Fitbit, Fossil, NRF Among Those Seeking to Head Off More US Tech Tariffs
The “same concerns” that led the Trump administration to remove smartwatches and fitness trackers from the List 3 Section 301 tariffs on Chinese imports in September “continue to apply” with the proposed fourth tranche, commented Fitbit in docket USTR-2019-0004. Imposing 25 percent tariffs would cause Fitbit “significant and unavoidable economic harm," it commented.
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If the Office of the U.S. Trade Representative won’t remove all goods under tariff subhedaing 8517.62.0090 from list 4, carve out wearable devices “classifiable under this subheading,” the company requested. “At the very least, Fitbit urges USTR to delay implementation of the tariff with respect to these products to allow additional time for consideration” of the arguments for excluding them from List 4.
The broad assortment of goods imported under subheading 8517.62.0090 includes smart speakers and Bluetooth headphones, plus the smartwatches and fitness trackers that Fitbit said “comprise nearly all” of its products. The U.S. in Q1 imported 30.22 million devices from China under 8517.62.0090, worth $2.84 billion in customs value, International Trade Commission data shows. A 25 percent tariff would have raised the Q1 import cost of the average device by $23.50 to $117.48.
Competition in the U.S. from Chinese brands “that are expanding rapidly in the global wearables market is a key concern regarding any trade action that will force U.S. companies to raise their prices,” Fitbit said. Huawei and Xiaomi compete in wearables “by operating on razor-thin profit margins for device sales, with an eye on expanding their user base and generating revenue through downstream products and services,” it said.
USTR "specifically crafted" subheading 8517.62.0090 to exempt smartwatches from the List 3 tariffs "after substantial comments at its public hearing and its receipt of comment letters," Fossil said. "This tariff subheading (at the statistical suffix level) never existed before September 2018, and it represents USTR’s reasoned position that importers of these products should not bear the burden of paying these significant duties." Fossil urges USTR to "stand by the decision it reached" in September.
List 4 tariffs of 25 percent would raise U.S. consumer prices for TVs imported from China by 23 percent, said a National Retail Federation-commissioned Trade Partnership Worldwide study released Friday. TV prices overall would increase by 4.1 percent on sets from all countries of origin, and U.S. consumers would “cut back on purchases of TVs by 7.8 percent,” it said.
Expect an announcement about the imposition of List 4 tariffs "any time" after the July 2 deadline expires for the submission of post-hearing rebuttals, blogged customs expert Ted Murphy, of Baker & McKenzie. "What gets announced will largely hinge on the outcome of the meeting" between Presidents Donald Trump and Xi Jinping at the G-20 summit in Osaka, Japan, later this week, Murphy said.