Tech Interests Strike Out in Their Bids to Spare Key Goods From Latest Tariffs
Tech interests virtually struck out in their attempts to persuade U.S. Trade Representative Robert Lighthizer to spare their products and components from a second tranche of 25 percent Trade Act Section 301 tariffs on imports from China. Despite heavy industry lobbying to exclude semiconductors and other key parts from the second round of new levies, the list Lighthizer released Tuesday contains 279 tariff lines of goods worth about $16 billion in trade value, a mere 2 percent reduction from 284 lines in the originally proposed list released June 15 (see 1806150030). The new tariffs will take effect Aug. 23, said Lighthizer, who soon will announce a "process" for seeking exclusions from the new duties.
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Of the nearly five dozen line items CTA asked Lighthizer last month to remove from tariffs consideration on behalf of member companies (see 1807240005), the final list deleted only one, that of alginic acid and its derivatives imported to the U.S. from China under Harmonized Tariff Schedule subheading 3913.10.00. Alginic acid has a wide variety of commercial applications, including as an agent for making industrial gels and for waterproofing textiles.
Of the remaining 58 items that CTA members earmarked for exclusion, imports from China in those categories totaled $10.1 billion in 2017 trade value, roughly 63 percent of all products on the list, Sage Chandler, CTA vice president-international trade, emailed us Wednesday. The “top tech categories hit,” by 2017 trade value, according to Rick Kowalski, CTA senior manager-industry and business intelligence: (1) HTS 8543.70.99, including amplifiers ($1.46 billion); (2) HTS 8542.31.00, semiconductors of all types ($1.12 billion); (3) HTS 8542.32.00, flash-memory and solid-state memory components ($754.6 million); and (4) HTS 8542.29.00, integrated circuits of various types ($707.5 million).
Tariffs “are taxes, plain and simple,” because they “raise prices for manufacturers, force consumers to pay more and throttle our economic growth,” said CTA President Gary Shapiro. “If we're going to address China's unfair trade practices, we should do so in a way that doesn't punish American families.” The new tariffs list includes 58 product categories “our members say are critical to their businesses and will cost American jobs if taxed,” said Shapiro. “These taxes are especially dangerous for small- and medium-sized companies. We've heard from many small businesses and startups who tell us the tariffs are forcing them to make difficult decisions about their workforces and their companies' futures.”
Voxx International was among the many CTA members that drew little good news from the latest tariffs release. The company had asked for the removal of five line items (HTS 3903.19.00, 8529.10.91, 8544.49.20, 8536.30.80, and 8543.70.99) covering goods such as antenna components and voltage protectors, but got none deleted. Voxx management “continues to look at all options to address tariffs, ensure adequate supplies and limit any exposure,” CEO Pat Lavelle emailed us Wednesday. Moving production “to other Asian markets and possibly moving some board production back to the U.S. are things we are evaluating,” he said. “We believe this is just the beginning of a trend we will see played out over the next few years as we predict higher prices from China as they shift their focus to their domestic market.”
Other tech interests also weighed in with their opposition to the new tariffs. The Trump administration’s decision to proceed with the new duties “will cost Americans more at the checkout counter on popular electronics such as wearable smart devices and televisions," Jose Castaneda, spokesman for the Information Technology Industry Council, emailed us Wednesday. “The continued escalation of this trade war has already begun to have a direct negative impact on Americans jobs and small-medium sized businesses across the country,” he said. ITI wants the administration to “stop punishing Americans for China’s unfair trade policies. It is time for the administration to re-engage the Chinese government and make its demands clear to resolve these persistent trade issues.”
Various tech interests “agree that the administration should take an aggressive stand in confronting unbridled Chinese mercantilist practices” in the information and communications technology (ICT) sector, Stephen Ezell, Information Technology and Innovation Foundation vice president-global innovation policy, told us Wednesday. “However, its approach has been way too tariff-happy to date,” said Ezell. “The reality is that these tariffs on productivity- and innovation-enhancing ICT goods are going to do more damage than good to the U.S. economy.”
ITIF thinks there are “far more effective ways we could be going about trying to contest and counter” China’s allegedly unfair trade practices “without having to unnecessarily inflict damage to our own economy,” said Ezell. An ITIF report that Ezell helped author in March estimated 25 percent tariffs on Chinese imports would rob the U.S. of $20 billion worth of “foregone” GDP in the first year (see 1803220043).