Consider ‘Reallocating’ TVs to List 4B Where There’s No Tariff Exposure, TCL Urges USTR
If TCL North America can’t win the exclusions it seeks from the 15 percent List 4A Section 301 tariffs it has paid since Sept. 1 on flat-panel TV imports from China, it wants the Trump administration to weigh “reallocating” TVs to List 4B where there’s no current tariff exposure, said the vendor.
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TCL filed three separate exemption requests Thursday at the Office of the U.S. Trade Representative public docket on the 8528.72.64.30, 8528.72.64.40 and 8528.72.64.60 classifications of TV imports that vary by screen size. The “sole available source of LCD panels and supporting material components is China,” it said in all three applications.
Though TCL “identified limited potential assembly capabilities located outside of China, none of these options are capable of producing primary LCD panel components, and can only assemble components in a limited capacity into finished or nearly-finished goods,” said the vendor. Flat-panel TVs are “a significant outlier on List 4A,” and so should be moved to List 4B, said TCL. Flat-panel TVs “are the only electronic or digital products” on List 4A, “with all others located on List 4B,” it said.
The administration suspended the List 4B tariffs 48 hours before they were to take effect Dec. 15, when it reached the phase one trade deal with China (see 1912130042). The List 4A tariffs are scheduled to be rolled back by half to 7.5 percent when phase one takes effect Feb. 14 (see 2001160022), but are to remain in place indefinitely.
President Donald Trump “initiated these tariff actions, in part, to address the issue of intellectual property rights for American businesses in trade with China,” said TCL. “Rather than be sanctioned under 301 tariffs, TCL’s partnership with Roku should serve as a model for ensuring the proper protection and compensation of American creators and owners of intellectual property for products manufactured in China.”
Though TVs are the largest consumer tech import category and the only display product on List 4A in terms of 2018 customs value, TCL was not accurate in saying they’re the only electronic or digital product on the list. Bluetooth headphones, smartwatches, smart speakers and fitness trackers also are on List 4A, as are cameras, speakers and flash-memory devices. Of the 140 product classifications of finished goods, raw materials and components CTA urged USTR to remove from tariff exposure, 37 were deferred to List 4B, including smartphones, laptops, tablets and monitors. The rest faced immediate exposure on List 4A, where they remain (see 1908140002).
USTR devised List 4A to include product classifications for which China had less than 75 percent share of all 2018 U.S. unit imports, delegating imports with higher Chinese shares to List 4B. China was 94 percent of the 34 million PC monitors imported to the U.S. from all countries in 2018, said Census Bureau statistics accessed through the International Trade Commission’s DataWeb tool.
China, by comparison, was only 56 percent of the 43.9 million TVs imported to the U.S. from all countries in 2018, said DataWeb, hence its placement on List 4A. China was 28 percent of U.S. TV imports in September through November, the first three months the List 4A tariffs were in effect at 15 percent, said DataWeb. China’s share was double that in the same 2018 three-month period, said DataWeb.
TCL has the ability and the scale to shift some TV production to other facilities “so the tariffs will not be as impactful on the brand,” said a spokesperson Aug. 13, when the List 4A tariffs were announced on finished TVs from China (see 1908130028). TCL didn't comment Friday on how that statement squared with arguments in its tariff exclusion requests that it has been unable to find alternative sourcing.