Smartphones, Laptops Win Dec. 15 Tariff Delay
Five of the top eight consumer tech product categories in terms of 2018 customs value temporarily escaped 10 percent List 4 Section 301 tariff exposure at least until Dec. 15 (see 1908130015), well after imports will have arrived for the peak holiday selling season, per Office of the U.S. Trade Representative documents released Tuesday. Bluetooth headphones, smartwatches, smart speakers and finished TVs from China face immediate 10 percent tariff exposure Sept. 1.
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Smartphones, No. 1 in 2018 customs value under the 8517.12.00 Harmonized Tariff Schedule subheading, appear on a newly configured List 4B among articles on which tariffs will be delayed to Dec. 15. It was “determined that the tariff should be delayed” on List 4B items “as part of USTR’s public comment and hearing process,” said the agency.
Other top eight consumer tech categories on List 4B on which tariffs will be delayed: (A) laptops and tablets, HTS 8471.30.01 (No. 2 in 2018 dollar imports); (B) drones and e-toys, HTS 9503.00.00 (No. 4); (C) videogame consoles, HTS 9504.50.00 (No. 5); and (D) PC monitors, HTS 8528.52.00 (No. 6).
The broad category of goods, including smart speakers, Bluetooth headphones, smartwatches and fitness trackers, imported from China under HTS 8517.62.0090, appears on the newly configured List 4A for products on which 10 percent duties take effect as previously proposed Sept. 1. Marketers in that category, including JLab Audio and Fitbit, successfully argued for removing their goods last year from List 3. They didn't prevail the second time around.
Importers of finished TVs shipped from China under HTS 8528.72.64 also were among the big losers among purveyors whose goods face immediate Sept. 1 tariff exposure by their appearance on List 4A. Other prominent tech products on List 4A: (1) flash-memory devices, HTS 8523.51.00; (2) digital cameras, HTS 8525.80.40; and (3) finished speakers, HTS 8518.21.00 and 8518.22.00. TVs and flash-memory devices were 2018's seventh- and eighth-largest import-dollar categories.
“We appreciate the administration hearing us about the damage retaliatory tariffs inflict and deciding to delay part of the list -- but the uncertainty and volatility of policy based on tariffs is bad for American businesses and is bad for workers, families and the U.S. economy,” said CTA CEO Gary Shapiro. “Recent wild, tariff-induced swings in the stock market concern every American with a 401(k), pension or IRA, proving the folly of unwinnable trade wars.” Shapiro called the “legally dubious” trade war with China “the biggest economic mistake since the passage of the Smoot-Hawley Tariff Act in 1930, which sent our country spiraling into the Great Depression.”
The tariffs starting Sept. 1 will affect $52 billion in consumer technology products, and those beginning Dec. 15 will affect $115 billion in products, Shapiro said. Since July 2018, Section 301 tariffs on China have cost the consumer tech industry over $10 billion, including $1 billion on 5G-related products, he said.
U.S. Chamber of Commerce Chief Policy Officer Neil Bradley called the pause on cellphone and laptops penalties “welcome news for American businesses and consumers. Now, it’s more important than ever that the two sides return to the negotiating table and recommit to achieving progress towards a comprehensive, enforceable agreement.”
President Donald Trump told reporters the U.S. has collected “close to $59 billion in tariffs.” The consumer “has not paid for it because of the devaluation by China.” Trump said the levies were pushed off to help “a lot of different groups of people.” He cited a “very, very productive call” Monday with China trade representatives who would like to “do something dramatic.”
The pause on certain items on the latest round of tariffs is “welcome news,” TechNet CEO Linda Moore said. The “optimal solution is to end these tariffs altogether, resolve this costly trade war, and pursue other means of holding China accountable for its unfair trade practices and theft of U.S. intellectual property,” she added.
Tariffs and “even the threat of tariffs ... hurt consumers, rattle markets, disrupt supply chains, increase costs, and create uncertainty across economies,” said Information Technology Industry Council Senior Policy Director Naomi Wilson. ITI urged the administration to “stop using Americans’ hard-earned dollars as collateral damage in its dispute with China.” The two countries need to consider the ramifications of their actions on global consumers “and stop creating an environment of extreme uncertainty," Wilson said. "It’s time for both sides to work together and strike a meaningful, long-term trade deal.”
Adjusting business operations on short notice “comes with a hefty cost” for U.S. manufacturers and consumers, said Stefanie Holland, CompTIA vice president-federal and global policy. CompTIA supports the administration’s efforts to address China’s “unfair trading practices,” she said. It encouraged the administration to “focus on negotiating a strong deal that addresses longstanding structural issues, improves U.S. global competitiveness, and eliminates tariffs.”
On whether he would consider delaying tariffs beyond Dec. 15, Trump said no. The hiatus is for the Christmas season “just in case some of the tariffs would have an impact on U.S. customers, which, so far, they've had virtually none,” he continued.