Element Electronics, in an emailed statement Tuesday, stopped well short of committing to close its Winnsboro, South Carolina, LCD TV assembly factory to escape the higher costs of the 25 percent Trade Act Section 301 tariffs on LCD panel imports from China being proposed on a third tranche of duties. The Office of the U.S. Trade Representative released its final list Tuesday in the second tranche of 25 percent duties, those to take effect Aug. 23 (see 1808080028). A Columbia, South Carolina, newspaper reported Tuesday that Element will close the plant in October and terminate its remaining 126 employees (see 1808070010). The “teammates” who work at Winnsboro “are at risk of layoff as a result of the trade-war related tariffs on our television parts,” said Element in the statement. “As we are the only USA assembler of televisions, we believe the inclusion of our parts on the list of affected products is accidental and resolvable.” Element is “working hard to have our parts removed from the tariff list and we remain hopeful that the closure of our South Carolina factory will be avoided,” said the company. “Until then, everyone at Element, especially the potentially impacted teammates at the factory, are completely committed to business-as-usual at an otherwise thriving Element.” Just "simply the announcement" July 10 of the proposed tariffs on LCD panels from China “triggered the need” for immediate factory cutbacks because of the likely impact the duties would have on the supply chain, said Element last month (see 1807200056).

Written comments and post-hearing rebuttals are due Sept. 6 on the third round of the Trump administration’s proposed Trade Act Section 301 tariffs on Chinese imports, after U.S. Trade Representative Robert Lighthizer said Wednesday he will “consider” hiking the duties to 25 percent from 10 percent (see 1808010018), said his office in a Friday "extended comment period" notice to be published Tuesday in the Federal Register. The agency scrapped its original Aug. 17 deadline for written submissions, extending it to Sept. 6, the same day post-hearing rebuttals are due, having been extended from Aug. 30. It also extended to Aug. 13 the deadline that expired July 27 for filing written requests to appear at four days of public hearings on the proposed tariffs. The scheduled Aug. 20 start date of the hearings “has not changed,” but the hearings may be extended beyond their current Aug. 23 conclusion, “depending on the number of additional interested persons who request to appear,” said the notice. “I have not heard about any additional days added to the schedule for the public testimony,” David Cohen, a trade expert with Sandler Travis, emailed us Friday. “Perhaps before deciding to do so, they will wait until the August 13th deadline to evaluate how many requests ultimately get filed before deciding about expanding the number of days.” Even with hard restrictions limiting each witness to five minutes of oral testimony, it remains to be seen how Lighthizer’s office can possibly accommodate so many witnesses in just four days of hearings, since well more than 400 had filed requests to appear in docket USTR-2018-0026 through Friday, the vast majority saying they want to testify against the tariffs.

Strategies for reducing the financial exposure to Trade Act Section 301 tariffs on Chinese imports (see 1808030002) were top of mind on Universal Electronics and GoPro earnings calls Thursday evening. Universal is developing plans to "mitigate" the cost of the tariffs by "gradually" shifting production of its "highest-priority or highest-volume" goods "out of China and into existing facilities that we have in Mexico or Brazil,” said CEO Paul Arling. It’s also exploring Vietnam as a possible "manufacturing alternative,” he said. The “vast majority” of Universal’s remote controls are manufactured in Chinese factories that Universal acquired in 2010 and owns and operates, and it imports those remotes to the U.S. under the Harmonized Tariff Schedule’s 8543.70.99 subheading, said Arling in comments prepared for Universal's testimony against the tariffs at a July 24 public hearing on round two of the Trump administration's proposed duties (see 1807230032). Shifting production away from China “will take months to complete, which means that we may incur additional costs during the transition as we expect some of these additional tariffs to be implemented somewhere in late September or probably into October,” said Arling on the call, saying it’s “difficult to know” for sure. The tariff situation “is obviously fluid, and we expect to react appropriately and as quickly as we can,” he said. GoPro “to date” has escaped the tariffs, said CEO Nicholas Woodman. If the situation changes, Woodman thinks GoPro would be able to shift production easily to “two locations” he didn’t name that wouldn’t have tariff exposure, he said. “Frankly, there may even be reasons to go to these regions even for cost benefits outside of protecting ourselves against tariffs,” he said. “So as we continue to look for ways to operate our business more efficiently and drive costs down, this is something that the team is looking at.”

