Tech Opposing Tariff Line They Say Would Hurt IoT; Rosenworcel Concerned; Higher Rate Possible

Also Wednesday, the office announced that the latest $200 billion batch of proposed tariffs could rise 15 points to 25 percent (see 1808010078). "Regrettably, instead of changing its harmful behavior, China has illegally retaliated," said USTR Robert Lighthizer: Potentially boosting the duty rate would give the U.S. administration "additional options to encourage China to change its harmful policies," he added.

Tech interests are increasingly focusing on the Harmonized Tariff Schedule line item they say would disrupt the IoT supply chain: 8517.62.00 includes servers, gateways and modems critical to the IoT “ecosystem,” plus ubiquitous consumer products such as Bluetooth headsets, speakers, fitness trackers and smartwatches, said CTA. Tweeted FCC Commissioner Jessica Rosenworcel Tuesday: “In 8517.62.00, @USTR proposes tariffs on ‘machines for the reception, transmission, conversion & transmission or regeneration of voice, images, or other data.’ This is the #InternetofThings & the damage these tariffs could do to innovation here is real.”

That “covers a wide variety of wireless products, including fitness trackers and smartwatches, which comprise nearly all of Fitbit's products,” said the company in Friday comments posted Tuesday. “At the very least, wrist-wearable products classifiable in this subheading should be removed.” The levies could “compromise” U.S. market-share leadership in wearables, it said.

The Chinese wearables brands Xiaomi and Huawei “are already among the top four suppliers of wearables in the world, and are aggressively targeting additional U.S. market share,” said Fitbit. “Unlike U.S. companies, such as Fitbit, that maintain major, U.S.-based research efforts, Chinese companies can survive on razor-thin margins and easily absorb this tariff, potentially with state-backed support. This would ultimately work to the advantage of Chinese competitors seeking to gain U.S. market share and access to U.S. consumers' health and fitness data.”

Dell Technologies opposes tariffs on four USTR line items, including on the network switches it imports from China under 8517.62.00, said the company. Dell manufactures “advanced technology products” at its plants in Franklin, Massachusetts, and Apex, North Carolina, it said. “Tariffs will increase the costs of vital parts and components for our U.S. services and manufacturing operations. Driving up the costs of manufacturing key Dell products in the United States will inevitably undermine U.S. technology leadership, as well as put good-paying U.S. jobs at risk.” American consumers also will “suffer” if the Trump administration “raises the cost of key technologies, diminishing access and increasing the digital divide,” said Dell.

CTA members “are still trying to figure out impact from this list,” because there’s “so many things on it," Sage Chandler, CTA vice president-international trade, told us. Many in the supply chain “don’t necessarily know if they’re going to get hit,” said Chandler. “They’re still struggling to work with all their importers of record. If a company isn’t the one that’s bringing the stuff in, then they have to rely on their suppliers, or their suppliers’ supplier. You can imagine the world right now, where all these people are trying to assess, but they’re not even the ones holding the information on what exactly is coming in.” The "administration never put into words or anything coherent, what the objective of all this is,” she said.