Consumer Electronics Group Warns Trump of ‘Disruption’ From Vietnam Tariffs

The Consumer Technology Association would be “extremely affected and disappointed” by any Trump administration rush to impose Trade Act Section 301 tariffs on Vietnamese imports before leaving office, President Gary Shapiro said in a Dec. 16 interview. “Our industry has suffered, in the national interest in a sense, because of U.S. positions taken on China,” he said, and additional tariffs on goods from Vietnam would be an unexpected, secondary blow.

The Office of the U.S. Trade Representative plans a Dec. 29 virtual hearing as part of the Section 301 investigation it launched in October into allegations that Vietnam is manipulating its currency and harming U.S. commerce (see 2011240004). Post-hearing rebuttals are due Jan. 7, 2021, stoking fears among many in the CTA rank and file that USTR will have ample time to impose tariffs on Vietnamese imports before Jan. 20, the day the administrations change.

CTA members have been “enormously responsive to the Trump administration’s push to move manufacturing out of China,” Shapiro said. “The sole-source supply chain based in China was something that we got the strong message on. Going to Vietnam was considered perfectly acceptable.”

“Shifting” the burden of tariffs to Vietnam “would be a bit of a shock,” Shapiro said. “We are hopeful that the administration will understand the disruption and the challenges that would cause.” Much of the Vietnamese supply chain for consumer tech products “didn’t exist four years ago, and it’s because of the Trump administration in large part that some of our members are sourcing products from Vietnam,” he said. USTR didn’t respond to questions.

Shapiro has no “insight” into what the Joe Biden administration will do about the existing Section 301 tariffs on China, he said. CTA is “reaching out” to the Biden transition team, and is “hopeful that the trade policy under Biden will be a little more steady” than it was under Trump, he said. Biden has said he will work with U.S. allies to seek cohesive leverage in persuading China to curb its allegedly unfair trade behavior. The transition team didn’t comment Wednesday.

Maintaining a tariff-free supply chain with Vietnam is “critical” to CTA members, the association said in comments dated Dec. 10 and posted Dec. 15 in which it requested to testify at the Dec. 29 hearing. “[M]any companies have recently made resource intensive and costly supply chain adjustments,” shifting production to Vietnam and away from China to reduce exposure to the Trump administration’s Section 301 tariffs on Chinese imports, CTA said.

The association “remains opposed to the use of tariffs to address inequity in trade relationships because of potential long-term negative consequences to our own economy,” it said. “CTA members remain concerned about the impact of tariffs on their supply chains and their ability to deliver the quality products desired by U.S. consumers.” CTA urges USTR to “ensure a transparent process for its investigation into Vietnam’s currency valuation practices, and one that allows the necessary time needed for meaningful stakeholder consultation and input on every step of the investigation, including the opportunity to comment on any potential actions against Vietnam,” it said.

Any actions USTR takes in response to the Section 301 investigation “should be measured and narrowly focused to avoid unnecessary harm to the U.S. consumer technology industry by potential action and retaliation.” CTA’s cautionary advice on USTR’s Vietnam rulemaking comes as roughly 3,700 complaints are inundating the U.S. Court of International Trade, alleging USTR overstepped its Section 301 authority when it imposed retaliatory lists 3 and 4A tariffs against China and violated the Administrative Procedure Act by running sloppy, nontransparent rulemakings. All the complaints seek to have the rulemakings vacated and the tariffs refunded.

Dozens of groups and individuals filed comments in the docket or requests to testify at the hearing. Many, including the Information Technology Industry Council, the National Retail Federation, the Retail Industry Leaders Association and the Semiconductor Industry Association, warned against imposing tariffs on Vietnamese goods for the harm they said it would bring to U.S. commerce. The Coalition for a Prosperous America disagreed, urging USTR to recommend that President Donald Trump impose 15% tariffs on all Vietnamese imports because all goods from Vietnam benefited from its currency manipulation and “all US exports to Vietnam were burdened by it.” The pro-Trump group speculates “there would have been more exports to Vietnam” if not for the manipulation, it said.