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Big Tech Teams Up

Tech, Telecom Ratchet Up Opposition to Tariffs Via New Campaign, More Opposition to USTR

Tech and telecom interests are ratcheting up opposition to U.S. tariffs on Chinese products being imposed over intellectual property disagreements between the countries. CTA, the Information Technology Industry Council, Internet Association, Telecommunications Industry Association and some 80 others wrote congressional leaders of their concerns and began Americans for Free Trade. It's a “major campaign against tariffs,” said the group Wednesday. Industry also continues telling the U.S. Trade Representative of concerns (see 1809110044), with tech heavy hitters teaming up after IBM earlier expressed concerns.

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Tariffs Hurt the Heartland” is the theme of the multimillion dollar national campaign. It starts next week with events in congressional districts in four states. The group also plans a “rapid response ‘war room’ that will fact check and respond to tariff announcements,” and will publish “op-eds, blogs and statements from Americans." Other members include the Computer & Communications Industry Association, CompTIA and Software & Information Industry Association.

Imposing 25 percent duties on wireless home audio systems “would cause disproportionate and severe economic harm to U.S. interests, while failing to address” allegedly unfair trade practices, commented Sonos in docket USTR-2018-0026. It “experienced” no IP-theft issues from USTR's investigative report released March 22, nor has it been “forced into a joint venture” as a condition to manufacture in China, it said. The supplier has “retained close control” over its IP “without interference from the Chinese government,” it said. The administration removed smartphones from the first tranche of tariffs that took effect July 6 because those are goods that American consumers commonly buy. “Sonos’ products share many characteristics with these other products," it noted.

Applying tariffs to the networking products imported to the U.S. from China under the same customs classification as Sonos smart speakers “would have a detrimental impact on U.S. interests,” commented Cisco, Dell, Hewlett Packard Enterprise and Juniper. “The duties would effectively create a tax on public sector and business entities,” said the companies. “Given the enormous volume of potentially impacted trade,” the tariffs would affect more than $23 billion in total imports and “create potential duty liability” of up to $5.7 billion a year for U.S. consumers, they said. “Prices for networking products and accessories would almost certainly increase.”

The “race” is on “to lead the world in 5G" (see 1809120017), the tech companies noted. The U.S. “currently lags behind China in 5G readiness,” they said. U.S. deployment of a 5G “infrastructure” will be “key” to America’s “early and successful rollout of 5G technology,” yet that deployment “will depend on “the very networking products the proposed additional duties would target,” they said. Cloud computing “is another strategic priority that depends heavily on the networking products that are potentially subject to the additional duties,” they said.

The cellphone chargers, batteries and accessories that Xentris Wireless sources from China under the 8504.40.85, 8504.40.95, 8506.80.00 and 8544.42.20 classifications account for 80 percent of profit and sales, commented the supplier. Tariffs on those products, as proposed, “would not only harm Xentris,” but also its customers, “mainly American wireless carriers, retailers, and dealer agents, and ultimately the American consumers who will not be able to get the wireless accessories they want,” said the company.

Senior Vice President-Public Policy Mark MacCarthy noted SIIA and others documented the "damaging" impact of duties. The group showed the tariffs will hurt the building of data centers and make smart thermostats more expensive, he said. "We urge the Administration to work with like-minded countries to develop a joint strategy to deal with China.”