Harmonized Tariff Schedule

April imports to the U.S. of laptops, tablets and smartphones were little changed sequentially and double digits higher than April 2020, per Census data we accessed Wednesday through the International Trade Commission. The 59.81 million smartphones shipped here in 2021's first four months were 25% above the 47.89 million handsets in the year-earlier period. April smartphone imports to the U.S. from all countries under Harmonized Tariff Schedule heading 8517.12.00 reached 15.09 million, up 27%. China generated 77% of April smartphone imports.

TCL’s North American smartphone subsidiary became one of the largest importers to join the massive Section 301 litigation when it filed a complaint (in Pacer) Friday in the U.S. Court of International Trade. Like the roughly 3,500 other lawsuits inundating the court, TCT Mobile (US) seeks to get the List 3 and 4A tariffs on Chinese goods vacated and the duties refunded with interest. TCT's claims “accrued with each and every entry of products” with List 3 or 4A tariff exposure, said the company. The action was filed within two years of the date that TCT paid the duties, it said, satisfying the court’s statute of limitations requirement on the timeliness of complaints. “With a mobile handset product portfolio that includes TCL and Alcatel devices,” TCT is “the fourth largest handset manufacturer in North America,” it said. The complaint lists two dozen import categories for which TCT has List 3 or 4A tariff exposure. Most are for capital goods, packaging materials or components, including lithium-ion batteries. Finished smartphones that TCT imports from China under the Harmonized Tariff Schedule’s 8517.12.00 subheading are on List 4B. The Trump administration postponed indefinitely the 15% tariffs on List 4B goods from taking effect in December 2019 after reaching the phase one trade deal with China (see 1912130042).

U.S. importers sourced record quantities of laptops, tablets and TVs in 2020 to meet high demand for connectivity and home entertainment gear during lockdowns, said Census Bureau data we accessed Sunday through the International Trade Commission. The 125.68 million laptops and tablets under Harmonized Tariff Schedule 8471.30.01 was a 23% increase from 2019 and the most in any year since Census began reporting that HTS category in 2007. Q4 shipments of 43.44 million laptops was the highest quarterly volume recorded, rising 40%.

Best Buy Purchasing and Best Buy Health “have been adversely affected” by the Section 301 List 3 tariffs on Chinese imports, argued the subsidiaries Monday in a complaint (in Pacer) at the U.S. Court of International Trade. It was among the roughly 3,300 suits filed at the CIT since Thursday to vacate the Lists 3 and 4A tariffs, including 700 on Monday, the last filing day for importers to qualify for refunds if the actions are successful. There was some debate Tuesday whether the Monday deadline could be open to interpretation.

The Office of the U.S. Trade Representative notified Sonos it got extension through Dec. 31 of the exclusion from the List 4A Section 301 tariffs on speaker imports from China, said the company in a Thursday SEC filing. The exclusion extension eliminates the 7.5% tariffs until year-end. Sonos sources the speakers under the Harmonized Tariff Schedule's 8517.62.0090 subheading for a wide swath of Bluetooth goods, one of 87 categories granted USTR extensions Aug. 31 (see 2008310033). Sonos, whose exclusion was granted in March (see 2005110034), has begun the process of seeking refunds for the $30 million in tariffs paid through July, said Chief Financial Officer Brittany last month (see 2008060030). The company is continuing plans to diversify its supply chain into Malaysia, Bagley said on the August call. Sonos turned to Malaysia to reduce exposure to the tariffs on Chinese-sourced wireless mesh networking audio components. The company planned to have “significant” U.S.-bound production from Malaysia ramped up by Dec. 31, but due to COVID-19-related government restrictions on manufacturing in Malaysia, reaching scale will take until mid-2021, Bagley said.

The Office of the U.S. Trade Representative extended List 4 Section 301 tariff exclusions to Dec. 31 on 87 Harmonized Tariff Schedule categories of Chinese imports, including LCD TV main board assemblies (HTS 8529.90.1300) and modules (HTS 9013.80.9000) that Element Electronics sources to assemble finished sets in South Carolina for sale through Walmart and other big-box retailers (see 2006090056). The exclusions were to expire Tuesday. Also extended were exclusions on smartwatches, fitness trackers and Bluetooth tracking devices (HTS 8517.62.0090), plus wireless audio receivers for smart speakers (HTS 8518.22.0000). USTR will let expire more than half the 200 exclusions it granted.

The International Trade Commission seeks $2.75 million more for FY 2020, without which it “faces a high risk of failing to successfully carry out” the U.S.-Mexico-Canada Agreement on free trade, Chair Jason Kearns wrote House Commerce Subcommittee leadership Wednesday. The ITC also risks “not meeting its other statutory responsibilities” next fiscal year, “due to a historic increase in workload for all investigative areas,” said Kearns. Unfair import investigations under Tariff Act Section 337 “have remained at historically high levels,” he said. Trump administrative trade policy actions resulted in a “substantial number of revisions to the Harmonized Tariff Schedule, he said. ITC staff have completed 22 HTS revisions this year, compared with the historical “context” of two or three revisions annually, he said.

Sonos and Tile landed List 4 tariff exclusions for wireless devices imported from China under the Harmonized Tariff Schedule’s 8517.62.0090 subheading. Sonos won exemption for its wireless mesh network audio components. Tile’s exclusion was for a Bluetooth tracking device that meshes with a smartphone app for finding misplaced keys and other common household articles. The exclusions are retroactive to Sept. 1 when List 4 took effect and expire Sept. 1. About 50 exclusion requests were filed for 8517.62.0090 goods, mostly for Bluetooth devices, of which 45 remained in a stage 1 or stage 2 administrative hold when we checked the docket Monday. Sonos landed an exemption on its wireless network speakers in March, as did the Apple Watch and Fitness activity trackers.

The U.S. Trade Representative Monday evening listed 63 Harmonized Tariff Schedule subheadings that may face tariffs of up to 100 percent when imported from France. It's in retaliation for that country’s digital services tax.

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.