The next few months include a "rapid-fire succession of trade and tech war deadlines" with much uncertainty for the fight between the U.S. and China, Bank of America economists Ethan Harris and Alexander Lin wrote investors Monday. What happens with Huawei's temporary general license is likely the most important unknown, they said. Huawei would be cut off from all U.S. exports Nov. 17, but "we expect an 'extend and pretend' scenario where Huawei remains on the 'entity list' but is allowed to keep buying US inputs." The other deadlines, all of which occur over the next three months, involve tariff increases on products from China and a decision on whether to impose tariffs on autos and car parts. The U.S. Trade Representative's office and the Department of Commerce Bureau of Industry and Security didn't comment Tuesday.

Any new restrictions the U.S. puts on American investment in China, as the Trump administration reportedly is discussing, would “surely harm the interests of Chinese and American companies and the two peoples,” said a China Foreign Affairs Ministry spokesperson Monday. That would cause “fluctuations in the financial market” and hurt international trade and “global economic growth,” he said. “This is not in the common interests of the international community.” The White House didn't comment.

Football fans will “need to be aware” this fall that Section 301 tariffs ranging from 15 to 30 percent on Chinese goods “will drive up the price of everything from footballs and TVs to portable grills and fanwear,” blogged the National Retail Federation Monday. “Fans who prefer to watch the game from the comfort of their couch won’t be spared,” said NRF. “Americans would pay $711 million more than they otherwise would for a television hit with 25 percent tariffs,” it said, citing a Trade Partnership report it commissioned in June. Tariffs of 15 percent took effect Sept. 1 on finished TVs from China, among other goods on List 4A. “Think of these tariffs as 15- to 30-yard penalties between you and the goal of a fun weekend afternoon with your favorite team,” said NRF. “As you take a break during halftime, take a moment to tell Congress to end the trade war and remove all tariffs.”

Revenue declined 23 percent in Micron Technology’s fiscal 2019 ended Aug. 29, but senior executives on a fiscal Q4 call Thursday wouldn’t break out how much of the decrease was attributable to the disruption in shipments to Huawei. Revenue in Q4 was down 42 percent from a year earlier, but up 2 percent sequentially, exceeding Micron’s previous guidance on better-than-expected demand in the quarter, said the company. “In recent months, we have seen increased demand from customers headquartered in mainland China,” said CEO Sanjay Mehrotra. Some customers “could be making strategic decisions to build higher levels of inventory in the face of increased trade tensions between the U.S. and China,” he said. The components Micron sells have heavy exposure in the first three rounds of Section 301 tariffs on Chinese goods. President Donald Trump announced in August he would hike those tariffs in October (see 1908230006). Micron, “with continued mitigation,” was able to limit the tariffs’ impact on Q4's consolidated gross margin to fewer than 20 basis points, said Chief Financial Officer David Zinsner. Micron resumed shipping “some products” to Huawei in Q3 that were “not subject” to the Trump administration’s export restrictions, said Mehrotra. Sales to Huawei in Q4 declined sequentially and “were down meaningfully from the levels we anticipated” before the Commerce Department put Huawei on the entity list, he said. Micron applied to Commerce for licenses “that would allow us to ship additional products, but there have been no decisions on licenses to date,” he said. “If the entity list restrictions against Huawei continue and we are unable to get licenses, we could see a worsening decline in our sales to Huawei over the coming quarters.” The stock plunged 11 percent Friday to $43.21.

That Section 301 tariffs on Chinese goods “have been growing in scope and now size” is causing “a scramble among importers to find alternative sources of supply,” commented the National Retail Federation in docket USTR-2019-0015. The Trump administration “might think this is a good way to exert pressure on China, [but] it comes at a very high cost to American manufacturers that use imported inputs for U.S. production, as well as retailers and consumers,” it said. The scramble “is bidding up prices for these goods from all possible alternative manufacturers,” it said. Higher prices are “already on the horizon,” and the problem's “particularly acute for products sold by small retailers across the country that have little control over their supply chains,” it said. NRF urged the administration to “refrain” from hiking the first three rounds of tariffs to 30 percent as planned for Oct. 15 and to “reconsider altogether the tariff approach to incentivizing China to modify its acts." The strategy “has not worked,” and is causing significant “collateral damage to wide swaths of the U.S.” and is “costing American jobs,” it said. “Reevaluate a strategy based solely on tariffs and focus on building an international coalition of our allies who share our concerns.”

