Fitbit Seeks 4A Tariff Exclusion as It Shifts Production Out of China

Fitbit filed one request from the 15 percent Section 301 List 4A tariffs for its core fitness trackers and smartwatches, saying it deserves credit for shifting production away from China at the U.S. Trade Representative’s public docket. Fitbit “began to adjust its operations" almost immediately after the Trump administration proposed tariffs on smartwatches and fitness trackers sourced from China, the company said. It "anticipates being able to make substantial additional changes to its supply chain in the foreseeable future," it said. Fitbit will shift production to "outside China" starting in January for “effectively all of its trackers and smartwatches” to escape tariff exposure, it said last month (see 1910090053).

Though Fitbit is aware of Taiwanese and South Korean facilities producing smartwatches and fitness trackers, they're owned by or contracted to competitors, the company said. "Fitbit has taken significant steps to overhaul its supply chain and minimize its reliance on Chinese component suppliers and contract manufacturers. These efforts are continuing, with the ultimate goal of eliminating the use of Chinese manufacturers in the company’s U.S. supply chain wherever possible."

Chinese sourcing of key electronic components for Fitbit devices has been "eliminated," the company said. It has "begun the process of shifting certain assembly operations to third countries," it said. Fitbit took those steps "despite the costs and challenges of uprooting an established global supply chain that has been developed meticulously over more than a decade," it said.

The LCD TV panel assemblies that Element Electronics imports for putting finished sets together in South Carolina “are not currently commercially available from any country other than China,” the vendor said in a List 4A Section 301 tariff exclusion request posted Nov. 1. “Element is exploring options for alternative sources of supply, but no non-China sources are currently available,” the vendor said. It supplies LCD TVs to Walmart and other big-box retailers and consistently places within the top tier of TV unit-share leaders.

An International Trade Commission and Commerce Department Miscellaneous Tariff Bill (MTB) “review” confirmed “there is no US production of LCD panel assemblies,” Element said. It landed a temporary suspension of the 4.5 percent duties on the LCD panel assemblies it sources from China under the 9013.80.90 tariff line through the MTB Act that President Donald Trump signed into law last September to promote U.S. production at companies that rely on small-volume imports. The 9013.80.90 goods were tariffed at 15 percent when the List 4A duties took effect Sept. 1.