Makers of child safety seats take opposite sides in tariff hearings

Washington — Will tariffs on a consumer good like injection molded children's car safety seats potentially lead to more jobs and investment in the United States, or will it only raise prices, weaken safety and hurt U.S. consumers?

That question was on the table June 17, as the administration of President Donald Trump opened seven days of hearings on its latest China tariff plan, this time on $300 billion in imports.

This round of tariffs, the largest yet, includes plastic child safety seats.

Seat maker Dorel Juvenile Group Inc. told the hearing that if tariffs are put in place, it could easily expand production at its large injection molding plant in Columbus, Ind. to meet demand for made-in-the-U.S. seats.

But several others in the children's safety products industry spoke against the proposed 25 percent tariffs. They sharply questioned whether the U.S. had enough manufacturing capacity to quickly adjust to the tariffs, since 90 percent of children's products come from Asian factories, mostly China.

Because Chinese factories for plastic molding and other technologies are tightly woven into supply chains, they contend that will lead to significantly higher prices for U.S. consumers, with younger, less affluent parents feeling the pinch the most.

Car seats and children's safety products took up part of the first morning of the hearings, which are expected to have more than 300 witnesses and stretch over seven days. Other executives from the plastics industry are scheduled to appear.

The debate around car seats mirrored others, with speakers divided over to what extent tariffs would spur U.S. manufacturing and raise prices.

Tim Gallogly, Dorel director of legal affairs, said tariffs would raise his company's prices at most 3-5 percent, suggesting to government investigators that the tariffs would have minimal impact on consumers.

The company was not directly urging tariffs, but neither was it standing in the way if that's what the government decided, it said in written comments.

"The imposition of tariffs on child safety seats will not cause disproportionate harm to U.S. consumers, and Dorel does not oppose the imposition of such tariffs," Dorel said.

Gallogly told the hearing, a fact-finding exercise organized by the U.S. Trade Representative's office, that his company could quickly boost its annual production by one-third, to 4 million seats a year.

He said the Indiana plant is the world's largest children's safety seat factory and the only significant U.S. production in an industry that relies heavily on Chinese imports. Right now, the 700 employees make 3 million car seats a year, accounting for about 30 percent of U.S. demand, Gallogly said.

"Although the company sources some components from overseas, it relies on U.S. workers to design, mold, assemble and test the finished child safety seat," the company wrote. "Dorel believes the quality and safety of its child safety seats are enhanced through the domestic manufacture of seats."

But Dorel was largely alone at the hearing in its tariff position.

Several other companies that sell child safety seats in the United States, including Ontario, Calif.-based Baby Trend Inc. and Graco Children's Products Inc., urged the Trump administration to abandon the tariffs, as did the industry's trade group, the Juvenile Products Manufacturers Association.

Baby Trend Vice President Brad Mattarocci said the low margins in the industry make 25 percent tariffs difficult to absorb and would hurt his company, which employs 120 in California who develop, market and test its products. Manufacturing is done by supplier factories, including in China.

Both he and the JPMA said that with 50 percent of baby gear consumers making less than the U.S. household median income of $50,000, and with 20 percent having a median household income of less than $25,000, higher prices could pose safety hazards as some families will use outdated or second-hand equipment that do not meet the latest standard.

"These types of trade-offs are real; we hear about them every day," he said.

Disagreeing with Dorel's assessment of the cost impact, he said tariffs would raise Baby Trend's prices by at least 20 percent and likely more. Safety seats run from $50-$300.

Other witnesses suggested that with large majorities of baby products in the U.S. being imported from China, consumers in general would see similar price increases.

In an interview with reporters after his testimony, Mattarocci said it would be challenging for the 31-year-old company to shift production from partner factories in China back to the U.S. or elsewhere in the world.

"We're looking at other sources, but again there's just not that many that are competitive," he said. "It's very costly, and it takes years to set up these supply chains, especially for car seats. For car seats or booster seats, the tooling is huge. It's expensive.

"Even if you wanted to move it and rehang it, the new mold shop, if they could do it, would say, 'We want to make our own tools because we don't like the cooling lines or we don't like that these are used tools, we won't guarantee the quality,'" he said. "It's like starting over."

He said Baby Trend does source some plastic parts in the United States.

He also took issue with Dorel's figures on market size, estimating that the child safety seat market typically varies between 15 million and 25 million units in the United States, implying that Dorel's Indiana factory would be less able to mitigate tariff harm by boosting production.

It's not the first time that safety seats have been under potential tariffs.

An earlier round of Trump administration tariffs included the child safety seats, but they were dropped after the industry protested and argued that keeping safety seats affordable was important to protecting children.

JPMA said in a statement it was "particularly aggrieved" to see seats and other children's products back on the tariff list.

The earlier Trump administration decision on safety seat tariffs also created what Dorel argues is an unfair disadvantage. That's because the Trump administration kept Chinese-made fabric components for the safety seats under tariffs in that earlier round, Dorel said, forcing it to pay tariffs on fabric it imports to its Indiana factory.

It argued that since companies that import the entire safety seat currently pay no tariffs, the government's split decision, in effect, puts U.S. manufacturing at a disadvantage.

"The current tariff schedule thus benefits child safety seat importers at the expense of the country's largest domestic child safety seat manufacturer," Dorel said.

Gallogly urged the Trump administration officials to treat both components and complete seats the same, either putting tariffs on both or neither.