The U.S. and Japan reached two agreements to “rebalance trade,” said the White House Wednesday. One of the deals “includes robust commitments on digital trade, which will greatly expand commerce across our modern industries,” it said. A second calls for Japan to open its markets to about $7 billion in U.S. agricultural exports, it said. Talks will continue “in the months ahead” toward a “final, comprehensive trade deal,” it said. Tech groups welcomed the digital trade accord. Along with the digital and e-commerce rules in the U.S.-Mexico-Canada Agreement on free trade, "this agreement with Japan now makes the two strongest trade agreements in U.S. history for digital trade and cross-border data flows," said CTA. "At a time when every company is essentially a tech company, it’s critical to have a new standard for global rules that ensures American innovation can thrive across borders.” Japan is America’s fourth-largest digital trading partner, “and this agreement enshrines key rules of the road from our shared digital framework,” said the Internet Association: “Digital trade benefits businesses of all sizes in every sector, and this agreement will only grow the $38 billion in digital trade between our two countries.” The “first-stage” U.S.-Japan agreement on digital trade is “a positive step toward solidifying international norms that ensure that global markets remain fair, open, and competitive in the modern economy,” said the Information Technology Industry Council. A future comprehensive U.S.-Japan trade agreement "would help to partially fill the void left by the U.S. withdrawal from the Trans-Pacific Partnership," said the Computer & Communications Industry Association.

The time is “now” for Congress to ratify the U.S.-Mexico-Canada Agreement on free trade, said Sen. John Thune, R-S.D., Tuesday on the Senate floor. USMCA will “benefit pretty much every sector of the U.S. economy,” said the majority whip. “With so many trade deals currently up in the air,” farmers and ranchers Thune met in South Dakota during the August recess “are struggling with a lack of certainty about what international markets are going to look like,” he said. They share President Donald Trump’s goal “of addressing trade imbalances and securing more favorable conditions for American products, [but] they also believe that we need to conclude the agreements we’re negotiating as soon as possible,” he said. “The surest way to stabilize and boost farm income and help farm country is to conclude agreements like USMCA.”

The Trump administration's “overreliance on unilateral tariff increases to address a wide range of policy problems is upsetting the historic balance between Congressional and Executive powers,” said CTA, the National Retail Federation and 20 other trade associations in a letter Wednesday to the House Ways and Means and Senate Finance Committee leadership. The groups formed the Tariff Reform Coalition, “dedicated to ensuring clearer guidelines and greater Congressional oversight with respect to Presidential use of tariff authority,” they said. Their objective is to work with Congress “to pass appropriate tariff reform legislation as soon as possible,” they said. “There are valid reasons for Congress to have delegated significant authority to the President in order to address unfair trade practices and liberalize world trade.” But the constitution clearly gives Congress “the power to regulate foreign trade and to specify the parameters of its delegated authority in the area of tariffs,” they said. Congress is entitled “by statute and custom to expect that meaningful consultations between the two branches will occur prior to raising tariffs, rather than after the fact or not at all,” they said. It’s critical “to weigh the downside effects on American manufacturers, farmers and ranchers, exporters and consumers,” they said. Many of the administration’s Section 301 tariff actions the past two years “have had significant collateral effects on domestic prices and have led to extensive retaliation against our exports,” they said. “We do not believe Congress was sufficiently apprised of these effects. Potential further harm from measures currently under consideration by the Administration and the resulting retaliation by trading partners could have even more sweeping effects throughout the economy.” They urged the committees “to consider a robust congressional review of this policy shift.” The White House and the Office of the U.S. Trade Representative didn't comment.

The International Chamber of Commerce urged the World Trade Organization to permanently ban tariffs on “cross-border data flows,” as a temporary ban soon expires. A 1998 moratorium should be made permanent to continue digital trade growth and prevent “trade barriers and burdensome customs duties,” ICC said Tuesday. Since the moratorium, “consumers have gained unprecedented access to new products and services” and international businesses accessed new markets. Three countries suggested ending the moratorium, including Indonesia, “going so far as to create tariff codes for ‘software and other digital goods transmitted electronically,” the business lobby said.

S&P Global Ratings is “fairly confident” that tech manufacturers Flex and Jabil “could manage their metrics to preserve” their current “BBB-“ credit ratings if the List 4 Section 301 tariffs stay at 15 percent, said the financial analytics firm Friday. But in a 30 percent tariff “scenario,” as the first three tariff rounds are scheduled to rise to on Oct. 15, the potential EBITDA declines “could prove to be too severe” for either company to avoid a ratings downgrade, said S&P. Before any downgrade, “we would consider each company's tariff mitigation and balance sheet management strategies,” it said. “If we believed credit metrics were likely to exceed our downgrade thresholds over a 24-month period, we could lower the ratings.” It estimates goods generating 6-9 percent of Flex's revenue and 12-17 percent of Jabil's sales will have exposure to the four rounds of tariffs, it said. “Neither company discloses these figures so we estimated them based on a review of revenue by geography for each of the customers they name in their annual reports,” it said. Jabil’s largest customer, Apple, draws 37 percent of its revenue from U.S. sales, it said. For Flex, the largest customer is Ford, which gets 61 percent of revenue from the U.S., it said. In fiscal 2019 ending March 31, 25 percent of Flex revenue came from manufacturing operations in China, it said. It estimates Jabil derives 40-50 percent of revenue from Chinese production, it said. Flex and Jabil didn’t comment Monday.