A Display Supply Chain Consultants analysis of International Trade Commission data confirmed the firm’s initial read that the Chinese-sourced display product lines targeted July 10 for proposed 10 percent Trade Act Section 301 tariffs (see 1807110034) accounted for minuscule import shipments in 2017, DSCC President Bob O’Brien told us. Of the 21 Harmonized Tariff Schedule (HTS) product codes listed in the Office of the U.S. Trade Representative notice under the “8528" heading for displays, only four of those classifications of imports had customs values exceeding $1 million last year for all countries of origin, including China, said O’Brien. The top four classifications, which combined accounted for only $90 million in imports from China last year, are: (1) HTS 8528.59.10, incomplete or unfinished color video monitors, not incorporating a VCR or video player. Imports from all countries totaled $99.3 million in 2017, of which $72.3 million (73 percent) came from China; (2) HTS 8528.69.10, incomplete or unfinished color video projectors, not incorporating a VCR or player. All 2017 imports totaled $12.4 million, of which $9.1 million (73 percent) were from China; (3) HTS 8528.59.05, incomplete or unfinished color video monitors, incorporating a VCR or player. Total 2017 imports were $9.5 million, of which $2.7 million (29 percent) came from China; (4) HTS 8528.42.00, finished CRT monitors. Total 2017 imports were $8.5 million, of which $5.9 million (69 percent) came from China. O’Brien said many regard CRT monitors as dead, but about 57,000 units were imported to the U.S. last year. Two classifications of flat-panel subassemblies made the tariffs list for the first time: (1) HTS 8529.90.54, flat-panel screen assemblies for TVs, color video monitors and video projectors. Total imports were $30 million, of which $18 million (60 percent) came from China; (2) HTS 9013.80.90, liquid crystal devices and optical appliances and instruments, "not elsewhere specified or included." Total 2017 imports were $834 million, of which $251 million (30 percent) were from China. Canada generated the most 2017 imports in the HTS 9013.80.90 category. Element Electronics sources LCD panels from China under the HTS 9013.80.90 subheading for the sets it assembles in South Carolina, the company told the USTR’s office in May 22 comments. Element representatives declined comment on the potential blow the company faces from having Chinese-sourced LCD panels now included on the proposed tariffs list.

June retail sales increased 0.07 percent, seasonally adjusted, from May and were up 4.2 percent unadjusted from June 2017, “as economic growth continued despite the U.S. trade war with China and other countries," said the National Retail Federation Monday. “This is a healthy retail sales report and consistent with underlying economic momentum that has fueled a steady run of retail sales increases,” said NRF. “The big question is whether households can continue this spending pace.” The trade war is “the big risk to the outlook,” said NRF. It fears trade frictions with China and others “could raise prices while reducing consumer confidence and household buying power,” it said. June retail sales at electronics and appliance stores were below those of other consumer sectors, rising 1.6 percent year-over-year, but declining 0.4 percent, seasonally adjusted, from May, said NRF. Overall online and other non-store sales in June were up 7.3 percent from a year earlier and up 1.3 percent from May, it said. NRF is standing by its forecast that 2018 retail sales will grow between 3.8 percent and 4.4 percent over 2017, it said.

With the publication of the Office of U.S. Trade Representative’s notice in Wednesday’s Federal Register on procedures for requesting exclusions from Trade Act Section 301 tariffs on Chinese imports (see 1807080001), docket USTR-2018-0025 for posting such requests became active in the regulations.gov portal. No requests were posted yet by our Friday deadline. Exclusion requests are due by Oct. 9, and if granted will apply for a year retroactively to July 6, said the notice. Once a request is posted, the public will have 14 days to file responses to that request, it said. After that 14-day period, “interested persons” will have seven days to reply to those responses, it said. Though Oct. 9 is the deadline for the exclusion requests, “international trade team” lawyers at BakerHostetler are “advising clients to file as soon as possible in anticipation of the large administrative backlog that they expect.” Though the Trump administration’s threat to impose 10 percent tariffs on an additional $200 billion worth of Chinese imports (see 1807110034) “doesn't necessarily raise the risk of an all-out trade war, the tariffs would affect some industries and individual corporate borrowers,” said S&P Global Friday. Together with the 25 percent tariffs enacted July 6 on $34 billion in Chinese imports and the proposal to impose tariffs on another $16 billion in goods, “the total amount of $250 billion now represents about half the value of China's annual exports to the U.S.,” it said. The absence of an immediate “tit-for-tat” retaliatory response from China “lends hope to the belief that China-U.S. trade negotiations aren't completely off the table,” said S&P. “We are obviously not sanguine about the risk. Our current base-case assumption is that the tariffs, if imposed, will not likely greatly affect either economy. However, they would affect some industries and individual corporations.” The U.S.-China friction already is contributing to “jitters in the financial markets and is coloring business investment decisions,” said S&P. If China wants to retaliate with tariffs on U.S. goods, it “can’t match” the $200 billion figure because American imports to China totaled only $130 billion last year, it said: “Should China opt to pursue non-tariff actions that affect services and investments, it could damage global business and consumer confidence, investment prospects, and growth.”