China urges the U.S. “to adopt a correct attitude" on trade relations between the two countries and not try to "blackmail China because it will not work,” said Foreign Ministry spokesman Geng Shuang at a Beijing news conference Thursday, reacting to the Trump administration’s announcement it will “consider” hiking the latest round of proposed Trade Act Section 301 tariffs on Chinese imports to 25 percent from 10 percent (see 1808010069). China also urges the U.S. “to return to rationality and refrain from acting impulsively, otherwise they will end up hurting themselves,” he said.

JLab Audio, which markets Bluetooth earbuds, headphones and speakers through Best Buy, Target and other big-box retailers, wants to testify at the Trump administration's Aug. 20-23 public hearings against proposed 10 percent Trade Act Section 301 tariffs on Chinese imports, said CEO Win Cramer in July 27 comments posted Tuesday in docket USTR-2018-0026. JLab in the past five years became “a disruptive force within the consumer electronics category growing itself to a top 5 audio brand despite the competition of much larger, seasoned brands such as Apple, Sony, Bose, and Samsung,” said Cramer. The goods that JLab imports from China under the Harmonized Tariff Schedule 8517.62.00 subheading account for more than 80 percent of the company’s business, he said. Since JLab is “focused on a relatively narrow range of products” under HTS 8517.62.00, mainly Bluetooth earbuds and headphones, it can’t absorb the “added costs” of 10 percent tariffs “by balancing continued profits from other products,” he said. JLab also sells “almost exclusively” to the U.S. market, “so we are unable to offset increased costs in this market with profits from other global markets,” he said. “Because of this, it is our opinion that this increase in duty rate will hurt our small U.S. business, and likely other small and medium businesses, more than it will harm large multinational corporations.” Cramer fears the tariffs would “require our company to engage in cost cutting by laying off U.S. employees,” he said. The HTS 8517.62.00 code to which Cramer referred is the same “single line item” that exposes to tariffs “basically the entire ecosystem of the internet,” said Sage Chandler, CTA vice president-international trade (see 1807300002).

U.S. Trade Representative Robert Lighthizer said the effort to get China to change its industrial policy and intellectual property practices will take years. “That’s not to say what we’re doing now will be in place for years,” Lighthizer said Thursday, testifying at a Senate Appropriations Subcommittee hearing on the Trump administration’s trade policy, including its proposed or implemented Trade Act Section 301 tariffs on imports from China. He was repeatedly pressed on how long the administration will keep the tariffs in place or threaten new ones, amid criticism from many sectors that the duties will disproportionately increase costs on American businesses and consumers without punishing the Chinese for allegedly unfair trade practices. Only Sen. Joe Manchin, D-W.Va., gave unalloyed support to the USTR on the North American Free Trade Agreement and tariffs. Other senators from both parties hammered Lighthizer with stories about how their constituents are losing money because of tariffs. The most heated exchange was between Rep. Brian Schatz, D-Hawaii, and Lighthizer. Schatz said because of the pressure from constituents when retaliatory tariffs and ordinary tariffs bite, the U.S. can't win a game of chicken with China. “They can wait us out,” he said. “They can endure more pain over time than we can.” When Lighthizer suggested Schatz doesn’t believe China is a threat to America’s economic future, Schatz cut him off. “It just means you don’t pick stupid fights!” he said. Lighthizer, his voice rising, said, “I don’t think it’s a stupid fight!”

