Harmonized Tariff Schedule

Critics are mobilizing opposition to the Trump administration’s third round of proposed tariffs on Chinese imports, which also drew Apple and other tech concern this week (see 1808010069). More than 300 people in various industries filed requests in docket USTR-2018-0026 by the Friday deadline to appear at Office of the U.S. Trade Representative hearings, virtually all to testify against the tariffs. USTR didn’t comment.

The U.S. trade relationship with China "significantly impacts” CTA members relying "on the global supply chain,” said Sage Chandler, vice president-international trade. She asked to appear at Aug. 20-23 hearings to oppose 10 percent Trade Act Section 301 tariffs proposed by the Office of the U.S. Trade Representative. Members identified 302 tariff lines of Chinese imports in USTR sights, with more than $109 billion in value, for which 10 percent duties “would be detrimental,” said Chandler's Friday filing. Harmonized Tariff Schedule codes that most worry members would affect startups using U.S. IP, research, design and engineering, said Chandler. Duties on those products would cause “substantial” harm to the entire IoT “ecosystem,” she said. What spooks Chandler most is a “single line item,” HTS 8517.62.00, listed as covering machines for reception, conversion and transmission or regeneration of voice, images or other data, she told us Monday. That “captures servers, gateways, modems,” plus “Bluetooth-enabled devices, like headsets, speakers, fitness trackers, smart health devices and watches,” she said. It exposes “basically the entire ecosystem of the internet,” she said. “You’re looking at what potentially could be pass-down costs everywhere along the chain for the Internet of Things."

Tech interests fear ripple-effect consumer harms that may result from the Trump administration’s newest proposals to impose 10 percent Trade Act Section 301 tariffs on $200 billion worth of Chinese imports over intellectual property disagreements between the countries. The list of goods targeted for the 10 percent duties, released Tuesday in an Office of the U.S. Trade Representative notice, doesn't include meaningful end-user consumer tech products like TVs. Some networking gear was included, drawing concern from Commissioner Jessica Rosenworcel, CompTIA, CTA, the Information Technology Industry Council and Telecommunications Industry Association.

CTA, the Semiconductor Industry Association and others asked the Office of the U.S. Trade Representative to appear at a July 24 hearing to oppose 25 percent Trade Action Section 301 tariffs on more Chinese-sourced products related to alleged IP practices (see 1806150030), docket USTR-2018-0018 shows. CTA members identified 22 Harmonized Tariffs Schedule codes on the new tariffs list covering $6.6 billion worth of products they imported from China in 2017, said Sage Chandler, vice president-international trade. Chinese companies “export almost no semiconductors to the U.S. market,” said David Isaacs, SIA vice president-government affairs. Most U.S.semiconductor imports from China "are semiconductors designed and manufactured in the United States, and then shipped to China for the final stage of semiconductor fabrication,” accounting for 10-15 percent “of the value of the final product,” he said. Written comments are due July 23, post-hearing rebuttal comments July 31.

TVs were the big winner Friday when the Office of the U.S. Trade Representative eliminated them from its final list of Chinese imports earmarked for Trade Act Section 301 tariffs of 25 percent. Other sectors didn’t fare so well, including those that import Chinese printer parts, thermostats and computer equipment used in artificial intelligence and blockchain technology. China vowed to retaliate "immediately."

Fossil watches that depend on a Bluetooth connection to a smartphone for timekeeping are best classified as smartwatches based on the radio transceiver, said Customs and Border Protection in a newly posted April 30 ruling. Fossil lawyers asked CBP in October 2016 for a “binding ruling” on the classification of Fossil Q hybrid smartwatches under the Harmonized Tariff Schedule, said the agency. CBP responded that the Fossil Q lacks mechanical or quartz watch movements and instead uses its Bluetooth connection to set the time. Before a Bluetooth connection is made, "the watch hands are completely inactive,” it said. “Not only are they unmoving, but they cannot be actuated or manually adjusted by the user." Once the watch is paired via Bluetooth to a mobile device, the time is automatically synchronized, CBP said. "From that point forward, the Fossil Q autonomously keeps the time of that zone throughout any interruptions to the connection with the mobile application," it said. "However, even following initial synchronization, the time cannot be adjusted manually by the user. Instead, any adjustments to the watch hands -- based, for example, on a change in time zone -- are orchestrated automatically by the mobile application." Friday, the company didn’t comment.

Much of the tech industry -- though CTA was silent -- blasted the Trump administration Tuesday for announcing it plans to go ahead with 25 percent Trade Act Section 301 tariffs on $50 billion worth of Chinese imports. The products affected won’t be known until the U.S. Trade Representative's office releases its final tariffs list by June 15. Tariffs will be imposed “shortly thereafter,” said the White House.

CTA, the National Retail Federation and 50 other trade groups from various industries want the U.S. Trade Representative’s office to “immediately make public” the details of the Trade Act Section 301 "process" it will use to add more Chinese-sourced products to the proposed 25 percent tariffs list, if it heeds the suggestions of "several stakeholders” to do so, they said in comments posted Thursday in docket USTR-2018-0005. “We strongly believe there needs to be additional public input for any products that USTR is considering adding to the proposed list,” said the comments, which also were signed by the Information Technology Industry Council, the Internet Association and the Telecommunications Industry Association.

TVs imported from China would bear an especially heavy burden under the U.S. Trade Representative’s list of products targeted for 25 percent tariffs under President Donald Trump’s March 22 memorandum accusing the Chinese of unfair intellectual property practices (see 1803220043). CTA President Gary Shapiro called the administration wrong for having “singled out TVs as one of the largest proposed categories for a 25 percent tariff.” He urged "companies and consumers to take action, make their voices heard and tell the administration just how much damage this would do." Other industry players reacted negatively, and China plans to retaliate.

Fiber network equipment is classifiable as optical instruments of chapter 90 of the Harmonized Tariff Schedule of the U.S., the Court of International Trade ruled. ADC Telecommunications argued Customs and Border Protection should have classified its “value added modules” as duty-free data transmission equipment. CIT held Wednesday that optical equipment includes fiber cables that transmit non-visible light, confirming CBP’s liquidation as “other optical appliances and instruments” at a 4.5 percent duty. A lawyer for ADC didn't comment.