Much of Tech Industry Blasts Administration's Decision to Go Ahead on Tariffs

Roughly a week ago, Treasury Secretary Steven Mnuchin said the administration would put the duties "on hold" while it tries to get a trade deal with China (see 1805200004). USTR Robert Lighthizer released a statement hours later saying the U.S. still “may use all of its legal tools to protect our technology through tariffs, investment restrictions and export regulations” as work on a trade deal with China continues. Now that the administration apparently has decided to proceed with the tariffs, several tariff-opposition groups Tuesday seized upon the mixed White House messaging as making the tariffs issue worse than just the tariffs themselves.

"Lack of clarity surrounding the administration’s plans is creating significant uncertainty for American businesses, disrupting supply chains and threatening to undermine the economic gains we’ve seen over the past year,” said National Retail Federation CEO Matthew Shay. China’s trade practices “raise serious concerns, but job-killing tariffs aren’t the answer,” said Shay. “As the U.S. and China prepare for another round of negotiations, we hope the administration has clearly defined objectives and concrete solutions to resolve this trade dispute without tariffs.”

The administration’s “conflicting messages” on tariffs are “causing whiplash for American companies,” said Hun Quach, vice president-international trade, at the Retail Industry Leaders Association, which represents big-box retailers. Going ahead with tariffs “puts American consumers on the hook for the misdeeds of Chinese companies,” said Quach. “Igniting a global trade war will cause casualties.” RILA urges administration officials “to keep their promise of minimizing harm on American families as they work towards solutions that hold our trading partners accountable,” she said.

Best Buy, whose CEO Hubert Joly sits on RILA’s board, won't comment on the White House announcement until it knows for sure what's on the final tariffs list, emailed spokesman Jeff Shelman Tuesday. The retailer, through two rounds of public comments and oral testimony at a May 15 public hearing (see 1805170067), urged the USTR’s office to remove from the tariffs list finished TVs under the Harmonized Tariff Schedule (HTS) 85287264 subheading because virtually all the Insignia-brand TVs it sources from China fall under that classification.

Roku, TCL and Vizio also have called for those TVs to be removed from the tariffs list, but none of them commented Tuesday. Analysts estimate U.S. companies imported nearly 19 million TVs last year worth about $3.9 billion under the 85287264 classification. Element Electronics also declined comment Tuesday. It bills itself as the only company that assembles LCD TVs in the U.S. and is among the few consumer tech firms that supports the imposition on tariffs on HTS 85287264-classifed sets.

CTA, which also opposes the tariffs as risking harm to U.S. jobs and the economy, didn’t comment on Tuesday’s White House announcement, which appeared to dismiss last week’s call from CTA, NRF and 50 other trade groups for “additional public input for any products that USTR is considering adding” to the tariffs list (see 1805240074). The timing of the USTR’s release of the final list would coincide with CTA's convening of its CES Asia show June 13 in Shanghai for a three-day run.

Tariffs “do not work -- point blank,” said Dean Garfield, Information Technology Industry Council CEO. “Moving forward with tariffs on goods imported from China will harm U.S. consumers and businesses, and will fail to change China’s discriminatory and damaging trade practices. As senior administration officials have said, trade wars will only ratchet up tensions with China.” Garfield urged the administration to “use this time to seek specific commitments on gaining fair and reciprocal access to the Chinese market, and on ending China’s harmful trade practices with accountability mechanisms.”

The decision to go ahead with tariffs is “a highly counter-productive move that will make it more expensive to produce advanced telecom products" in the U.S., said Cinnamon Rogers, Telecommunications Industry Association senior vice president-government affairs. “The higher costs associated with tariffs stand to weaken U.S. exports and impair our country's competitiveness."

The White House also announced additional steps it will take to "protect domestic technology and intellectual property, stop noneconomic transfers of industrially significant technology and intellectual property to China, and enhance access to the Chinese market." The U.S. will "request that tariffs and taxes between the two countries be reciprocal in nature and value" and will work toward "resolving long-standing structural issues and expanding our exports by eliminating China’s severe import restrictions," the White House said.

New "investment restrictions and enhanced export controls for Chinese persons and entities related to the acquisition of industrially significant technology" are coming, the White House said. "The proposed investment restrictions and enhanced export controls will be announced by June 30, 2018, and they will be implemented shortly thereafter." The White House said in a fact sheet that "China has consistently taken advantage of the American economy with practices that undermine fair and reciprocal trade."

A spokesman for China said his country was "surprised at the strategic statement" released by the White House, according to an informal translation of a Ministry of Commerce news release. "This is obviously contrary to the consensus reached between the two sides in Washington not long ago. No matter what measures the United States takes, China has confidence, ability, and experience to safeguard the interests of the Chinese people and the country’s core interests. China urges the United States to act in accordance with the spirit of the joint statement."

The US-China Business Council said tariffs and other such punitive measures are unnecessary. "We would like to see both sides put the threat of sanctions on hold and quickly get into negotiations to resolve these important issues," USCBC President John Frisbie said. "Tariffs and restrictions on commerce will have a real and negative impact on the economy and jobs. We need solutions that will put the trade relationship on a sounder path for mutual prosperity, not sanctions that will do more harm than good. We encourage both sides to use the coming weeks to achieve that goal." The U.S. Chamber of Commerce is similarly worried and said the tariffs are "a tax on American consumers and will undermine the competitiveness of American companies, just as the administration’s steel tariffs have dramatically raised prices on steel."