Chinese Tariffs ‘Wrong Solution to Real Problems,’ Says Internet Association

The Trump administration “should not undertake policies that stifle growth,” said IA. Internet companies “understand that tariffs are hidden, regressive taxes that will be paid by the U.S. consumer in the form of higher product prices and will hurt a company’s ability to invest in future technology,” it said. “Instead of punishing China for its trade violations, tariffs will punish hard-working Americans across the country. The steps that the U.S. takes today on these tariff lines will determine whether American companies continue to lead the global market for internet-based companies or begin to fall behind.”

Imposing 25 percent tariffs on the line item of products imported to the U.S. from China under the Harmonized Tariff Schedule’s 8517.62.00 classification would “put a significant drag on U.S. companies -- including many small businesses -- trying to manufacture connected devices in the United States,” said the association. “It also would put a tax on U.S. consumers seeking to connect to the internet or use internet-enabled technologies.” A CTA study this week said 25 percent duties on HTS 8517.62.00 goods would cost the U.S. economy $1.8 billion a year because of higher prices reducing "consumption" (see 1808170014).

Tariffs on HTS 8517.62.00 goods “would apply to a massive range of internet-connected consumer devices largely developed by U.S. companies,” including modems and routers to go online, said IA. Consumers also use “a wide range of internet-connected devices to manage tasks, watch videos, play games, monitor their health, etc.,” it said. “Virtually all of these products (except for cell phones themselves) will be hit with increased costs if tariffs are imposed on HTS 8517.62.00.”

The association also wants to defeat tariffs on goods imported under a second category, HTS 8473.30.11, because that classification covers “most of the core inputs to data centers and other U.S. technical infrastructure, including memory modules and other printed circuit board assemblies,” it said. PCBAs “are present in all computers, servers, and phones, as well as almost all electronic devices,” it said. “Taxing these components would make it far more difficult to build and operate data centers and other technical facilities in the U.S. and would massively damage U.S. leadership on cloud technologies,” it said.

LED digital signage supplier Daktronics is seeing a ripple effect from the administration's implemented and proposed tariffs, said CEO Reece Kurtenbach on an earnings call Tuesday. The tariffs, whether in effect or threatened, are creating "volatility in the marketplace" that makes components pricing and availability "difficult to predict," he said, Supply chains "are intricate and intertwined, making the ultimate impact" of tariffs hard to gauge and plan for, he said.

Though some of the components Daktronics sources from China "are directly named and proposed or in active tariff changes," there's also "volatility in pricing and availability of other components as well" not on the tariffs lists, said Kurtenbach. "We have been closely monitoring these developments and responding as needed to minimize the impact in the short-term as well as the ongoing business of Daktronics and we will continue to keep a close watch on the trade situation over the coming months."

Tell the White House that tariffs “are a Tax on American Families,” headlined a CTA petition drive Wednesday to fend off the third tranche of Chinese tariffs. The administration’s decision to raise tariffs “punishes American companies, workers and consumers,” said CTA. “U.S. employees are already getting laid off and prices on everyday purchases are increasing. Slapping more trade taxes on products from China doesn’t support hardworking Americans who want more choices at affordable prices. The White House is giving you until September 6 to tell them how this impacts your pocketbook.” That's when final comments are due in docket USTR-2018-0026.