Covid-19, hurricane season spark Duracell, Energizer push to lift tariffs on China-sourced batteries

03 Apr 2020 5:53 pm by Kat Lucero

Energizer Holdings and Duracell say their US manufacturing operations won’t be able to meet an upcoming surge of demand for batteries during the coronavirus pandemic that may collide with the upcoming hurricane season.

Battery imports, including from China, would benefit the domestic supply, the two US manufacturers told US Trade Representative Robert Lighthizer, and the removal of the Trump administration’s retaliatory 25 percent tariffs on these specific Chinese goods would ease the companies' financial burden during the economic slump brought on by the Covid-19 shutdowns.

“While current demand levels require that we temporarily supplement our essential U.S. production, the tariff renders that commercially unsustainable,” said Thomas C. Lachman, CEO and president of Duracell, a Berkshire Hathaway company, in a letter to Lighthizer.

The battery giants’ requests are among the hundreds that USTR has received in the past few days as the agency attempts to identify critical Chinese imports that need tariffs waived in response to the Covid-19 emergency. Even companies whose requests were denied can make another pitch or double down on pending bids, such as Duracell’s for AAA rechargeable batteries. The agency will be reviewing the applications on a rolling basis.

The tariffs were first imposed two years ago under Section 301 of the Trade Act as part of the White House’s retaliatory measures against China for what the US considered unfair trade practices. These tariffs remain as leverage for the US in ongoing negotiations.

In response to the emergency, Duracell and Energizer said their domestic operations ramped up production. Still, those factories won’t be able to meet an upcoming spike in demand, according to the companies, especially as more people stock up on batteries for possible power outages during the Atlantic hurricane season from June to November and if the pandemic doesn’t appear to be winding down by then

Energizer said its manufacturing plants, research and development facilities and distribution centers are currently open but “operating with staggered shifts” to follow the federal government’s public health recommendations.

“The size and speed of the COVID-19 pandemic [make] clear, however, that Energizer’s domestic manufacturing capacity must be supplemented by sources from outside the United States (including China) in order to meet the requirements of this national emergency,” said King & Spalding, counsel on behalf of the company.

Energizer and Duracell both requested lifting the 25 percent tariff on alkaline batteries and carbon-zinc batteries, which are used to power thermometers, flashlights, hospital equipment, defibrillators and other medical devices used to treat and monitor Covid-19 patients. They also want the 25 percent tariff removed from lithium-ion power banks and other batteries and chargers, which currently have tariff exemptions that will expire this year.

One of Duracell’s distributors is seeing a “dramatic increase in demand for batteries for infusion treatments that are being conducted in-home as more patients are advised to stay away from hospitals,” said Lachman.

Duracell expects “similar demand spikes in other medical application segments as well, as our battery brand commands a huge market share in the medical distributor market,” Lachman said. He said his company supplies batteries to nearly 14,000 hospitals, laboratories, home health care services, assisted living facilities and health clinics.

Duracell’s manufacturing facility in Dongguan, China, now fully operational after the country’s own Covid-19 shutdowns, would be able to help meet those demands, according to Lachman.

The shares of Energizer and Duracell parent company Berkshire Hathaway are traded on the New York Stock Exchange.

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