Tariffs Would Hike Prices 23% on TVs Imported From China, Study From Trade Groups Says

The Trump administration’s imposition of 25 percent tariffs on TVs sourced from China (see 1804040019) would cause shipments of those sets to decline 2.1 percent and raise consumer pricing 23 percent, according to a new report released by industry groups. The survey report, released April 17, was prepared by Trade Partnership Worldwide for the Consumer Technology Association and the National Retail Federation, both of which vehemently oppose the tariffs. The Section 301 tariffs, which aren't yet in effect, would likely have a major impact on TVs from China (see 1804090008).

Using a “modeling strategy” to analyze the impact on individual categories of goods on the Office of the U.S. Trade Representative’s list of products targeted for tariffs, the study estimates that overall TV pricing would rise 4.1 percent, prompting consumers to reduce purchases by 7.9 percent. The tariffs would “force consumers to pay $711 million more than they otherwise would for the televisions they continue to buy,” it said. “The net impact on the economy (the value of U.S. producer gains plus tariff revenues to the U.S. government, minus the value of consumer losses) is a hit of $322 million.”

It’s conceivable that TV production could rise in other countries to “compensate” for the decline in Chinese shipments, the report said, estimating that U.S. production alone could increase 1.1 percent. A big caveat is that “the types of TVs currently imported from China differ markedly from TVs imported from other countries,” it said. “As such, sourcing is not easily transferred to these other countries.”

In 2016, the average unit value of TVs imported to the U.S. from China was $192, compared with $1,153 for the average TV sourced from Japan, $939 from South Korea and $367 from Mexico, the report said. “Clearly, a consumer shopping in the TV price point met by a Chinese-made TV is not going to switch to a TV in the price point of a Japanese-made TV,” it said, for example. Of the top alternative TV supply countries, the only ones that produced TVs with an average unit value similar to that of China were Thailand ($145), Hong Kong ($206) and Taiwan ($134).

The study also sought to gauge the impact of tariffs on monitors, batteries and printer cartridges and came to similar conclusions. “As with TVs, the unit values of monitors imported from China also differ considerably, limiting the degree to which other sources of supply can compensate for losses of supply from China,” the report said. In 2016, the average unit value of monitor imports from China was $82, compared with $790 from Japan, $279 from South Korea, $500 from Malaysia and $310 from Canada, it said. Sourcing countries with average unit value of monitor imports closest to that of China were Mexico ($148), Thailand ($117) and Indonesia ($65), it said.

The proposed tariffs “are bad for the economy, businesses and American consumers," CTA President Gary Shapiro said in a news release. “For TVs, just one of the 1,300 products on the administration's list, American pocketbooks will suffer. Now that China has expressed some willingness to open its market and strengthen protection of intellectual property, the Trump administration should immediately initiate negotiations." CTA is urging member companies to lobby Congress, governors and the Trump administration against imposing 25 percent tariffs on goods imported from China, saying the tariffs and the trade war that results would cost more than 7 million U.S. jobs (see 1804160006).

China’s “unfair trade practices must be addressed, but as this study shows, tariffs aren't the answer and will punish U.S. consumers in the form of higher prices," NRF President Matthew Shay said. "If these tariffs take effect, they will force American families to pay more for TVs and other products. We urge the administration to avoid taxing Americans through tariffs and instead work with our like-minded trading partners and develop a serious, long-term strategy to pressure China to play by the rules."