Tech Firm 'Upended' by Tariffs Is Aftermarket Supplier That Exhibits at CES

Murphy said the company was “upended” immediately after the third tranche of 10 percent tariffs took effect Sept. 24 (see 1809240011). She told U.S. Trade Representative Robert Lighthizer at the hearing that the company was slapped with an "upfront bill" of $280,000 the morning the tariffs took effect to release its imported Chinese goods from a U.S. port.

The company imports automotive electronics components from China under four eight-digit tariff lines that survived the final List 3, we're told. Murphy said the company assembles finished products in Orlando for sale through retailers large and small. Efforts through Monday to find out why the company doesn't wish to be named were unsuccessful.

The company's $800,000 in additional tariff costs since September came with "no notice" from the government and "no time to adjust," said Murphy. Larger retailers have absorbed the price increases the company has had to impose or have passed them along to consumers, but smaller retailers have walked away from the business, said Murphy. Lighthizer, though saying he was “sympathetic,” shot back: “This process of putting these tariffs in place was months going through with the hearings and all that, so I don’t want to let anybody have the impression that we just woke up and did this.”

Five and a half months passed between Lighthizer’s highly publicized April 6 announcement of the first proposed List 1 tariffs and the Sept. 24 imposition of the List 3 duties. The List 3 process itself took 69 days from initiation to completion, including roughly a week between List 3's final notice of implementation and its effective date.

Murphy, on her constituent's behalf, was not the first to confront the USTR with complaints that the tariff rulemakings could have been better organized. The “procedures" the USTR used "for gathering public input and the substance of its tariff decisions are arbitrary and capricious and contrary to law,” argued CTA Sept. 6, less than three weeks before List 3 took effect. “Shifting logistics and deadline changes have forced parties to focus their attention on navigating a confusing and inefficient process,” it said then. The USTR has been silent on CTA’s criticism.

The USTR “has failed to provide reasoned rationales for the choices it has made, leaving parties without substantial official guidance,” making it “difficult for constituents to participate meaningfully in the review process,” said CTA then. Violation of the Administrative Procedure Act on transparent federal rulemakings was one among several grounds on which CTA threatened to challenge the List 3 tariffs in court (see 1810290019).

Trade experts more recently criticized the USTR’s List 1 and 2 exclusion processes as lacking that same transparency, saying many of the thousands of exemption denials have been “terse” and “unsupported” by the evidence (see 1902170001). Trade lawyer David Cohen with Sandler Travis is pleased that House and Senate legislation introduced last week to mandate a List 3 exclusion process (see 1903010031) contains an International Trade Commission component for making the USTR's exemption decisions more accountable, he emailed us Monday.

Under the legislation, the USTR can’t deny an exclusion request if a company can show, through ITC data, that its List 3 goods are “not commercially available” outside China, or not produced outside China ”at a cost-competitive price at commercial scale.” Cohen hopes the ITC component will “help insure that the exclusion process for List 3 goods actually gets stood up,” he said.