The Chinese Embassy in Washington released a 1,300-word statement Thursday accusing U.S. Trade Representative Robert Lighthizer of “slander” for alleging that China uses unfair trade practices to gain advantages over its U.S. trade competitors. In announcing a new round of proposed 10 percent Trade Act Section 301 tariffs Tuesday on $200 billion worth of Chinese goods (see 1807110034), Lighthizer called China’s trade practices “an existential threat to America’s most critical comparative advantage and the future of our economy.” The retaliatory actions China took in response to the tariffs that took effect July 6 were "without any international legal basis or justification," said Lighthizer. The Chinese shot back, calling Lighthizer’s statement “a distortion of facts” and his accusations “groundless.” Any “underlying problems in the American economy and society are purely caused by domestic, structural reasons in the US,” said the embassy. China since February “engaged in four rounds of high-level economic talks with the US,” and reached “important consensus” on “strengthening trade and economic cooperation and avoiding a trade war,” it said. “But due to domestic politics, the US has gone back on its words, brazenly abandoned the bilateral consensus, and insisted on fighting a trade war with China. China has done its utmost to prevent the escalation of trade frictions. The United States is fully responsible for the current situation.” The tariffs the Trump administration implemented or proposed are “typical unilateralism, protectionism and trade bullying,” and are a “clear violation” of the basic World Trade Organization “principle of most-favored-nation treatment as well as the basic spirit and principles of international law,” said the embassy. That China was “forced to take” retaliatory “counteractions” against the tariffs was “an inevitable choice to defend national interest and global interest, and is perfectly rightful, reasonable and lawful," it said. Lighthizer's office didn't comment.

Consumers are “one step closer to feeling the full effects of a trade war,” said National Retail Federation CEO Matthew Shay Thursday, before U.S. tariffs on $34 billion of Chinese goods are to take effect Friday. The tariffs “will do nothing to protect U.S. jobs, but they will undermine the benefits of tax reform and drive up prices for a wide range of products as diverse as tool sets, batteries, remote controls, flash drives and thermostats,” said Shay, who “strongly urged” the administration to scrap plans for tariffs on another $200 billion in Chinese goods. Additional tariffs would “destroy thousands of American jobs and raise prices on virtually everything sold in our stores,” Shay said. “Reining in China’s abusive trade policies is a goal shared by many countries, but a strategy based on unilateral tariffs is the wrong approach and it has to stop,” said Shay. The Washington Post Tuesday quoted CTA CEO Gary Shapiro, referencing comments Shapiro made in a June 5 Fortune commentary: “Tariffs are Trump’s worst choice,” said Shapiro. “They don’t make us ‘great.’ Instead, they lead to retaliation," he said. "And as the rest of the world moves forward with tariff-busting trade agreements such as the Trans-Pacific Partnership and other bilateral agreements, we will become further isolated as foreign markets shrink for our goods." Addressing journalists at CES Asia last month (see 1806130001), Shapiro said "nobody wins" in a trade war, and threats and discussions about tariffs cause "global economic uncertainty." He said: “Everybody loses when two major trading partners start disagreeing.”

