Any List 4 Tariffs Would Be ‘Detrimental,’ but 25% Duties ‘Could Be Catastrophic,’ CTA Says

Consumer Technology Association members have identified 139 “line items for technology sector products” they want removed from List 4 of the proposed Section 301 tariffs on Chinese imports, the association said in comments dated June 10 in docket USTR-2019-0004. “The annual import value from China of those items alone totals over $167 billion, over half of the entire value of the products on List 4,” CTA said.

Roughly 400 companies, trade associations or individuals filed requests by the June 10 deadline to appear at public hearings that begin June 17 on the proposed List 4 tariffs. It took six full days of hearings last summer to accommodate the roughly 350 witnesses who testified on the List 3 tariffs.

The Office of the U.S. Trade Representative is expected to release a List 4 hearings schedule June 14. The schedule will figure critically in determining when the List 4 tariffs might take effect, should the Trump administration make good on its threat to impose the duties. Post-hearing rebuttal comments are due seven days after the hearings end, the final deadline in the List 4 proceedings. USTR put the List 3 tariffs into effect Sept. 24, 2018, less than three weeks after post-hearing rebuttals in that process came due.

That 400 people that have asked to testify suggests strongly that the hearings will spill into a second week, leaving USTR in no position to order the List 4 tariffs imposed until after President Donald Trump returns from the G-20 summit June 28-29 in Osaka, Japan. Trump threatened on CNBC Monday to immediately order the List 4 tariffs into effect if Chinese President Xi Jinping doesn't meet with him at the G-20, but it's unclear how he could legally do so before USTR completes the Section 301 comment period as required under the 1974 Trade Act.

Any additional List 4 tariffs would be “detrimental” to CTA members, but a 25 percent duty “could be catastrophic,” the association said. Products on List 4 “impact the global enterprises of America’s most well-known brands,” plus the “heart of the American entrepreneurial spirit,” CTA said.

Targeting the List 4 products for tariffs will “hinder U.S. innovation, slow the growth engines of U.S. small and medium-sized businesses, and hit the pockets of the average American consumer,” CTA said. The “increasing integration” of information and communication technologies in other sectors, such as agriculture and transportation, means that putting “punitive tariffs” on technology products “will cause a ripple effect” of harm across “the whole U.S. economy,” it said.

Best Buy Chief Merchandising Officer Jason Bonfig will testify at the hearings “on the inefficacy of the proposed tariffs in achieving the objectives outlined by USTR in its Section 301 report and the impact of the proposed tariffs on Best Buy, the industry, and U.S. consumers,” the retailer said. Best Buy urges USTR to remove laptops, smartwatches, PC monitors, TVs and videogame consoles from List 4, it said, apparently forgetting to include smartphones, the largest consumer tech category on List 4 in terms of 2018 import value. It rectified the error with a second filing. Best Buy didn’t comment.

The Retail Industry Leaders Association worries about the “negative impact” the List 4 tariffs “could have on America's working families,” said the trade group, of which Best Buy and Walmart are members. “We agree that punishing American working families with higher prices on household basics like clothing, shoes, electronics, and home goods is not a solution.”

JLab Audio, which escaped List 3 tariffs on its Bluetooth headphones, wants USTR to repeat past practice and remove them again from List 4, the vendor said. “Removing our products from the previous wave of tariffs has enabled JLab to hire six new employees,” it said. With sales up 80 percent year-over-year, “imposing an increased tariff now would threaten our progress and would make it more difficult for us to do what we do best: support our community and provide our customers with a quality product at a low price.”