TVs, Cameras, Speakers Face Sept. 1 Tariff Exposure; Smartphones, Laptops Win Dec. 15 Delay

Smartphones, No. 1 in 2018 customs value under the 8517.12.00 Harmonized Tariff Schedule subheading, appear on a newly configured List 4B among articles on which tariffs will be delayed to Dec. 15. It was “determined that the tariff should be delayed” on List 4B items “as part of USTR’s public comment and hearing process,” said the agency. “Just in case” some of the tariffs “might have an impact” on U.S. consumers, “what we’ve done is we’ve delayed it so that they won’t be relevant for the Christmas shopping season,” President Donald Trump told reporters Tuesday.

Other top eight consumer tech categories on List 4B on which tariffs will be delayed: (A) laptops and tablets, HTS 8471.30.01 (No. 2 in 2018 dollar imports); (B) drones and e-toys, HTS 9503.00.00 (No. 4); (C) videogame consoles, HTS 9504.50.00 (No. 5); and (D) PC monitors, HTS 8528.52.00 (No. 6).

The broad category of goods, including smart speakers, Bluetooth headphones, smartwatches and fitness trackers, imported from China under HTS 8517.62.0090, appears on the newly configured List 4A for products on which 10 percent duties take effect as previously proposed Sept. 1. Marketers in that category, including JLab Audio and Fitbit, successfully argued for removing their goods last year from List 3 (see 1809180020), but didn't prevail the second time around.

Importers of finished TVs shipped from China under HTS 8528.72.64 also were among the big losers among purveyors whose goods face immediate Sept. 1 tariff exposure by their appearance on List 4A. Other prominent tech products on List 4A: (1) flash-memory devices, HTS 8523.51.00; (2) digital cameras, HTS 8525.80.40; and (3) finished speakers, HTS 8518.21.00 and 8518.22.00. TVs and flash-memory devices were 2018's seventh and eighth largest import-dollar categories.

The U.S. imported $1.9 billion worth of finished TVs from China in 2019's first half, a 29.9 percent increase from the same 2018 period, said Census Bureau data accessed Tuesday through the International Trade Commission's DataWeb tool. First-half TV unit imports of TVs increased 23.4 percent from a year earlier to 9.28 million sets. Had the 10 percent List 4A tariffs been in effect, it would have added $20.43 in cost to the average TV shipped here from China in 2019's first half. Prominent brands that ship finished TVs to the U.S. from China include Hisense, TCL, Vizio and Best Buy's Insignia private-label franchise.

“We appreciate the administration hearing us about the damage retaliatory tariffs inflict and deciding to delay part of the list -- but the uncertainty and volatility of policy based on tariffs is bad for American businesses and is bad for workers, families and the U.S. economy,” said CTA CEO Gary Shapiro. “Recent wild, tariff-induced swings in the stock market concern every American with a 401(k), pension or IRA, proving the folly of unwinnable trade wars.”

Shapiro called the “legally dubious” trade war with China “the biggest economic mistake since the passage of the Smoot-Hawley Tariff Act in 1930, which sent our country spiraling into the Great Depression. Continuing down this path will devastate U.S. startups and small businesses -- many of them will face no-win decisions about shrinking operations and cutting jobs.” The trade war is “compromising America’s global leadership,” he said.

Shapiro repeated previous statements supporting addressing China’s “forced technology transfer” and intellectual property theft but said tariffs are “bad economic policy” short and long term. Tariffs are taxes on Americans, not the Chinese government, Shapiro repeated, saying “next month, we’ll begin to pay more for some of our favorite tech devices -- including TVs, smart speakers and desktop computers." The administration should "permanently remove these harmful tariffs and find another way to hold China accountable for its unfair trading practices.”