Small-business community representatives warned the House Small Business Committee Wednesday about what they feel is the threat Chinese telecom equipment manufacturer ZTE poses. President Donald Trump said he will support passage of the Foreign Investment Risk Review Modernization Act (HR-4311/S-2098) to curb foreign companies' ability to violate U.S. companies' IP rights, instead of invoking the International Emergency Economic Powers Act. The additional ZTE criticism follows more than a month of congressional debate about the Trump-led push to lift a Department of Commerce-imposed ban on U.S. companies selling telecom software and equipment to ZTE (see 1806260031). The Senate voted 85-10 to pass a version of the FY 2019 National Defense Authorization Act (HR-5515) that would reinstate the ZTE ban (see 1806190051). “Small businesses have become top targets for nefarious state-backed actors because they tend to be the softest targets,” said House Small Business Chairman Steve Chabot, R-Ohio. “They have fewer resources to manage their IT systems and respond to cybersecurity incidents, and they often lack the technical knowledge needed to assess the ever-evolving threats.” The Chinese company is “seeking to disrupt manufacturing not only through the espionage” of IP “but also the destruction of the U.S. supply chain by crippling them both financially and through attacks,” said TechSolve CEO David Linger. “For those of us that work with small manufacturers who have teetered on the brink of closing their doors due to cyber-attacks, their cyber-crimes are personal, real, and distressing.” ZTE “has proven to be a particularly bad actor, flouting U.S. export control laws and deceiving regulators,” said IronNet Cybersecurity President Matthew Olsen. Small businesses can't effectively “compete against nation-state attacks, aggressive, unrelenting international espionage, and theft of trade secrets,” said George Mason University Law School National Security Institute Visiting Fellow Andy Keiser. “Those are exactly the challenges presented by ZTE and Huawei.” HR-4311/S-2098 “will enhance our ability to protect the United States from new and evolving threats posed by foreign investment while also sustaining the strong, open investment environment to which our country is committed and which benefits our economy and our people,” Trump said. It would expand the Committee on Foreign Investment in the United States' scope to probe more investments, including in "critical" technology or infrastructure companies (see 1804260029).

Vote for a bill from Sen. Bob Corker, R-Tenn., that would amend a 1962 law to constrain President Donald Trump’s ability to impose Trade Expansion Act Section 232 tariffs, more than 60 national business groups and more than 200 local chambers of commerce and similar organizations urged the Senate in a Tuesday letter. Though the president should retain the authority to impose tariffs on national security grounds, “the current circumstances highlight the need for Congress to ensure that the authority will be used, as intended by the Congress, in the overall national interest," it said. Among signers were the Computer & Communications Industry Association, Internet Association and National Retail Federation. S-3013 "is designed to accomplish this limited objective. The President will retain the power to impose tariffs to protect the national security subject only to confirmation by the Congress that the power is being properly used," the letter said. CTA didn’t comment on why it didn’t sign.

The Trump administration’s plan to impose Trade Act Section 301 tariffs of 25 percent on Chinese imports “may have gotten China’s attention," but they’re "unlikely to change China’s conduct -- and will cause significant collateral damage in the process,” the Progressive Policy Institute reported. The duties, though applied to “Chinese-origin” products, “would be paid by Americans and impose serious costs on the U.S. economy,” it said. A “smarter strategy” to “confront China’s mercantilism” would be for the U.S. “to work more closely with its trade partners” to curb the allegedly “abusive” trade behavior, said PPI. “China’s unfair policies and practices seriously threaten innovative businesses in many countries, and they -- and their governments -- can be key allies in pushing back.” It’s difficult to build a coalition against China when the administration “needlessly antagonizes allies,” as it did when it imposed steel and aluminum tariffs against them, it said. The U.S. also needs to “speak with a single voice” in “focused, results-oriented” trade negotiations with China, said the report. The administration “should designate a single, high-level official to negotiate with China about core trade issues related to China’s unfair innovation practices,” it said. “This official should also actively seek cooperation from allies on those issues.”

The International Trade Commission issued a general exclusion order banning imports of all collapsible sockets for mobile devices that infringe patents held by PopSockets, it said Tuesday. The ITC began the underlying Trade Act Section 337 investigation in May 2017 (docket 337-TA-1056), based on PopSockets allegations that more than a dozen companies in China were manufacturing and importing the cellphone accessories, which can be used as a grip for mobile phones, as a stand to position them on a surface or for cord management. The ITC set bond at 100 percent of entered value for covered merchandise while the Trump administration evaluates the exclusion order. PopSockets didn't comment.

That the Office of the U.S. Trade Representative removed finished TVs from China Friday from the final list of products exposed to Trade Act Section 301 tariffs of 25 percent (see 1806150030) came “much to the satisfaction” of manufacturers, suppliers and retailers, said Paul Gagnon, IHS Markit executive director-research and analysis. For the past two months, most Chinese TV brands and panel makers “have been very concerned” about the possible tariffs because “it would have been challenging to quickly change production supply chains without disruption and additional cost,” said Gagnon. “Section 8539" of products remained on the final tariffs list, and that includes some TV components like tuners and printed circuit boards that “may impact assembly plans in the US,” he said: “The impacts of the increased tariffs are still being evaluated on TV components used in the assembly of TVs.” Manufacturers that “maintain US assembly of products will not have to worry about increased panel prices due to tariffs, as LCD panels for use in TV applications were excluded” from the final list as well, said Gagnon. “But the higher cost for some components will edge into profit margins.” IHS is maintaining its North American TV demand forecast at about 42 million units a year, said Gagnon. “The forecast was at significant risk had the tariffs been passed.”