Smartphones are the largest of eight classifications of consumer technology products that would bear the biggest brunt of the 25 percent Section 301 tariffs proposed on $300 billion in imports not previously dutied during the U.S.-China trade war, according to the Consumer Technology Association’s top trade strategist. “The import values of the products that hit our members are massive,” emailed Vice President-International Trade Sage Chandler on May 14.
Paul Gluckman
Paul Gluckman, Executive Senior Editor, is a 30-year Warren Communications News veteran having joined the company in May 1989 to launch its Audio Week publication. In his long career, Paul has chronicled the rise and fall of physical entertainment media like the CD, DVD and Blu-ray and the advent of ATSC 3.0 broadcast technology from its rudimentary standardization roots to its anticipated 2020 commercial launch.
Trade Partnership Worldwide President Laura Baughman stands by her organization’s February survey report that found levying Section 301 tariffs on all remaining $300 billion in Chinese imports in addition to other sanctions in effect would cause severe U.S. economic harm, she said in an email. President Donald Trump's chief economic adviser Larry Kudlow, in a Fox News Sunday appearance May 12, called the study flawed. He tried to make the case that any economic "consequences" would be "modest" and well worth it.
The Office of the U.S. Trade Representative notice on the increase in Section 301 tariffs for the third tranche of goods from China (see 1905080004) mentions that a new exclusion process will be coming for that group of products. The notice, which said that the tariffs will go from 10 percent to 25 percent for the third list of goods from China at 12:01 a.m. on May 10, also seems to indicate some differences from previous tariff implementation instructions on the timing.
A Rhodium Group report prepared for the U.S. Chamber of Commerce found that the American information and communication technology sector is bearing an especially heavy burden from the “bilateral tariff escalation” between the U.S. and China, senior Rhodium analyst Lauren Gloudeman told reporters on a conference call March 15. The report found the costs of the escalation are “unambiguously severe” on the ICT industry, she said.
Importers welcomed the news that tariffs on the largest tranche of Chinese products will not rise to 25 percent in five days (see 1902240001). “We welcome the Trump administration not raising tariffs to 25 percent,” Consumer Technology Association President Gary Shapiro said. Tariffs “are costing the tech industry an additional $1 billion per month, and the cost of 5G products and parts from China have skyrocketed,” he said. “We urge both sides to move forward to a permanent resolution that will address trade issues with China, while also protecting American leadership in innovation.”
The National Retail Federation is optimistic about a de-escalation of the U.S.-China trade war but won’t close the door on joining a legal challenge if the Trump administration hikes the 10 percent Section 301 tariffs to 25 percent after March 1, CEO Matthew Shay told us Feb. 6. “I’m not sure we’re ready to go there yet,” Shay said of a court challenge.
The three rounds of Section 301 tariffs since July on $250 billion worth of Chinese goods are costing the tech industry more than $1 billion a month in added fees, the Consumer Technology Association reported. CTA teamed with The Trade Partnership to analyze recent U.S. import data and found tariffs on tech products imported from China jumped to $1.3 billion in October, a sevenfold increase from the same month a year earlier. That includes $122 million more in duties on 5G-related imports in October, compared with $65,000.
Cisco saw “immaterial” impact in its Q1 ended Oct. 27 from the 10 percent Section 301 tariffs that took effect Sept. 24 on $200 billion worth of Chinese imports, because the tariffs kicked in with only a month to go in the quarter, CEO Chuck Robbins said on a Nov. 14 earnings call. Though Cisco hiked prices on Chinese-sourced goods in Q1 to cover the higher tariff costs, it “saw absolutely no demand change” between the week before and the week after the price increases took effect, he said.
It’s “not resolved” whether the Consumer Technology Association will file a lawsuit blocking the Section 301 tariffs on Chinese imports before they rise to 25 percent, as scheduled for Jan. 1, CTA President Gary Shapiro said at a CTA event Nov. 8. CTA hired Akin Gump to draft a court complaint to block the tariffs and is shopping the draft around to other trade groups seeking their legal and financial support (see 1810290020).
The Consumer Technology Association has hired Akin Gump to draft a complaint, which, if pursued in the Court of International Trade, would seek an injunction blocking the Section 301 tariffs on $200 billion worth of Chinese imports before the duties are scheduled to rise to 25 percent on Jan 1., said several sources familiar with CTA’s plans. The association is shopping the draft around with other anti-tariff trade groups, seeking their legal and financial backing to support a court challenge, the sources said.