The International Trade Commission issued Revision 14 to the 2018 Harmonized Tariff Schedule, implementing the removal of Generalized System of Preferences benefits for a lengthy list of products from certain countries as a result of the 2017-18 GSP review (see 1810300031). Changes include the replacement of special program indicator “A” with “A*” -- indicating GSP eligibility only when imported from certain countries -- for subheadings that are now GSP-ineligible when imported from countries that exceeded annual import limits. These ineligible country-product pairs are added to the burgeoning General Note 4(d) of the tariff schedule, which is now over twice as long as it was in previous years’ tariff schedules.

Custom OEM server hardware company MBX Systems sent a letter to its independent software vendor, OEM and cloud service customers this month, alerting them about upcoming price increases resulting from tariff-driven price hikes by over 30 of its component suppliers, President Chris Tucker told us. The Illinois-based company integrates motherboards, chassis, power supplies, cables, disk drives, central processing units and memory, most coming from China, said Tucker, describing a “bit-by-bit” approach to price increases by individual vendors resulting from the 10 percent Trade Act Section 301 tariffs imposed by the Trump Administration Sept. 24. MBX’s price increase for finished products is “slight” at this point because “10 percent on a motherboard may be a small percentage of the overall product cost so maybe we’re seeing a single-digit increase,” he said. Suppliers have had different responses to tariffs, some taking a wait-and-see approach and others “running through inventory"; by January, Tucker expects “one quick bump from everybody when people really feel it.” MBX has spent a “huge amount of resources” managing tariffs as it receives individual price adjustments, Tucker said. “We’re not slapping 10 percent across the board and saying, ‘that’s the tariffs,’” but the company has expended hundreds of hours across the organization managing the supply chain, marketing and educating account managers how to inform customers of price changes, he said. “That’s labor we could be using in other areas to expand the business; it’s a lost opportunity for us.” Third-party hardware partners listed on the MBX website include AMD, Broadcom, Dell, EMC, HP, Intel, NVidia, Microsoft, Red Hat and Samsung.

CTA hired Akin Gump to draft a complaint that, if pursued in the U.S. Court of International Trade, would seek a preliminary injunction blocking the Trade Act Section 301 tariffs on $200 billion of Chinese imports before the duties are scheduled to rise to 25 percent on Jan. 1, we learned from those familiar with the plans. The association is shopping the draft around with other anti-tariff trade groups, seeking their legal and financial backing to support a court challenge, they said.

The Consumer Technology Association has hired Akin Gump to draft a complaint, which, if pursued in the Court of International Trade, would seek an injunction blocking the Section 301 tariffs on $200 billion worth of Chinese imports before the duties are scheduled to rise to 25 percent on Jan 1., said several sources familiar with CTA’s plans. The association is shopping the draft around with other anti-tariff trade groups, seeking their legal and financial backing to support a court challenge, the sources said.

IRobot’s decision not to pass along to retailers or consumers the higher costs of the 10 percent Trade Act Section 301 tariffs that took effect Sept. 24 on all vacuum cleaners manufactured in China will cost the company about $5 million in Q4 gross margin, said CEO Colin Angle on a Wednesday earnings call. The company is discussing “a lot of different scenarios about how to tackle” the 25 percent tariffs that take effect Jan. 1, said Angle. Many of those scenarios “assume some level” of pass-along price increases, “but we haven’t exactly settled on the final answer yet there,” he said. With the market experiencing “continuing strong growth,” iRobot has “some ability to absorb an impact without putting us in a dangerous situation,” he said.

IRobot’s decision not to pass along to retailers or consumers the higher costs of the 10 percent Trade Act Section 301 tariffs that took effect Sept. 24 on all vacuum cleaners manufactured in China will cost the company about $5 million in Q4 gross margin, said CEO Colin Angle on a Wednesday earnings call. The company is discussing “a lot of different scenarios about how to tackle” the 25 percent tariffs that take effect Jan. 1, said Angle. Many of those scenarios “assume some level” of pass-along price increases, “but we haven’t exactly settled on the final answer yet there,” he said. With the market experiencing “continuing strong growth,” iRobot has “some ability to absorb an impact without putting us in a dangerous situation,” he said.

