Best Buy, TCL Make Their Case at Hearing for Changes to Chinese Tariffs List

There's no true TV manufacturing in the U.S., so TVs don't belong on a list of products targeted for 25 percent tariffs designed to hurt Chinese producers without harming end U.S. consumers, representatives of Best Buy and TCL said Tuesday. They were among a wide range of companies and industries asking to be spared -- or protected -- in the first of three days of U.S. Trade Representative's office hearings that will listen to testimony from more than 120 companies, a major union and many trade associations. The USTR's office will refine the list of products subject to 25 percent tariffs over China's intellectual property issues on what amounted to $50 billion in imports last year. "Assembling is not manufacturing," said Jonathan King, vice president-legal affairs at TCL's North American subsidiary. The idea that a domestic TV production industry could quickly emerge here isn't feasible, he said. His remarks were in apparent reference to Element Electronics, whose general counsel, David Baer, testified later Tuesday that his company assembles LCD TVs in a plant in Winnsboro, South Carolina, and has been doing so since 2014. Element supports the USTR's inclusion of finished flat-panel TVs from China on the tariff list, though it wants LCD panels, which Element sources from China, left off, he said. Element pays a 4.5 percent duty on LCD panels imported from China. That leaves Element at an unfair advantage because finished TVs imported from China bear a lower 3.9 percent royalty and finished sets imported from Mexico carry no duty at all under the North American Free Trade Agreement, he said. Baer said the USTR needs to look beyond China, as Chinese factories are already shipping subassemblies to Thailand and Vietnam, which haven't previously made TVs, and to Mexico, which does. If the government doesn't stop that shift in production among companies seeking the circumvent the tariffs, the agency's Section 301 remedies "would be a toothless tiger," he said. Element made many of those same points in comments it filed Friday in docket USTR-2018-0005 (see 1805140040). Mike Mohan, chief merchandise officer at Best Buy, dismissed Baer's arguments. Tariffs could raise retail TV prices as much as 23 percent, affecting those at the lower end of the market who shop smaller screens the most, he said. Best Buy sources virtually all its private-label Insignia-brand TVs from China (see 1804040023).