Sonos can’t move production outside China “in any reasonable or efficient manner” of the wireless mesh network speakers for which it’s seeking an exclusion from the List 4A Section 301 tariffs, posted the vendor Wednesday in the Office of the U.S. Trade Representative public docket. Sonos estimates it would cost more than $15 million and take about two years to find alternative sourcing in a third country to “ensure that quality and sourcing standards are met,” it said. There's “no other single market in the world” besides China “where all of the components and expertise required to produce our wireless home audio systems can be obtained at the scale necessary to support consumer demand for our products,” said Sonos. “Fragmenting our supply chain across several countries is inefficient and prevents achieving economies of scale. Shifting production out of China would require us to recreate an entirely new supply chain and global concentration in the electronics sector means that we would still need to import many of our components from China.” Finding “substitute components” or new sources of product assembly “is a complex process that takes time and a significant investment,” it said. Sonos imports the speakers under the 8517.62.00.90 heading covering a broad swatch of consumer tech products, including smart speakers, Bluetooth headphones, fitness trackers and smartwatches.

Stability in Section 301 tariff levels is one piece of good news to come out of Friday’s announcement of a U.S.-China phase one trade deal, even if the large majority of imports will remain dutied at 25 percent indefinitely, Flexport chief economist Phil Levy told a webinar Monday. Recent history should be as a “precautionary tale” because many times in the past eight months, “a deal was announced, and it didn't last,” he said. Levy doesn't think a Phase Two deal that could include rolling back or eliminating more tariffs is likely in the next year.

U.S. trade representative alleged Wall Street Journal accounts of negotiations leading up to the U.S.-China phase one trade deal were "totally false, untrue and baseless" (see 1912140001). The Journal stands by the reporting, emailed spokesperson Steve Severinghaus Monday. The newspaper reported the U.S. promised China it would cut all existing tariffs in half in exchange for huge purchases of U.S. agricultural products. The agreement announced Friday called for the U.S. to suspend putting the 15 percent List 4B tariffs into effect Sunday and roll back the 15 percent List 4A duties by 50 percent, but keep the 25 percent tariffs in effect indefinitely on the first three rounds of imports (see 1912130042).

With the House expected to vote this week on ratifying the U.S.-Mexico-Canada Agreement on free trade, “we are one step closer to securing a major bipartisan victory for our economy,” blogged U.S. Chamber of Commerce CEO Thomas Donohue Monday. USMCA “will be a boon to manufacturing, services, and agricultural enterprises,” plus small business, said Donohue. While not “without its weaknesses” in the last-minute removal of key intellectual property provisions (see 1912110035), USCMA “is a strong deal overall,” he said.

NakiRadio wants an exclusion from the List 4A Section 301 tariffs for the “kosher Wi-Fi device” it imports from China, it posted Sunday in the Office of the U.S. Trade Representative public docket 2019-0017. The device streams only “pre-approved” Jewish content and is imported under the same 8517.62.00.90 subheading covering a broad swatch of other tech goods, including smart speakers, Bluetooth headphones, fitness trackers and smartwatches. The device has a 2.1-channel stereo speaker/subwoofer with a three-inch screen “used to navigate an electronic interface,” said the application. NakiRadio tried sourcing the product in the U.S., “but has been unable to find a manufacturer” capable of producing the firmware that “limits the accessible channels,” it said. Finding alternative sourcing would incur “punitive capital investment and serious disruption to its supply chain" because the product is of “a highly specific construction and functionality,” it said. “Kosher Wi-Fi devices with limited channels geared for the Orthodox community are not strategically important” to the Made in China 2025 industrial program, it said. NakiRadio pays 15 percent List 4A duties on the imports. The Trump administration announced plans Friday to roll back List 4A to 7.5 percent in the phase one trade deal with China (see 1912130042).

Expanding export administration regulation limits to further control foreign shipments to Huawei would have a “dramatic” impact on international supply chains, said Kevin Wolf, a trade lawyer with Akin Gump. The actions, which the Commerce Department is considering (see 1912110039), include expanding the direct product rule and broadening the de minimis rule. “This is a really, really big deal,” said Wolf Friday in Boston on a Massachusetts Export Center panel. “The collateral, psychological effect of this, I fear, is really going to be quite dramatic.” The changes could apply to foreign-made items that contain U.S.-origin content not controlled for national security reasons. They wouldn't apply to dual-use goods and sensitive technologies, just consumer goods, Wolf said. The rule may apply to “wholly formed made items that no other country controls, creating a jurisdictional rule for foreign companies” when selling to Huawei that would likely be difficult to comply with, he said. The rule would make dealing with foreign-made U.S. content and technology “very frustrating and difficult for foreign companies,” Wolf said, which may have a ripple effect.

The U.S. is “getting VERY close to a BIG DEAL with China” on trade, tweeted President Donald Trump at 9:35 a.m. EST Thursday. “They want it, and so do we!” Trump eight days earlier in London said he liked “the idea of waiting until after the election for the China deal” (see 1912030006). The 15 percent List 4B Section 301 tariffs are scheduled to take effect at 12:01 a.m. Sunday. The Office of the U.S. Trade Representative didn’t comment.

Americans for Free Trade wants President Donald Trump to "suspend" imposing the 15 percent List 4B Section 301 tariffs Sunday if a “Phase One” trade deal isn’t reached with China, it wrote the White House Wednesday. It’s “incredibly important for the ongoing negotiations to be allowed to continue without the specter of new tariffs taking effect before a deal is signed,” it said. As Trump previously delayed implementing 4B “specifically to avoid harming American consumers over the holidays,” he should extend the delay “until a deal is reached,” it said. “We strongly support using the Phase One deal to include reciprocal elimination of existing tariffs,” said the group. “Such an action would send an important economic signal while providing immediate relief to job creators.” The group supports reaching a trade deal “that achieves meaningful change in our trading relationship with China and provides business certainty for the future.” The White House didn’t comment.

Proposed Commerce Department Bureau of Industry and Security rules on emerging technologies may not be published until early next year, another sign of delay that has plagued the rules since their November 2018 announcement. Commerce has three emerging technology rule proposals in “various stages of clearance,” Hillary Hess, BIS Regulatory Policy Division director, told Tuesday's Regulations and Procedures Technical Advisory Committee meeting. The agency hopes to publish one proposal before the end of the year, Hess said, urging committee members take any prediction with “at least a handful of salt.” The process has been “very fraught,” she said. “There’s not a lot of year left, but it’s still theoretically possible.” Also at the meeting, restrictions on Huawei were discussed (see 1912110039).

The Commerce Department is considering several expanded restrictions on foreign shipments to Huawei of items containing U.S. technology (see 1911070026), said Rich Ashooh, assistant secretary-export administration. The department is discussing expanding the direct product rule that subjects certain foreign-made products containing U.S. technology to American regulations, and a broadened de minimis rule, he told a Regulations and Procedures Technical Advisory Committee meeting. Ten associations wrote Secretary Wilbur Ross last week that the potential changes “could negatively impact a wide range of commercial transactions” that don't have national security implications. BSA|The Software Alliance, CompTIA, the Information Technology Industry Council, the Semiconductor Industry Association, the Software & Information Industry Association and others said the department proposals would encourage “design-out of U.S. technology by non-U.S. firms, while also imposing massive new compliance burdens for U.S. and non-U.S. companies alike." Ashooh said Tuesday any potential rule changes would likely be subject to public comment, under the Export Control Reform Act. “The default is to go seek the public support,” he said.