Consumer Technology Group Seeks Removal of 54 Lines From Section 301 Tariff List

The Consumer Technology Association wants the Office of the U.S. Trade Representative to remove 54 tariff lines from the list of imports from China targeted for a second tranche of 25 percent Trade Act Section 301 duties, said Sage Chandler, vice president-international trade, in comments filed July 23 in docket USTR-2018-0018. Chandler also testified at the USTR’s public hearing on July 24. The 54 tariff lines were well more than double the 22 Harmonized Tariff Schedule product codes that Chandler said CTA members had identified nearly four weeks ago for exclusion from the new list of duties (see 1807100025). Tariffs on the proposed products “will harm the very industries they seek to protect, all while failing to influence China's behavior or help the administration's stated goal of eliminating China’s discriminatory trade practices,” Chandler said in her latest comments.

A statement of CTA's “rationale” for wanting a product code removed from consideration for possible duties accompanied each of the 54 tariff lines listed in Chandler’s comments. Many convey the statement that they were earmarked for removal as “highlighted by CTA member company as critical to their business,” or “not targeted in China’s Made in China 2025 plan, and not part of China’s core industrialization strategy.”

Other categories carried fuller explanations of rationale for asking that they be removed from the tariffs list. Under the HTS 8542.31.00 product code for “electronic integrated circuits: processors and controllers,” CTA wants it excluded on grounds that a member company “imports items under this code because it would be unable to switch sourcing and is not yet able to further expand domestic manufacturing capability,” the statement said.

A tariff on imports of products under HTS 8542.31.00 would “upend the member’s supply chain, undermine its U.S. manufacturing operations, and make the company uncompetitive against foreign manufacturers,” the statement said. Products in this HTS code “are found in many consumer technology products,” it said. “Product may be manufactured in the United States but packaged in China, meaning U.S. companies and manufacturers may pay the tariff on their own products.”

The overall proposed duties list is “heavy” on semiconductors “and the machinery that makes them,” and those tariff lines need to be removed Chandler, said. China has only 5 percent of the global semiconductors market, and the U.S. “is the world's market share leader,” she said. Most semiconductors the U.S. imports were made in the U.S., shipped to China for final, low-end assembly and packaging, and then shipped back to the U.S., she said. “Tariffs placed on the equipment used to manufacture semiconductors therefore impose a double cost for semiconductor companies that manufacture in the United States and employ hundreds of thousands of Americans.”

Another product code, HTS 8543.70.45, includes motion sensors that are “for everyday household use” and are “key components of home security systems,” the CTA rationale statement said. Tariffs on these products “will punish the US consumer, imposing a double burden of (1) higher prices on a consumer necessity, and (2) compromised household safety because consumers will be less able to afford technologically advanced home security systems,” it said. “Tariffs will also hurt the retailers and small business installers who sell and install home security systems by increasing prices and depressing demand.”

Lutron’s ability to import Chinese semiconductors under the HTS 8542.39.00 product code “is essential to our ongoing research and development activities at our five U.S. engineering facilities as well as our U.S. manufacturing,” the company said in heavily redacted comments. “Lutron supports the administration’s goal to protect America’s leadership in technology and innovation” against China’s allegedly unfair practices, it said. “We are requesting an exclusion for a limited number of components that would not have any impact on convincing the Chinese” to change their behavior, it said.

The proposed duties on Chinese imports of semiconductors classified under HTS codes 8542.31.00 and 8542.32.00 “would further undermine U.S. competitiveness in information technology, threaten U.S. manufacturing and jobs, and do nothing to further the goals of the Section 301 investigation,” Dell Technologies said. “We are deeply troubled by the cumulative and self-destructive impact of Section 301 tariffs on critical information technology inputs.”

Voxx International wants five tariff lines (HTS 3903.19.00, 8529.10.91, 8544.49.20, 8536.30.80 and 8543.70.99) removed from the list of proposed duties, it said. The “subject products,” including antenna components and voltage protectors, are used “to facilitate the safe operation of finished goods and systems,” Voxx said. They’re “low-end” and “generic items, not possessing the proprietary data or materials of the finished goods which with they operate.”

“Certainty and cost” are the “two major factors in maintaining a strong, secure supply chain,” said the Retail Industry Leaders Association, which represents Best Buy, Walmart and other big-box retail chains. “Retailers need assurances that the products they sell can be made at the quality, quantity and cost our customers demand.” Though there’s “no good time for price increasing tariffs” to be imposed, “it is particularly harmful to do so just as American families begin shopping for the holiday,” RILA said. “If America’s retailers face any increase in the cost of products in the form of a tariff, it will mean higher prices at the checkout for American families this holiday season.”

A broad coalition of trade associations, including the American Apparel and Footwear Association and the National Association of Foreign-Trade Zones, also filed joint comments on the tariffs. "The ongoing discussion of tariffs on billions of dollars of goods has created great uncertainty across the U.S. business and farm community, depressed commodity prices, and has already harmed U.S. companies, farmers, consumers, and markets," the groups said. "The ongoing escalation by both the U.S. and China will only continue to make this worse."