TVs Spared From Final Tariffs, but CTA, Others Still Call Duties Anti-Consumer

The tariffs take effect July 6 on the first list of 818 product classifications gleaned from the 1,333 “lines” published in the early April proposed tariff list, said the agency. It will hold a “public notice and comment process” in the next few weeks, including a hearing, on a second list of 284 lines of products newly proposed for tariffs. Several companies and groups had urged the USTR's office against proposing new tariffs without giving the public a chance to weigh in.

The final tariffs were missing all 33 classifications under the Harmonized Tariff Schedule’s main 8528 heading for TV products that were published in the early April proposed tariffs list (see 1804040023). Key were finished TVs imported from China as grouped under the 85287264 subheading. International Trade Commission statistics showed that last year, China exported nearly 19 million TVs worth about $4 billion to the U.S. under 85287264.

Eliminating those sets from possible tariffs spared Best Buy, TCL and Vizio. All heavily source finished TVs from China and lobbied the USTR’s office to remove those sets. They argued the higher TV pricing that would result from the tariffs would hurt U.S. consumers, not punish the Chinese responsible for allegedly unfair trade practices.

The USTR’s office mentioned in its announcement that the final tariffs list “does not include goods commonly purchased by American consumers such as cellular telephones or televisions.” Best Buy spokesman Jeff Shelman declined comment. TCL and Vizio didn’t comment, nor did Element, which bills itself as the only company that assembles LCD TVs in the U.S. Element had urged the USTR’s office not to remove finished TVs from the tariffs list. Element did get its wish that the agency not impose tariffs on the LCD panels it imports from China for final set assembly at a plant in South Carolina.

The agency kept intact for imminent tariffs flat panels for applications other than TVs that are imported from China under the 90138070 HTS subheading. ITC data shows China shipped nearly 15 million such flat panels worth about $294 million to the U.S. last year. “It surprises me that the number is so high, and the math says that this means it's only about $20 average price,” emailed Bob O’Brien, president of Display Supply Chain Consultants. He speculated those might include “other types of displays that are not LCD, including vacuum fluorescent displays, LEDs, passive-matrix OLEDs, and the like.” Those types of displays “are used in a variety of applications,” he said.

One classification of goods proposed for new tariffs was Chinese-sourced “machines and apparatus for the manufacture of flat panel displays” imported to the U.S. under HTS subheading 84863000. O’Brien said producers of such machinery are heavily “concentrated” in Japan and South Korea. The Chinese government has been pushing more local companies to become involved in that sector, said O’Brien, so tariffs against Chinese imports of that machinery might be the Trump administration’s “preemptive” measure against those initiatives.

Cree lost because tariffs on LEDs imported from China under the 85414020 HTS subheading remain. House members representing districts in or near where Cree is based in Durham, North Carolina, urged the agency not to impose tariffs on LED chips it re-imports from China, based on wafers it produces in the U.S. (see 1806140056 or 1806140001). Cree didn’t comment.

China "doesn't want a trade war," reacted the Foreign Ministry. "However, confronted by such [a] short-sighted act that hurts both [the] US itself and others, China has no choice but to fight back forcefully, to firmly safeguard the interests of the nation and its people and uphold economic globalization and the multilateral trading system." China will "immediately take tariff measures of the same scale and intensity," said the ministry. "All economic and trade outcomes of the previous talks will now lose effect."

The final tariffs list emphasized it's targeting capital goods over consumer products. Tech and retail groups nevertheless criticized the tariffs for their potential to hurt U.S. consumers through pass-along costs, including CTA, among those that successfully fought to remove TVs. “Tariffs go against the interest of the American people,” said Michael Petricone, senior vice president-government and regulatory affairs. “The economy will respond to the president's tariff agenda by increasing the cost of goods that people use every day.”

Tariffs are “taxes on American consumers,” said National Retail Federation CEO Matthew Shay. “These tariffs won’t reduce or eliminate China’s abusive trade practices, but they will strain the budgets of working families.”

The Telecommunications Industry Association is “extremely disappointed” the administration “opted to employ this trade remedy,” said Senior Vice President-Government Affairs Cinnamon Rogers. The administration’s response to China’s unfair trade practices “stands to hurt one of the most innovative sectors of the American economy, making it more expensive to manufacture advanced telecom products here in the United States,” said Rogers.

The administration “should be careful not to inadvertently put U.S. productivity growth in jeopardy,” said Information Technology and Innovation Foundation President Robert Atkinson. “An increase in prices brought about by tariffs on capital goods would reduce investment.”

The tariffs put the U.S. and China “firmly on a path to a trade war,” said TechNet CEO Linda Moore. TechNet hopes the administration “will realize this action is ill-advised and reverse course before" stakeholders "begin to feel the pain,” she said.

CompTIA has “no doubt that tariffs will create irreparable harm to America’s tech companies,” said Elizabeth Hyman, executive vice president-public advocacy. “Tariffs will result in higher costs for American manufacturers and suppliers and decrease the overall global competitiveness of U.S.-based tech firms.”

The Computer & Communications Industry Association predicts a “backfire,” said CEO Ed Black. “These tariffs may be aimed at China, but they will result in collateral damage that targets US companies and consumers.”

Forcing U.S. “businesses and working families” to pay “billions in new trade taxes won’t change China’s bad behavior,” said Ed Gerwin, Progressive Policy Institute senior fellow-trade and global opportunity. “China will respond -- as it has already announced -- with billions in targeted retaliatory tariffs.” Gerwin fears “tit-for-tat tariffs."