List 4 Tariffs Would Cause ‘Direct Economic Harm’ to US Consumers, Says Bose

Filings from tech interests and various other industries were pouring into the docket at a rapid pace before the Monday-midnight deadline for written comments in the List 4 proceeding. Virtually all the tech groups and companies that filed said they opposed the tariffs on grounds they would harm U.S. businesses and consumers and would do little to stop China’s allegedly bad behavior on intellectual property theft and forced technology transfer.

The Bose products earmarked for List 4 tariffs “generally do not incorporate the types of technology targeted” by China’s IP and tech transfer policies, said the manufacturer. Bose forecasts it will import $450 million worth of goods from China this year, it said in a rare disclosure for the usually secretive company. Most of the goods Bose sources from China are produced in “wholly foreign-owned enterprises” (WFOEs) and have “generally not been compelled to transfer IP and/or technology to Chinese companies or State actors,” said Bose. It said the Trump administration should “categorically exempt” goods produced at WFOEs from List 4.

There's a wide range of consumer electronics goods classified in the four subheadings of products Bose wants removed from List 4, said the company. If tariffs are imposed on those goods, Bose is “seriously considering” raising prices “in a way that results in higher costs to U.S. consumers,” it said. That would be “inconsistent” with the administration’s “stated intent to place tariffs on products that are not likely to adversely impact U.S. consumers and businesses,” it said.

Though the administration claims to have taken steps to avoid placing tariffs on consumer products, “there is simply no way to protect consumers from tariffs” on List 4, said the Information Technology Industry Council (ITI). The imposition of 25 percent tariffs on List 4 products “would cause direct, additional harm to U.S. consumers, cost U.S. jobs, and undermine U.S. technology companies in the intense competition for global leadership,” it said.

List 4 includes “finished computing devices and accessories that are used widely in the workplace and in homes,” said ITI. Lists 1, 2 and 3 “already placed duties on various types of computer monitors, screens, and networking equipment,” it said. “Therefore, implementation of List 4 tariffs will mean that every single office and home computing machine from printers to standalone desktops to landline telephones -- and even the cables that connect them -- will become more expensive for all U.S. enterprises and consumers.”

The proposed List 4 tariffs would affect 100 percent of SVS Sound’s product line, since all its speakers are sourced from China, and would be “devastating” to the company, said President Gary Yacoubian. Its Chinese factories “are assuming none of the costs of these tariffs,” he said. “If SVS raises its prices, it will lose the competitive edge that has built the company into a world-class brand,” said Yacoubian, a former CTA chairman when the group was CEA.

Smaller, innovative companies like SVS “can't dictate the supply chain necessary to manufacture in the US, so they are disproportionately affected by the tariffs,” said Yacoubian. “Hence, such tariffs suppress the kind of innovation that the US is best at, and miss the opportunity to create new American jobs.”

SVS is “investigating” alternative product sourcing in Thailand and the Czech Republic, to escape the Chinese tariffs, not the U.S., said Yacoubian. “We do not anticipate that the tariffs will create US manufacturing jobs in the tech sector. These jobs will just migrate to other Asia Pacific countries and to Eastern Europe.”

The U.S. “should not respond to unfair Chinese practices and policies by imposing tariffs or other measures that will harm U.S. companies, workers, consumers, and investors,” said consumer tech accessories supplier Scosche Industries. “Imposing sweeping tariffs would trigger a chain reaction of negative consequences for the U.S. economy, provoking retaliation; stifling U.S. goods and services exports; and raising costs for businesses and consumers.”

Tariffs on electronics, apparel and other consumer products “would increase prices for U.S. consumers and businesses, while doing little to address the fundamental challenges posed by unfair and discriminatory Chinese trade practices,” said Scosche. “These increased costs would effectively levy a tax on U.S. consumers and businesses, negating gains for American workers from U.S. tax reform. Tariffs would not only affect Chinese shippers but also harm U.S. companies that sell component pieces of final products exported from China.”

The LCD modules that Sharp’s Device Division imports from China are used in “a wide array of products” manufactured in the U.S., including cars, watches, phones and medical equipment, commented the company. Sharp’s U.S. operations support 1,650 “well-paying American jobs,” it said. Its U.S. clients “support multiples-more well-paying American jobs,” it said.

“Punitive” tariffs on LCD modules would imperil many of those jobs “located within the US manufacturing heartland of the Midwest,” in states “that are so crucial to the President’s upcoming re-election campaign,” said Sharp. Clients “will be at a disadvantage vis-à-vis their non-US competitors using the very same Chinese origin components,” it said. “Our clients will lose most of their business to these foreign competitors because of the 25% cost impact.”