Trump tariffs: In 2018, Bobby Djavaheri, president of Yedi Houseware Appliances, faced a daunting challenge. The Trump administration’s 25% tariffs on Chinese imports threatened the survival of his family-owned appliance business. Despite hiring a customs attorney and filing for an exemption, Djavaheri’s application was swiftly denied without explanation.
“We were growing steadily, but this just halted everything,” he lamented, as his Los Angeles-based firm was forced to lay off workers and abandon expansion plans.
Djavaheri’s struggle highlights the challenges many U.S. businesses have faced in navigating a complex and opaque tariff exclusion system. Critics describe the process, initiated during the Trump administration, as riddled with inconsistencies and vulnerable to political favoritism.
Trump tariffs: A “Broken” System
Tom Madrecki, vice president of the Consumer Brands Association, called the exclusion process “convoluted and incredibly confusing.” Businesses seeking relief were required to prove severe economic harm, lack of alternative sources, or the non-strategic importance of the product to China. Between 2018 and 2020, the U.S. Trade Representative (USTR) received over 53,000 applications but approved only 13%.
“According to the U.S. Trade Representative, industrial goods—ranging from machinery to consumer products—make up approximately 94% of U.S. merchandise imports by value, with an average tariff rate of 2.0% on these goods. Notably, half of all industrial goods imports enter the U.S. duty-free (USTR).”
A Government Accountability Office (GAO) review exposed inconsistencies and a lack of documentation in how the USTR processed applications. A separate Commerce Department review in 2019 also identified transparency issues, raising concerns of improper influence.
Corruption Allegations
Academic research has added weight to these concerns. A peer-reviewed study from the Journal of Financial and Quantitative Analysis found a troubling correlation: companies whose executives donated to Republican candidates had higher chances of securing exemptions, while those supporting Democrats fared worse.
Lehigh University finance professor Jesus Salas, a co-author of the study, called the findings “clear evidence of corruption.” He noted instances where identical products received different rulings, calling the system chaotic and susceptible to abuse.
Salas declared, “Lawyers and lobbyists are the winners in this chaos.”
A study from the Federal Reserve Bank of Chicago examines the wider economic implications of tariff increases, finding stark differences in welfare impacts across U.S. states. States such as Wyoming could see welfare gains as high as 3.8%, while others, like Florida, could experience losses of up to 0.3%. These variations are mainly due to states’ exposure to different sectors, further complicating the already fragmented and inconsistent tariff system. (Santacreu et al., 2021).
Trump tariffs: The Need for Reform
Under President Biden, officials claim the exclusion process has become more transparent, with decisions handled by career staffers. However, researchers like SUNY Buffalo’s Veljko Fotak argue that systemic weaknesses remain.
To address these issues, experts urge greater transparency, standardized procedures, and congressional oversight. Without such reforms, businesses fear a repeat of past inequities, especially as former President Trump vows to reimpose and expand tariffs on China.
For companies like Yedi Houseware Appliances, the stakes are existential. “I have no choice but to try again,” Djavaheri said. “Otherwise, I’m done.”
Despite Trump’s assertions that China bears the cost of tariffs, research consistently shows the burden falls on U.S. businesses and consumers. Djavaheri, pointing to his mounting bills, put it bluntly: “Bro, that’s nonsense.”
I am Azzam Ameen, a news journalist based in Colombo, Sri Lanka, with extensive experience in covering significant national and international events. My work focuses on delivering accurate and insightful news that resonates with audiences. Over the years, I have reported on a variety of critical issues, including political developments, social changes, and global affairs. I am committed to providing in-depth analysis and ensuring that every story I cover is both factual and impactful. Stay connected with me on Facebook, Twitter, Instagram, Tiktok etc.
