Shapiro Warns Trump Against Rush to Impose Vietnam Tariffs Before Jan. 20
CTA would be “extremely affected and disappointed” by a rush to impose Trade Act Section 301 tariffs on Vietnamese imports before President Donald Trump leaves office, President Gary Shapiro told us Wednesday. “Our industry has suffered, in the national interest in a sense, because of U.S. positions taken on China,” he said, and additional tariffs on goods from Vietnam would be an unexpected, secondary blow.
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The Office of the U.S. Trade Representative plans a Dec. 29 virtual hearing as part of the Section 301 investigation it launched in October into allegations Vietnam is manipulating its currency and harming U.S. commerce (see 2011240020). Post-hearing rebuttals are due Jan. 7, stoking fears among many in the CTA rank and file that USTR will have ample time to impose tariffs on Vietnamese imports before Jan. 20.
Vietnam has a significant and growing role in the consumer tech supply chain. U.S. importers source about a fifth of all smartphones from Vietnam. More than a quarter (26.6%) of all October TV imports to the U.S. with 30- to 35-inch screen sizes originated in Vietnam, according to Census Bureau data available through the International Trade Commission’s DataWeb tool. CTA members we canvassed said tariffs on Vietnamese imports couldn’t come at a worse time because 30- to 35-inch sets are the hottest-selling segment of the TV business on a unit basis during the pandemic.
CTA members have been "enormously responsive to the Trump administration’s push to move manufacturing out of China,” said Shapiro. “The sole-source supply chain based in China was something that we got the strong message on. Going to Vietnam was considered perfectly acceptable.”
“Shifting” the burden of tariffs now to Vietnam “would be a bit of a shock,” said Shapiro. “We are hopeful that the administration will understand the disruption and the challenges that would cause.” Much of the Vietnamese supply chain for consumer tech products “didn’t exist four years ago, and it’s because of the Trump administration in large part that some of our members are sourcing products from Vietnam,” he said. USTR didn’t respond to questions Wednesday.
CTA held its annual CEO Summit in Vietnam seven or eight years ago, where it “exposed our members to a lot of the Vietnam opportunities,” said Shapiro. “Our members were impressed with the willingness of the Vietnam government” to engage with them, he said. “Vietnam is a very different country than China, with regard to child labor, with regard to other things, and some of the concerns we have with China.”
Shapiro has no “insight” into what the Biden administration might do about the existing Section 301 tariffs on China, he said. CTA is contacting President-elect Joe Biden's transition team and is “hopeful that the trade policy under Biden will be a little more steady” than it was under Trump, he said. Biden said he will work with U.S. allies to seek cohesive leverage in persuading China to curb its allegedly unfair trade behavior. The transition team didn’t comment Wednesday.
Maintaining a tariff-free supply chain with Vietnam is “critical” to CTA members, said the association in Dec. 10 comments posted Tuesday in docket USTR-2020-0037, in which it requested to testify at the Dec. 29 hearing. “Many companies have recently made resource intensive and costly supply chain adjustments,” shifting production to Vietnam and away from China to reduce exposure to the Trump administration’s Section 301 tariffs on Chinese imports, said CTA.
The association “remains opposed to the use of tariffs to address inequity in trade relationships because of potential long-term negative consequences to our own economy,” it said. “CTA members remain concerned about the impact of tariffs on their supply chains and their ability to deliver the quality products desired by U.S. consumers.” CTA urged USTR to “ensure a transparent process for its investigation into Vietnam’s currency valuation practices, and one that allows the necessary time needed for meaningful stakeholder consultation and input on every step of the investigation, including the opportunity to comment on any potential actions against Vietnam,” it said.
Any actions USTR takes in response to the Section 301 investigation “should be measured and narrowly focused to avoid unnecessary harm to the U.S. consumer technology industry by potential action and retaliation,” CTA's comments said. Its guidance on transparency comes as about 3,700 complaints are inundating the U.S. Court of International Trade, alleging USTR overstepped its Section 301 authority when it imposed retaliatory List 3 and 4A tariffs against China and violated the Administrative Procedure Act by running sloppy, nontransparent rulemakings. All the complaints seek to have the Lists 3 and 4A rulemakings vacated and the tariffs refunded.
Dozens of groups and individuals filed comments in the docket or requests to testify at the hearing. Many, including those from the Information Technology Industry Council, the National Retail Federation, the Retail Industry Leaders Council and the Semiconductor Industry Association, warned against imposing tariffs on Vietnamese goods due to the harm they said tariffs would bring to U.S. commerce. The Coalition for a Prosperous America disagreed, urging USTR to recommend that Trump impose 15% tariffs on all Vietnamese imports because all goods from Vietnam benefited from its government's currency manipulation, and “all US exports to Vietnam were burdened by it.” The pro-Trump group speculates “there would have been more exports to Vietnam” if not for the manipulation, it said.