International Trade Today is providing readers with some of the top stories for July 30 - Aug. 3 in case they were missed.
The Office of the United States Trade Representative released the final list for the second tranche of Section 301 tariffs on Aug. 7. CBP will begin the collection an extra 25 percent in tariffs on those goods from China starting Aug. 23, the USTR said in its announcement.
China responded to proposed U.S. tariffs on $200 billion worth of goods under Section 301 with a new tariff threat of its own on Aug. 3. The Chinese Ministry of Commerce announced plans to add tariffs of between 5 percent and 25 percent on 5,207 items, said to account for about $60 billion worth of goods from the U.S. The Office of the U.S. Trade Representative is considering imposing tariffs of 25 percent on $200 billion worth of Chinese goods (see 1808010070). "The US measures have deviated from the consensus of the two sides, leading to an escalation of trade friction between China and the United States, serious violations of relevant rules of the World Trade Organization, and damage to our national interests and people's interests," the Ministry of Commerce said, according to an unofficial translation.
Tariffs "show up as a tax on the consumer and wind up resulting in lower economic growth” that can sometimes bring about "significant risk of unintended consequences,” Apple CEO Tim Cook said in Q&A on the company’s quarterly earnings call on July 31. Several trade agreements “are in need of modernizing,” but in most situations, “tariffs are not the approach to doing that,” Cook said. Risks of macroeconomic issues such as an economic slowdown or currency fluctuations related to tariffs are difficult to quantify, “and we're not even trying to,” Cook said. None of Apple’s products was affected by the U.S. tariff on steel and aluminum, which took effect in June, nor two other Section 301 lists totaling about $50 billion in goods from China that were implemented.
As critics continue ratcheting up their opposition to the Trump administration’s proposed third round of Section 301 tariffs on $200 billion in Chinese imports, it remains to be seen how the Office of the U.S. Trade Representative will accommodate all who have requested to testify in five-minute slots during four days of public hearings scheduled to begin Aug. 20. Well more than 300 people in various industries filed requests in docket USTR-2018-0026 by the July 27 deadline to appear at the hearings, virtually all of them to say they'll testify against the tariffs.
International Trade Today is providing readers with some of the top stories for July 23-27 in case they were missed.
The U.S. trade relationship with China "significantly impacts” Consumer Technology Association member companies, large and small, because they “rely on the global supply chain -- including China -- to conduct business,” said Sage Chandler, CTA vice president-international trade. She asked to appear at Aug. 20-23 public hearings to oppose 10 percent Section 301 tariffs proposed in a July 10 Office of the U.S. Trade Representative notice. CTA members identified 302 tariff lines of Chinese imports in the notice, accounting for more than $109 billion in value, for which 10 percent duties “would be detrimental to their business,” Chandler said in her July 27 filing. CTA is still gathering “relevant data” on the tariffs’ possible impact on members, and the numbers she cited may need to be “updated” by the time written comments are due Aug. 17, she said.
Element Electronics wants a slot to appear at public hearings Aug. 20-23 to urge removal of two Harmonized Tariff Schedule classifications of Chinese LCD panel imports (HTS 9013.80.90 and 8529.90.13) from the list of proposed 10 percent Section 301 tariffs, the company said in a filing posted July 26 in docket USTR-2018-0026. Element is “the sole U.S. mass assembler” of LCD TVs, producing about 2.5 million sets a year at its plant in Winnsboro, South Carolina, and is among the local county's top 20 employers, the company said. The Internet Association also wants to testify at the hearings, for the removal of 22 tariff lines “that cover products internet companies use to function on a daily basis,” including “control or adapter units for automatic data processing machines” and other components, it said in a filing posted July 26. Imposing new duties on the 22 tariff lines “would not help to correct China's practices, but would cause disproportionate economic harm to American internet companies,” the association said. July 27 is the deadline for filing requests to appear at the hearings.
It's not easy or cheap relocating semiconductor packaging plants from China to other countries of origin to avoid tariffs, Intel said in comments posted July 25 in docket USTR-2018-0018 opposing the proposed 25 percent Section 301 duties on Chinese semiconductor imports. Many tech interests argued this week for removing Chinese semiconductor imports from the tariffs list because most semiconductors the U.S. imports are made in the U.S., shipped to China for final, low-end assembly, testing and packaging (ATP), and then shipped back to the U.S. (see 1807240045). Imposing those duties would require U.S. semiconductor manufacturers to pay tariffs on their own products, they said. Though U.S. firms can limit or avoid their exposure to Chinese tariffs by moving their ATP plants elsewhere, "no rational U.S. semiconductor company is going to incur the very high costs and other risks raised by relocating an ATP facility in China with an already established ecosystem to a green field site in another country,” Intel said. It estimates it would cost anywhere from $650 million to $875 million to move an ATP plant out of China, “depending on its size and where it would be relocated,” it said.
Pier 1 Imports does not expect major ramifications from proposed 10 percent Section 301 tariffs on a wide range of goods from China (see 1807110050), the company said in a news release. "Consistent with recent years, approximately 59% of the Company’s fiscal 2019 net sales are expected to be derived from merchandise produced in China," the company said. "Of that amount, approximately half is expected to consist of product classes subject to the proposed tariff." While Pier 1 is looking at "strategies to mitigate the impact of the proposed tariff, including collaborative efforts with its vendor partners," it "does not expect financial results in fiscal 2019 to be materially affected," the company said. Still "there can be no assurance as to the final scope of the proposed tariff or the course or timing of trade negotiations," it said.