Many ESOP companies, especially in manufacturing, are facing challenges because of the global increase in tariffs, especially between the US and China. Companies can apply for an exception to certain “Section 301” tariffs if specific criteria are met, including “Whether the imposition of additional duties on the particular product would cause severe economic harm to the requestor or other U.S. interests.” The deadline is October 9.

Arguably, tariffs have a greater impact on ESOP companies than on other companies subject to the same tariffs. Because employees are owners as well as employees, the economic cost of the tariffs affects both their job stability and their retirement assets. Protecting these companies can be justified as well by the fact that ESOPs have been found to have turnover rates that are one-third to one-fifth that of other companies, generate 2.2 times the retirement assets compared to companies that provide retirement plans (and 51% of the private sector workforce does not participate in any plan at all), and generate 2.5% more jobs per year than would have been expected absent an ESOP. A substantial number of ESOP companies are located in economically distressed areas.

Readers of this blog are welcome to use this language if they choose to apply, and the NCEO requests that any companies that apply for tariff exemptions inform us about the response they receive.