Chinese Tariffs Costing Tech Industry $1 Billion Monthly in Higher Fees, Says CTA
The three rounds of Trade Act Section 301 tariffs imposed since July on $250 billion worth of Chinese goods are costing the tech industry more than $1 billion a month in added fees, reported CTA Friday. CTA released its estimates as the Trump administration officially delayed to March 2 its plan to raise the third tranche of 10 percent tariffs to 25 percent.
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CTA teamed with The Trade Partnership to analyze recent U.S. import data and found tariffs on tech imported from China jumped to $1.3 billion in October, a sevenfold increase from the same month a year earlier, said CTA. That included $122 million more in duties on 5G-related imports in October, compared with $65,000 in the same 2017 month, it said.
Though President Donald Trump "made the right decision" when he postponed the 25 percent tariff hike for 90 days, the cost of tariffs that still exist "remains an issue," said Sage Chandler, CTA vice president-international trade. The "uncertainty of potentially more tariffs combined with export controls is a real threat to our industry and to maintaining U.S. global leadership on 5G innovation," she said. CTA estimates nearly 70 percent of the tariffs the tech industry pays come from the third tranche of 10 percent tariffs enacted Sept. 24, said Chandler.
CTA thinks it's "almost inevitable" the tariffs will cause an "economic slowdown" if not suspended altogether, said Chandler. "Just look what the tariffs' damage and uncertainty have done to stock markets." It's "critical" the administration negotiates a trade deal with China "with the mindset of ending tariffs and addressing the concerns of forced tech transfers and IP theft," she said.
The third tranche of 10 percent tariffs on Chinese imports automatically rises to 25 percent March 2 at 12:01 a.m. EST if U.S. and Chinese negotiators don’t agree on a comprehensive trade package, said an Office of the U.S. Trade Representative notice Friday that officially postponed the hike 90 days (see 1812030002).
U.S. and Chinese leaders met Dec. 1 and agreed “to hold negotiations on a range of issues,” including U.S. allegations of unfair Chinese trade practices as described in the USTR's March 22 Section 301 investigative report, said the agency. “In light of the outcome” of the Dec. 1 meeting, and at the “direction” of Trump, USTR “determined that it no longer is appropriate” to raise the tariffs to 25 percent on Jan. 1, it said.