With 90 percent of U.S. laptops and more than 75 percent of smartphones sourced from China, “there is simply insufficient capacity in the rest of the world to absorb production shifts of these high-demand devices in the short term,” commented the Software & Information Industry Association, posted Tuesday in docket USTR-2019-0004. If the List 4 Section 301 tariffs on those products are implemented, “U.S. producers would have to either sacrifice profits on U.S. sales or pass increased costs on to consumers by raising prices,” said SIIA. “In the low-margin and high-risk consumer hardware business, few if any U.S. firms would be able to absorb a 25% surcharge on products without losing significant market share to foreign competitors who are not burdened by such additional costs.” SIIA fears “many smaller U.S. firms in these sectors would simply go out of business, while larger firms would become less competitive globally." And "raising prices at this time of year further risks missing production goals for the critical holiday season.” That can “damage annual sales targets” and risk compromising the “the long-term viability of a product,” the group said. Post-hearing rebuttals were due Tuesday, ending the List 4 rulemaking proceeding. President Donald Trump put the List 4 tariffs on hold after agreeing to resume trade negotiations with China (see 1907010070 or 1907010015).

With 90 percent of U.S. laptops and more than 75 percent of smartphones sourced from China, “there is simply insufficient capacity in the rest of the world to absorb production shifts of these high-demand devices in the short term,” commented the Software & Information Industry Association, posted Tuesday in docket USTR-2019-0004. If the List 4 Section 301 tariffs on those products are implemented, “U.S. producers would have to either sacrifice profits on U.S. sales or pass increased costs on to consumers by raising prices,” said SIIA. “In the low-margin and high-risk consumer hardware business, few if any U.S. firms would be able to absorb a 25% surcharge on products without losing significant market share to foreign competitors who are not burdened by such additional costs.” SIIA fears “many smaller U.S. firms in these sectors would simply go out of business, while larger firms would become less competitive globally." And "raising prices at this time of year further risks missing production goals for the critical holiday season.” That can “damage annual sales targets” and risk compromising the “the long-term viability of a product,” the group said. Post-hearing rebuttals were due Tuesday, ending the List 4 rulemaking proceeding. President Donald Trump put the List 4 tariffs on hold after agreeing to resume trade negotiations with China (see 1907010070 or 1907010015).

Element Electronics, which assembles LCD TVs in Winnsboro, South Carolina, for sale through Walmart, Target and Costco, hasn’t “taken a position” on whether Section 301 tariffs should be slapped on finished TVs from China, General Counsel David Baer told a List 4 hearing June 17, according to a newly posted transcript. Baer spoke at the hearing to urge the removal from List 4 of the LCD panels and motherboards Element sources from China. Even when those goods weren't being considered for tariffs on List 1, Baer appeared at a May 2018 hearing to argue for finished TVs from China to be assessed 25 percent tariffs. Section 301 tariffs have “the potential to level the playing field for Element's U.S. work force and workers across America,” said Baer then. “Element supports the inclusion of finished TVs in the scope of the 301.” Baer said Element had an unfair disadvantage against competitors that imported finished TVs from China at 3.9 percent duties and sourced them from Mexico duty-free, versus the 4.5 percent tariffs it pays to import LCD modules from China. Baer didn’t respond to emails Tuesday seeking comment on why the company changed its position about tariffs on finished TVs from China. List 4 includes proposed tariffs on finished TVs, plus the LCD components Element sources from China.

Widespread opposition to the List 4 Section 301 tariffs spawned “political blowback” that persuaded the Trump administration to delay implementing the duties, said SVS Sound CEO Gary Yacoubian. “I have a feeling that some of that negative energy influenced our administration to come back with some good news” from the G20 summit in Osaka, Japan, Yacoubian told us.

International Trade Today is providing readers with some of the top stories for June 24-28 in case they were missed.

Tech and business groups hailed President Donald Trump’s decision postponing the List 4 Section 301 tariffs as his administration tries to negotiate a comprehensive trade deal with China, though three existing rounds of tariffs stay as is, and the threat remains that List 4 could be imposed any time if the talks go awry, as they did in May (see 1905060015). Bipartisan Capitol Hill condemnation greeted Trump’s surprise announcement he will let U.S. companies resume shipments to Huawei, though the tech-equipment giant remains subject to Commerce Department export administration regulations and entity list restrictions (see 1905160081).

The Trump administration’s trade policy “fails the reality test” when it encourages U.S. importers to escape the Section 301 tariffs by sourcing products from countries outside China, commented consumer tech supplier Jasco Products, as posted Thursday in docket USTR-2019-0004. Jasco's comments were dated Monday, the same day it testified at the List 4 public hearing on the same panel as CTA, as the association had requested. Jasco had to cut its monthly employee bonuses by half when 80 percent of its products became exposed in the first three rounds of 25 percent tariffs, said CTA.

CBP's Office of Regulations and Rulings is facing a massive increase in ruling requests involving products from China, in addition to its need to weigh in on exclusion requests, CBP Assistant Commissioner Brenda Smith said June 28 at the American Association of Exporters and Importers Annual Conference in Washington. The trade remedy exclusion requests are reviewed by OR&R "because of the tariff classification inherent in the application and then in the final determination," she said. Exclusion requests for the Section 232 tariffs on steel and aluminum are now at about 80,000, well above the 10,000 that were expected when first announced, she said. That's not counting the exclusion request processes now available for the first three tranches of Section 301 tariffs on goods from China, she said.

The Office of the U.S. Trade Representative will open its new portal on June 30 at noon for exclusion requests for the third tranche of Section 301 tariffs (see 1906200002), as announced in a June 24 notice. The agency also posted a set of Frequently Asked Questions about the exclusion process, supplementing the recently added site meant to help importers navigate the Section 301 tariff process (see 1906190002).

CBP issued the following releases on commercial trade and related matters:​