The tariffs starting Sept. 1 will affect $52 billion in consumer technology products, and those beginning Dec. 15 will affect $115 billion in products, Shapiro said. Since July 2018, Section 301 tariffs on China have cost the consumer tech industry over $10 billion, including $1 billion on 5G-related products, he said. Last week CTA reported (see 1908070012) the industry paid $1.7 billion in tariffs in June, more than eight times what it paid in June 2018 despite a 39 percent decrease in imports since last year, largely due to the trade war.

Tariffs and “even the threat of tariffs ... hurt consumers, rattle markets, disrupt supply chains, increase costs, and create uncertainty across economies,” said Information Technology Industry Council Senior Policy Director Naomi Wilson. ITI urged the administration to “stop using Americans’ hard-earned dollars as collateral damage in its dispute with China.” The two countries need to consider the ramifications of their actions on global consumers “and stop creating an environment of extreme uncertainty," Wilson said. "It’s time for both sides to work together and strike a meaningful, long-term trade deal.”

The National Retail Federation was still reviewing details of USTR documents released Tuesday when it issued a statement from Senior Vice President-Government Relations David French saying it's “pleased” the administration delayed some tariffs before the holiday season. “Still, uncertainty for U.S. businesses continues, and tariffs taking effect September 1 will result in higher costs for American families and slow the U.S. economy,” said French. He urged the administration to use the delay period to “develop an effective strategy to address China’s unfair trade practices by working with our allies instead of using unilateral tariffs that cost American jobs and hurt consumers.”

Adjusting business operations on short notice “comes with a hefty cost” for U.S. manufacturers and consumers, said Stefanie Holland, CompTIA vice president-federal and global policy. CompTIA supports the administration’s efforts to address China’s “unfair trading practices,” she said, but it encouraged the administration to “focus on negotiating a strong deal that addresses longstanding structural issues, improves U.S. global competitiveness, and eliminates tariffs.” The 10 percent Sept. 1 tariffs affects internet-connected consumer devices and other consumer electronics, printers and printer parts, scanners, speakers and computers, she said.

The tariff delay on cellphones and laptops until Dec. 15 should “alleviate some of the fears that contributed to Dolby's sharp pullback after its June quarter conference call,” said Dougherty and Co. analyst Steven Frankel in a Tuesday investor note.

U.S. Chamber of Commerce Chief Policy Officer Neil Bradley called the decision to delay imposing tariffs on cellphones and laptops “welcome news for American businesses and consumers. Now, it’s more important than ever that the two sides return to the negotiating table and recommit to achieving progress towards a comprehensive, enforceable agreement.”

The delay on certain items on the latest round of tariffs is “welcome news,” TechNet CEO Linda Moore said Tuesday, but the “optimal solution is to end these tariffs altogether, resolve this costly trade war, and pursue other means of holding China accountable for its unfair trade practices and theft of U.S. intellectual property.” Robust job creation and economic growth in the U.S. "requires certainty and consistency when it comes to public policy," she said: “Unfortunately, entrepreneurs and businesses have been left without either of these because of tariffs. That is neither sustainable nor a way to grow the economy.” TechNet will continue to highlight “the negative impact tariffs have on consumers, our economy, and America’s global innovation leadership.”

A TCL spokesperson said the China-based TV maker has the ability and the scale to shift some production to other facilities “so the tariffs will not be as impactful on the brand.”

President Donald Trump said in remarks to reporters Tuesday that the U.S. has collected “close to $59 billion in tariffs so far.” The consumer “has not paid for it because of the devaluation by China. They devalued and they pumped a lot of money into their system.” Trump said the tariffs were delayed to help “a lot of different groups of people.” He cited a “very, very productive call” with China trade representatives Monday who would like to “do something dramatic.” Speculating on whether the Chinese government was waiting for a Democrat to get into office for trade negotiations, Trump said: “Hopefully that's not going to happen because the economy would go to hell in a handbasket very fast.”

On whether he would consider delaying tariffs beyond Dec. 15, Trump said no, the delay was for the Christmas season “just in case some of the tariffs would have an impact on U.S. customers, which, so far, they've had virtually none.”