Arris emphasized “serious concerns” in meetings last week with aides to FCC Commissioners Mike O’Rielly and Jessica Rosenworcel about “harmful effects” the third tranche of Trade Act Section 301 tariffs will have on “U.S. 5G leadership" and broadband deployment, it posted Tuesday in docket 13-49. The 10 percent tariffs took effect Sept. 24 on “core broadband infrastructure and networking equipment and other critical inputs for wireless and wireline connectivity, as well as consumer broadband equipment,” and will “automatically increase” to 25 percent Jan. 1 (see 1809240025 or 1809240011), said Arris. “At just the 10 percent level,” Arris estimates the fees will impose $200 million a year “in additional costs on its equipment and devices.” The levies already had “serious business implications” for Arris when an analyst downgraded the stock because of the expected higher tariff-related costs, it said. The tariffs “risk slowing deployment of 5G and broadband more generally, diverting resources away from 5G and other broadband research and development efforts,” it said. Arris tried to enlist FCC support for an “exclusion process” for the third tranche of duties to give affected companies “additional time to make adjustments to their operations and mitigate the harms,” it said. The Trump administration has announced no process for requesting exemptions on the third tranche of tariffs as it did on the first two.

Arris emphasized “serious concerns” in meetings last week with aides to FCC Commissioners Mike O’Rielly and Jessica Rosenworcel about “harmful effects” the third tranche of Trade Act Section 301 tariffs will have on “U.S. 5G leadership" and broadband deployment, it posted Tuesday in docket 13-49. The 10 percent tariffs took effect Sept. 24 on “core broadband infrastructure and networking equipment and other critical inputs for wireless and wireline connectivity, as well as consumer broadband equipment,” and will “automatically increase” to 25 percent Jan. 1 (see 1809240025 or 1809240011), said Arris. “At just the 10 percent level,” Arris estimates the fees will impose $200 million a year “in additional costs on its equipment and devices.” The levies already had “serious business implications” for Arris when an analyst downgraded the stock because of the expected higher tariff-related costs, it said. The tariffs “risk slowing deployment of 5G and broadband more generally, diverting resources away from 5G and other broadband research and development efforts,” it said. Arris tried to enlist FCC support for an “exclusion process” for the third tranche of duties to give affected companies “additional time to make adjustments to their operations and mitigate the harms,” it said. The Trump administration has announced no process for requesting exemptions on the third tranche of tariffs as it did on the first two.

The Retail Industry Leaders Association sent President Donald Trump a letter praising his plan to meet with the Chinese president, and said that raising tariffs on nearly $200 billion in Chinese imports to 25 percent on Jan. 1 would dampen the economy. The organization said it supports "targeted trade actions against intellectual property theft, unfair dumping or subsidies," but not the broad application of Section 301 tariffs. Direct engagement with President Xi "is vital to resolving this trade dispute and ensuring it does not undermine our nation’s record-setting economic expansion and hurt American families," RILA President Sandra Kennedy wrote Oct 24. Meanwhile, The Wall Street Journal on Oct. 25 reported that the U.S. won't engage in trade talks with China until the country's government presents a proposal to address U.S. intellectual property concerns.

Customs and Border Protection is substantially increasing staffing levels at its Office of Regulatory Audit to keep up with “the revenue on the table” from the imposition of Trade Act Section 301 tariffs on Chinese imports and the Trump administration’s push for more enforcement, said Tom Jesukiewicz, director of regulatory audit’s Los Angeles field office, at the recent Western Cargo Conference. CBP’s enforcement “push” this year will be on electronics, Jesukiewicz said. There are going to be “a lot of companies hit over the next few months,” he said.