Element Electronics, which bills itself as the only company assembling LCD TVs in the U.S., wants the Office of the U.S. Trade Representative to stand firm in its proposal to levy 25 percent tariffs on finished flat-panel sets imported from China, the company said in comments. Element’s support for keeping TVs imported from China under the HTS 8528.72.64 subheading on the USTR’s proposed tariffs list puts the company at odds with Best Buy (see 1804240062), the Consumer Technology Association (see 1804260053) and Roku, all of which oppose the tariffs and are asking the office to remove that TV product line item from the list.
U.S. Trade Representative (USTR)
The U.S. cabinet level position that oversees trade negotiations with other countries. USTR is part of the Executive Office of the President. It also administers Section 301 tariffs.
The Office of the U.S. Trade Representative's annual review of countries' intellectual property practices added Canada and Colombia to a "priority watch list," as other countries remained on it, including China, for 12 nations total, one more than in 2017 (see 1704280026). Canada remains the only G7 country identified in the "Special 301" report and its "downgrade" is amid "significant concerns" like "poor border and law enforcement with respect to counterfeit or pirated goods" and "deficient copyright protection," USTR reported. "Canada does not provide customs officials with the ability to inspect, detain, seize, and destroy in-transit counterfeit and pirated goods entering Canada destined for the United States." That country's embassy didn't comment to us, nor did that of Colombia or China. China is on the priority watch list for the 14th consecutive year, USTR announced. "Longstanding and new IP concerns merit increased attention, including China’s coercive technology transfer practices, range of impediments to effective IP enforcement, and widespread infringing activity -- including trade secret theft, rampant online piracy, and counterfeit manufacturing."
The Office of the U.S. Trade Representative accepted the Consumer Technology Association’s request for Sage Chandler, vice president-international trade, to testify at the May 15 public hearing in opposition to the Trump administration’s proposed 25 percent tariffs on certain goods imported from China, a CTA spokeswoman said in an email. Of the 1,300 "product lines" in the USTR's list of proposed tariffs, CTA members have so far identified 190 HTS codes representing goods they import from China, and those goods were worth $25 billion last year, Chandler said in comments posted April 25.
Business interests who depend on NAFTA are trying to piece together a strategy for how to handle changes under a new deal, but there are differing opinions on what will happen to car rules of origin. Trade lawyer Daniel Ujczo, who chairs the Canadian-U.S. trade practice at Dickinson Wright, said in an interview that the U.S. trade representative is looking for a 75 percent North American content on high value parts, such as the engine and transmission, but may allow lower percentages for other tiers of parts. But Ujczo said his understanding is that the lower hurdle for parts doesn't eliminate the top-line requirement that 85 percent of cars' value must come from NAFTA partner countries in order to qualify for duty-free status.
India's eligibility for the Generalized System of Preferences is being evaluated after petitions from American dairy interests and medical device manufacturers who complained about Indian trade policies on those products. The Office of the U.S. Trade Representative, which announced the review of three countries on April 12, had mentioned India's pricing controls on knee replacements and stents as a trade irritant in its annual trade report (see 1803300022). The two interest groups have been asking for India's removal from GSP since October 2017 (see 1710190022). India is the top beneficiary of GSP, accounting for $5.6 billion of the program's $21.1 billion in imports last year, according to USTR.
TVs imported from China could bear an especially heavy burden under the Office of the U.S. Trade Representative’s list of products targeted for 25 percent tariffs under the Trump administration's Section 301 investigation (see 1804040019). “This is a big impact on TV,” Bob O’Brien, president of Display Supply Chain Consultants, said in an interview. All products classified in Harmonized Tariff Schedule subheading 8528.72.64 would be prone to tariffs, “which is basically all TVs” imported from China, he said. He estimates 18.8 million TVs with a value of $3.9 billion were imported from China in 2017 under that classification. “This would have a huge impact on the TV supply chain.”
Trump Considering Tariffs on Another $100 Billion Worth of Chinese Goods Under Section 301 Authority
President Donald Trump tasked the Office of the U.S. Trade Representative with looking at adding another $100 billion in Chinese goods to the $50 billion already identified as part of the Section 301 investigation. "Rather than remedy its misconduct, China has chosen to harm our farmers and manufacturers," the White House said in a release. USTR promptly responded that tripling the size of the tariffs is appropriate, and promised to assemble a list. "Any additional tariffs proposed will be subject to a similar public comment process as the proposed tariffs" announced on April 3 and "no tariffs will go into effect until the respective process is completed," the agency said.
U.S. Trade Representative Robert Lighthizer has said he hopes to reshape NAFTA in a way that appeals to both Democrats and Republicans. Some of the most prominent critics in the House of Representatives on NAFTA said April 5 that while they appreciate some of his positions, he has a long way to go to convince them.
Hours after the U.S. put out its draft list of tariffs on $50 billion worth of Chinese goods (see 1804030055), China said it may impose tariffs on $50 billion worth of U.S. imports, including certain narrow-body and corporate jets, cars, SUVs, soybeans, beef, wheat, whiskey and chemicals. Trade lawyers and lobbyists and China economic experts didn't agree on much, but most expect that a negotiated settlement will not be reached in time to stop the tariffs.
An agreement in principle on NAFTA is reachable in the "next little bit," U.S. Trade Representative Robert Lighthizer said in a March 28 interview on CNBC. According to media reports from Inside U.S. Trade and from Canada, Lighthizer's team has abandoned a U.S. content requirement for rules of origin in autos, and replaced it with a proposal that an 85 percent North American content requirement can be fulfilled in part by giving credit for higher wages. Some reports pegged that wage at $15 an hour, others at somewhere in the $13 to $17 an hour range. Either would be easily met by most U.S. and Canadian auto parts and auto assembly plants.