Smartphones, Finished TVs Among Broad Swath of Tech Goods Facing 25% Tariffs in 4th Tranche

Smartphones are the largest of eight classifications of consumer technology products that would bear the biggest brunt of the 25 percent Section 301 tariffs proposed on $300 billion in imports not previously dutied during the U.S.-China trade war, according to the Consumer Technology Association’s top trade strategist. “The import values of the products that hit our members are massive,” emailed Vice President-International Trade Sage Chandler on May 14.

Smartphones from China escaped the previous rounds of Section 301 tariffs but are now among the consumer tech goods facing 25 percent duty exposure in a fourth tranche of goods listed in an Office of the U.S. Trade Representative notice released on May 13 (see 1905130063). The customs value of smartphones imported from China last year under the HTS 8517.12.00 subheading exceeded $44.8 billion, Chandler said, citing International Trade Commission data. Laptops and tablets imported under HTS 8471.30.01 were the next biggest category germane to CTA members, she said, worth $38.7 billion.

On the big hit smartphones stand to take should the tariffs go through, CTA is “reviewing all options” on its next possible policy or judicial actions, spokesperson Tyler Suiters said in a May 14 email. AT&T, T-Mobile and Verizon didn’t respond by press time to emails, nor did Apple and Samsung.

The broad assortment of goods imported under HTS 8517.62.00 was worth $23.9 billion in 2018 customs value, Chandler said. The category includes smart speakers, Bluetooth headphones, smartwatches and fitness trackers, she said. Those consumer products were removed from the final version of List 3 when the USTR in September created a special new 10-digit subheading (HTS 8517.62.00.90) to contain them, while keeping intact the List 3 tariffs on modems, routers and network gateways in HTS 8517.62.00 (see 1809180016). List 4 now includes that 10-digit consumer-product subheading.

Toys are the fourth-largest import by value on Tranche 4, at $12.9 billion, according to an analysis of ITC data by the Trade News Centre. Consumer electronics hold positions five through nine, and cotton sweaters, sweatshirts and jerseys are the 10th-largest Chinese import by value on List 4.

The $300 billion in goods on the list are the biggest tranche of the four so far and represent virtually all of the remaining Chinese imports not previously dutied. USTR officially listed the new round of tariffs as “under consideration.” For now, a single day of public hearings on the proposed duties is set for June 17, though the notice appears to be flexible on scheduling additional days of hearings. Roughly 350 witnesses testified on the List 3 tariffs in hearings that spanned six days in late August 2018.

June 10 is the due date for filing requests in docket USTR-2019-0004 at regulations.gov to appear at the hearing and submit a summary of expected testimony, the notice said. Written comments on the proposed tariffs are due June 17, the same date listed for the public hearing. Post-hearing rebuttal comments will be due “seven days after the last day of the public hearing,” it said.

The proposed list encompasses 3,805 “full and partial tariff subheadings,” the notice said. It covers “essentially all products not currently covered by action in this investigation,” it said. The proposed list “excludes pharmaceuticals, certain pharmaceutical inputs, select medical goods, rare earth materials, and critical minerals,” it said. Product exclusions granted in “prior tranches” will not be affected in the new action, it said.

The eight Chinese import categories of biggest impact to CTA members totaled $138 billion in 2018 customs value, roughly 46 percent of the total $300 billion fourth tranche, Chandler said. The five other categories and their 2018 customs value: (1) drones and e-toys (HTS 9503.00.00, $11.9 billion); (2) videogame consoles (HTS 9504.50.00, $5.4 billion); (3) PC monitors (HTS 8528.52.00, $4.6 billion); (4) TVs (HTS 8528.72.64, $4.5 billion); and (5) flash-memory devices (HTS 8523.51.00, $4 billion).

Though CTA did tariff “impact assessments” on TVs and Bluetooth devices that were included and subsequently dropped in previous rounds, most of the other eight targeted categories are uncharted territory, Chandler said. The new goods were “not tariffed for a long time, because, by their own account, the administration was seeking to have as little impact on US companies and American consumers as possible,” she said.

Consumer tech companies “have suffered enormously” from tariffs, Chandler said. “These final items on list 4 are maximum impact. Make no question about it, if the administration goes through with these questionably legal tariffs, American companies will be wiped off the map, and consumers will bear the brunt of sharp price hikes.”

Chandler’s reference to the tariffs as “questionably legal” revived for the first time in months CTA rhetoric alleging that the administration’s actions may run afoul of the 1974 Trade Act. CTA argued in comments last summer that USTR lacks authority to impose new retaliatory tariffs without launching a new Section 301 investigation into China’s allegedly unfair trade practices (see 1811090044). CTA President Gary Shapiro used identical wording May 13 when he blasted the “immense” new round of proposed tariffs as “exponentially worse for our country.” Imposing new tariffs in “this questionably legal fashion hurts American families, workers and businesses," Shapiro said.

Though TV imports pale in comparison with volumes of smartphones in the ITC data, TV tariffs would deal a blow to big retailers that import sets from China. The $4.5 billion worth of finished TVs imported from China last year under HTS 8528.72.64 was a 60 percent increase in terms of customs value from the $3.9 billion shipped to the U.S. in 2017, ITC data showed. With the threat of TV tariffs lifted from List 1 in mid-June 2018, TV unit imports from China increased 28 percent last year to 24.1 million sets from 18.8 million in 2017, ITC said.