Remove Disk Drives, LEDs From Section Tariffs List, House Republicans Urge USTR

Eight House Republicans, including seven from the Texas delegation, went to bat for constituent tech companies trying to fend off Trade Act Section 301 tariffs of 25 percent on imports from China, with the final tariffs list due out this week (see 1805290010). The eighth GOP member said he wants to protect one company, Cree, from paying higher duties on the LED wafers that it makes in North Carolina, ships to China, and re-imports to the U.S. as finished, packaged chips.

The seven GOP members from Texas want U.S. Trade Representative Robert Lighthizer to heed the “requests” of Dell Technologies and Hewlett Packard Enterprise (HPE) to remove Chinese imports of hard disk drives (HDDs) and solid state drives (SSDs) from the final list, they said in a May 18 letter posted June 8. Three classifications of such devices were on the proposed tariffs list that the USTR’s office released in early April.

Imposing 25 percent tariffs on those products “would cause serious harm to our constituents and their Texas operations, and put high-paying U.S. manufacturing jobs at risk,” said the letter, signed by Reps. Ted Poe, Pete Sessions, Mac Thornberry, John Carter, Roger Williams, Lamar Smith and Bill Flores. HDDs and SSDs are “critical components, and major cost drivers” for the “cutting edge” servers and storage products that Dell and HPE manufacture in the U.S., they said.

Tariffs on HDDs and SSDs “would significantly increase our constituents’ costs and undermine the competitiveness of their products relative” to those of their Chinese rivals, they said. “This would be an irrational outcome for a trade action that is specifically intended to offset unfair Chinese trade practices.” Dell is headquartered in suburban Austin, and HPE, though headquartered in Palo Alto, California, has corporate offices and production sites throughout Texas.

Meanwhile, Rep. George Holding, R-N.C., urged Lighthizer in a separate letter also posted June 8 to remove Chinese LED imports from the final tariffs list. He did so on behalf of Cree, which produces LED wafers in Durham, in Holding's 2nd congressional district. Cree ships the wafers to China, where they are cut into LED chips and packaged, and then brings them back to the U.S., Holding said. LEDs were on the April proposed tariffs list under the 8541.4020 subheading of the Harmonized Tariff Schedule. Imposing 25 percent tariffs on the LEDs Cree re-imports from China "would essentially benefit non-U.S. competitors that have major operations in Taiwan, Korea, Malaysia, Singapore, Germany and Japan, but not China," he said.