Exclude Chinese-Sourced Antenna Components From Tariffs List, USTR Urged
The U.S. subsidiary of a prominent Japanese antenna manufacturer serving the big five U.S. automakers wants the Office of the U.S. Trade Representative to exclude Chinese imports of automotive antenna components from the list of proposed 25 percent Trade Act Section 301 tariffs because the duties would cause the subsidiary “economic hardship,” it said in comments posted Friday in docket USTR-2018-0018. Yokowo Manufacturing of America wants Harmonized Tariff Schedule product code 8529.10.91 removed from the list of proposed duties released June 15 (see 1806150030) -- the second tranche of Trump administration tariffs on which comments are due Monday and a public hearing is set to take place Tuesday.
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Imposing a 25 percent tariff on antenna components imported from China under the HTS subheading 8529.10.91 “will not be effective or practicable” toward eliminating China’s allegedly unfair trade practices, “as this subheading represents a specialized product with limited customers and import volume,” Robert Shield, the subsidiary’s president, told the USTR. Shield’s comments were among the few posted in the docket from the tech sector through Friday, though Sage Chandler, CTA vice president-international trade, will testify at the hearing on behalf of CTA members that identified at least 22 HTS codes on the new tariffs list covering $6.6 billion worth of products they imported from China in 2017 (see 1807100015). We couldn’t verify Friday whether Yokowo is a CTA member.
Instead of protecting U.S. industry and jobs, as the USTR’s office says the tariffs are designed to do, the higher duties “will damage small and medium sized US businesses and the US automotive industry and it will cause cutbacks and severe economic hardship for US businesses and price increases for customers,” said Shield. The automotive antennas that Yokowo makes “are used to receive radio and navigation signals that are used in vehicle infotainment systems,” he said. “Antenna manufacturing is a small niche industry and the impact of this 25% tariff will negatively affect profitability and revenue causing undue financial hardship on antenna suppliers.” The duties will “trigger reductions” in Yokowo’s “labor force and capital expenditures while not contributing to the elimination of Chinese trade policies,” said Shield.
OEM automotive antennas are “not a readily available nor easily obtainable product,” said Shield. “Because these automotive antennas are unique for each of the automakers vehicle models, no comparable automotive antenna is available or can be substituted.” Though Yokowo designs and does “final assembly work” on its antennas in the U.S. and Japan, no other manufacturing locations outside of Yokowo’s China facility “have been customer approved to produce our antenna components,” he said.
Yokowo “cannot easily move its manufacturing location, nor make any changes to our processes without prior consent of each automaker customer and without first undergoing a lengthy testing, validation and approval process,” said Shield. “This process can be quite detailed and expensive as tooling and/or inspection jigs may need to be fabricated, employees trained, sub-suppliers approved, and prototype parts submitted for testing and approval prior to the start of mass production.”
As an OEM supplier, “Yokowo must meet rigid price, quality and delivery requirements including annual price reduction goals for parts purchased by the automaker,” said Shield. The subsidiary would therefore need to “absorb any additional tariff costs,” with “very little hope of recovering this cost from any of its five major US based automaker customers,” he said. “Ultimately, future increased antenna costs when combined with other automotive cost increases due to higher tariffs will impact US new car sales and hurt the overall US auto industry.”