Element Electronics wants a slot to appear at public hearings Aug. 20-23 to urge removing two Harmonized Tariff Schedule classifications of Chinese LCD panel imports (HTS 9013.80.90 and 8529.90,13) from the list of proposed 10 percent Trade Act Section 301 tariffs, said the company in a filing posted Thursday in docket USTR-2018-0026. Element is “the sole U.S. mass assembler” of LCD TVs, producing about 2.5 million sets a year at its plant in Winnsboro, South Carolina, and is among the local county's top 20 employers, said the company. The Office of the U.S. Trade Representative dealt Element a potential blow July 10 when it released its third round of proposed tariffs targeting LCD panels for the first time, despite Element’s testimony in the first round of tariffs urging that flat-panels be excluded from the duties (see 1807110034). Element responded with an angry letter to the USTR’s office last week threatening to close Winnsboro and terminate the remaining 136 workers unless LCD panels are “immediately excluded from consideration” for the 10 percent tariffs (see 1807200056). It leveled no such threats in the filing posted Thursday. The Internet Association also wants to testify at the hearings, for the removal of 22 tariff lines “that cover products internet companies use to function on a daily basis,” including “control or adapter units for automatic data processing machines” and other components, it said in a filing posted Thursday. Imposing new duties on the 22 tariff lines “would not help to correct China's practices, but would cause disproportionate economic harm to American internet companies,” said the association. Friday is the deadline for filing requests to appear at the hearings.

It's not easy or cheap to relocate semiconductor packaging plants from China to other countries of origin to avoid tariffs, said Intel in comments posted Wednesday in docket USTR-2018-0018 opposing the proposed 25 percent Trade Act Section 301 duties on Chinese semiconductor imports. Many tech interests argued this week for removing Chinese semiconductor imports from the tariffs list because most semiconductors the U.S. imports are made in the U.S., shipped to China for final, low-end assembly, testing and packaging (ATP), and then shipped back to the U.S. (see 1807240005). Imposing those duties would require U.S. semiconductor manufacturers to pay tariffs on their own products, they said. Though U.S. firms can limit or avoid their exposure to Chinese tariffs by moving their ATP plants elsewhere, "no rational U.S. semiconductor company is going to incur the very high costs and other risks raised by relocating an ATP facility in China with an already established ecosystem to a green field site in another country,” said Intel. It estimates it would cost $650 million to $875 million to move an ATP plant out of China, “depending on its size and where it would be relocated.” That includes the costs of constructing a new building and buying or leasing new land to build it on, hauling at least 80 percent of the equipment from the existing facility to the new one and buying new, “duplicative” equipment to “ensure continuous operation at the existing site while the new site is being built out,” said Intel. Other costs include paying for the labor “overlap” of two to three years “while the new site ramps up and the existing one winds down,” and the “incremental product freight incurred by relocating the plant,” it said. “China is our industry's biggest market and has some of our biggest customers,” it said. “These significant costs assume very limited disruption in servicing customers.”

Anything that goes against free trade between the world's two largest economies "could eventually have a macro effect that would be detrimental to everybody,” said Texas Instruments Chief Financial Officer Rafael Lizardi on a Tuesday-evening earnings call, about the Trump administration’s proposed 25 percent Trade Act Section 301 tariffs against Chinese semiconductor imports (see 1807240005). TI sees no “direct impact other than some minimal impact” if those tariffs take effect, he said. TI draws only about 13 percent of its revenue from products it imports to the U.S., he said. “Only a sliver of that has Chinese origin,” he said. “Only about 1 percent of our revenue would have those tariffs applied to it,” and that's before TI makes “any adjustments” in its supply chain “and other things that we could do to even minimize that impact further,” he said. The earnings call was TI's first since it named Chairman Rich Templeton to return to his former CEO role, replacing Brian Crutcher, who resigned for allegedly violating the company's code of conduct in his personal behavior (see 1807180062). Templeton, who didn't appear on the call, is "fully engaged" and busy "executing our strategy," said Dave Pahl, vice president-investor relations.

Though Hasbro products escaped three rounds of Trade Act Section 301 tariffs implemented or proposed on Chinese goods, the toymaker is talking with its congressional delegations and the Trump administration “to ensure we’re communicating just how terrible an impact an ongoing tariff or trade war” would have on the company and the U.S. economy, said CEO Brian Goldner on a Monday earnings call. “We’ve only seen nonmaterial changes to the tariff schemes of other countries that don’t really impact our business.” The company’s toy business “has not been part” of the Section 301 duties that took effect July 6, he said: "A free-trade environment" is "the best course for our company and for the industry.” Hasbro sources about 65 percent of its global product from China, but “we’re moving more production" to alternative sources, said Goldner. “We found some great new partners and territories that provide very-high-quality product,” he said. Hasbro draws about 25 percent of its U.S. revenue from products built in factories it runs in five U.S. states, said Goldner.