officials from Mobile Mini came to Washington, D.C. to testify before USTR. In the end, USTR was convinced by our arguments and removed shipping containers from the list of goods subject to the July tariffs—one of only five products granted that privilege.
I strongly believe that it is possible to send a strong message to China while still ensuring that our Arizona businesses continue to prosper, and I will continue to balance these priorities throughout my time in office.