The proposed third tranche of 25 percent Trade Act Section 301 tariffs on Chinese imports targets equipment “critical for the build-out” of 5G, IoT and “big data,” says K.C. Swanson, Telecommunications Industry Association director-global policy, in prehearing testimony posted Monday in docket USTR-2018-0026. Swanson is scheduled to testify Aug. 21, day two of four days of Office of U.S. Trade Representative hearings. Requests to testify were due Monday under the deadline USTR Robert Lighthizer extended when announcing Aug. 1 he will “consider,” under President Donald Trump’s direction, raising the third tranche of proposed duties to 25 percent from 10 percent (see 1808010073). The “network-based technologies” in which U.S. companies lead the world “depend on underlying hardware,” said Swanson. “Taxing that hardware,” as tariffs on network servers, gateways and modems would do, will raise costs for consumers, she writes: That "stands to discourage U.S. adoption of advanced technologies in a period of growing global competition.” Duties "will hit so many of the telecom products essential to the operation of the internet,” Swanson says. More than 10 million Americans use the computer networking products Zyxel Communications sources from China under certain tariffs hearings for home internet access and for “network computers in the workplace,” commented the company. Its largest customers include CenturyLink, Cincinnati Bell and Hawaiian Telecom, it said. Zyxel’s router products “are used to proliferate broadband throughout the U.S.,” it said. With 34 million Americans lacking "an affordable and reliable broadband connection,” government levies would run counter to DCC and other broadband initiatives, the company said.
US Trade Representative (USTR)
A U.S. Cabinet level position which serves as the President's primary representative, negotiator, and spokesperson regarding U.S. trade policy. The USTR heads the Office of the United States Trade Representative which develops and coordinates U.S. policy for international trade, commodities, and direct investments, as well as overseeing trade negotiations with other countries.
The Trump administration’s proposed Trade Act Section 301 tariffs on Chinese goods imported to the U.S. under the Harmonized Tariff Schedule’s 8517.62.00 subheading targets equipment “critical for the build-out of high-speed broadband internet” and related IoT technologies, said the Telecommunications Industry Association in comments posted Saturday in docket USTR-2018-0026. The comments were filed July 27, when 10 percent tariffs were still on the table, days before U.S. Trade Representative Robert Lighthizer announced he will “consider” hiking the duties to 25 percent (see 1808010018).
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."
U.S. Trade Representative Robert Lighthizer said the effort to get China to change its industrial policy and intellectual property practices will take years. “That’s not to say what we’re doing now will be in place for years,” Lighthizer said Thursday, testifying at a Senate Appropriations Subcommittee hearing on the Trump administration’s trade policy, including its proposed or implemented Trade Act Section 301 tariffs on imports from China. He was repeatedly pressed on how long the administration will keep the tariffs in place or threaten new ones, amid criticism from many sectors that the duties will disproportionately increase costs on American businesses and consumers without punishing the Chinese for allegedly unfair trade practices. Only Sen. Joe Manchin, D-W.Va., gave unalloyed support to the USTR on the North American Free Trade Agreement and tariffs. Other senators from both parties hammered Lighthizer with stories about how their constituents are losing money because of tariffs. The most heated exchange was between Rep. Brian Schatz, D-Hawaii, and Lighthizer. Schatz said because of the pressure from constituents when retaliatory tariffs and ordinary tariffs bite, the U.S. can't win a game of chicken with China. “They can wait us out,” he said. “They can endure more pain over time than we can.” When Lighthizer suggested Schatz doesn’t believe China is a threat to America’s economic future, Schatz cut him off. “It just means you don’t pick stupid fights!” he said. Lighthizer, his voice rising, said, “I don’t think it’s a stupid fight!”
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."
U.S. Trade Representative Robert Lighthizer should “do everything possible” to address China’s allegedly unfair trade practices without “imposing tariffs” or enacting measures that “might harm large numbers" of U.S. workers, consumers and businesses, said a Wednesday letter signed by 34 House Democrats and Republicans and released Thursday. The letter to Lighthizer comes before the USTR's office releases its final list of duties by June 15 and a day after the White House announced its decision to proceed with the tariffs on Chinese imports (see 1805290046).
New “trade taxes” will “increase consumer prices, decrease jobs and weaken the US economy,” tweeted CTA President Gary Shapiro Tuesday, hours after the White House announced it will go through with 25 percent tariffs on Chinese imports after the Office of the U.S. Trade Representative releases its final tariffs list by June 15 (see 1805290046). CTA otherwise was silent on the Trump administration's decision to proceed with tariffs, while other tech groups denounced it. CTA "remains opposed" to the use of tariffs to address the "imbalance" in the U.S.-China trade relationship "because of the high likelihood of short- and long-term negative consequences to our own economy and to our member companies," it testified May 16 at a USTR hearing (see 1805160020).