With 90 percent of U.S. laptops and more than 75 percent of smartphones sourced from China, “there is simply insufficient capacity in the rest of the world to absorb production shifts of these high-demand devices in the short term,” commented the Software & Information Industry Association, posted Tuesday in docket USTR-2019-0004. If the List 4 Section 301 tariffs on those products are implemented, “U.S. producers would have to either sacrifice profits on U.S. sales or pass increased costs on to consumers by raising prices,” said SIIA. “In the low-margin and high-risk consumer hardware business, few if any U.S. firms would be able to absorb a 25% surcharge on products without losing significant market share to foreign competitors who are not burdened by such additional costs.” SIIA fears “many smaller U.S. firms in these sectors would simply go out of business, while larger firms would become less competitive globally." And "raising prices at this time of year further risks missing production goals for the critical holiday season.” That can “damage annual sales targets” and risk compromising the “the long-term viability of a product,” the group said. Post-hearing rebuttals were due Tuesday, ending the List 4 rulemaking proceeding. President Donald Trump put the List 4 tariffs on hold after agreeing to resume trade negotiations with China (see 1907010070 or 1907010015).

The U.S. and Chinese “teams” for days had been “in close communication to prepare for the meeting” Saturday between Presidents Donald Trump and Xi Jinping on the sidelines of the G20 summit in Osaka, Japan, said a Chinese Foreign Affairs Ministry spokesperson Friday. “We hope the U.S. will meet China halfway and strive for positive outcomes through joint efforts,” he said. “It serves the interests of both countries and meets the expectation of the international community.” The “large amount of international media coverage” about the Trump-Xi meeting “shows that the international community is paying close attention to the meeting and all hope to see the two sides resolving trade differences through dialogue and consultation,” he said. “It also manifests that China-U.S. relations have gone beyond the bilateral scope and are of great significance to peace, stability, development and prosperity of the world.” The Office of the U.S. Trade Representative didn’t comment Friday.

The advent of data privacy laws, such as Europe's general data protection regulation, creates a "potential tension" with trade sanctions compliance, said Ramsey Kazem of Spark Compliance Consulting Thursday at the American Association of Exporters and Importers Conference. GDPR and other laws in various stages of implementation in U.S. states "tend to be very protective and restrictive on how you use personal data," he said. This may "often conflict with sanction laws, which requires companies" to do "more with the personal data that they possess in terms of screening their third parties, screening their business partners, screening their customers," said Kazem. "So it's not difficult to see how the GDPR" and other data privacy restrictions "could conflict with, for example, U.S. sanctions laws." Further complicating the issue for companies is that "neither the U.S. nor the EU recognize the other's laws as a legitimate basis" for not complying, he said. Companies will need to examine the potential risks of such a conflict, Kazem said. "In some instances there may not be an easy answer and a company may be forced to choose between the lesser of two evils." As a result, data privacy considerations "must be at the table" while a company is developing a sanctions law compliance program, Kazem said.

President Donald Trump wants to use the G20 summit, opening Friday in Osaka, Japan, to promote “fair and reciprocal trade” as part of his “pro-jobs, pro-growth strategy,” said the White House Thursday. The Trump administration is “working to open new markets for American goods and services, while ensuring any deal is enforceable and creates a level playing field for our workers and companies,” it said. The U.S. is working with its allies to “confront unfair trade practices, including intellectual property theft, unfair labor practices, and forced technology transfer,” it said without mentioning China. Trump will “encourage our allies and partners to lower tariff and non-tariff barriers to free, fair, and reciprocal trade,” it said. He’s also committed to “encouraging innovation” by promoting “growth in the digital marketplace and supporting emerging technologies,” including artificial intelligence, which have “the potential to make a positive, meaningful impact on living standards and productivity,” said the White House. “Overly burdensome regulations can stifle innovation and limit the potential of these transformative technologies to fuel economic growth.” The U.S. will promote “innovation-friendly policies that support growth in the digital economy and pave the way for technological innovation,” said the White House. The administration urges G20 members “to work together to advance an open, fair, market-based digital economy, which will benefit all our nations through the free flow of data,” it said. Trump's planned meeting on the G20 sidelines with Chinese President Xi Jinping will figure critically in the administration's decision whether to impose the threatened List 4 Section 301 tariffs on virtually all remaining Chinese imports not previously dutied. The threat of additional tariffs "will in no way intimidate the Chinese people," said a Foreign Affairs Ministry spokesperson Thursday. "I would like to remind the U.S. that waging a trade war and raising tariffs will hurt others as well as itself and can never solve any problem at all. We hope the U.S. will earnestly listen to the outcry against the trade war and additional tariffs of its people and various groups at home and heed to the call to boycott unilateralism, protectionism and bullying from the international community at the G20 Osaka summit."

The growing "internationalization" of supply chains means the success of OEMs “depends greatly on the health and vitality of suppliers in other nations and the ability to pursue trade, ideally on mostly unimpeded terms, with them,” said an Information Technology and Innovation Foundation report on the “trade linkages” between the U.S. and Mexico, South Korea and Taiwan. Understanding trade and economic linkages within the context of “global value chains” (GVCs) can “intrinsically” place “consumer benefit at the focal point of trade discussions,” said the report, which advocates stronger U.S. trade ties with its three “key partner nations.” The increasing use of “trade liberalization,” including reducing tariffs and integrating more nations into the global trading system, has helped spur the expansion of GVCs, it said. “There are now well over 400 regional free trade agreements in place across the world, helping to reduce tariff rates and eliminate other trade barriers.” The report’s policy recommendations for Congress and the Trump administration: (1) Pursue a free trade agreement with Taiwan to make it “a more attractive location for sourcing advanced-technology production as an alternative to China”; (2) Ratify the U.S.-Mexico-Canada Agreement on free trade, which is “well-positioned to play an important role in supporting the flow of goods and services across North American borders”; (3) Continue confronting Chinese “innovation mercantilism,” including by “enrolling like-minded allies to contest” China’s bad trade behavior.

CTA declined comment Tuesday on legislation in the House and Senate and backed by the National Retail Federation that would boost congressional oversight of U.S. Trade Representative decisions to impose or hike import tariffs, including Section 301 duties of the type now in effect on $200 billion worth of Chinese goods. House Ways and Means Committee member Stephanie Murphy, D-Fla., introduced the measure (HR-3477) Tuesday as a companion to S-899 introduced in March by Sen. Tim Kaine, D-Va. “The time has come for Congress to reclaim its constitutional authority over trade,” said Murphy. “Imposing tariffs without a concrete strategy is harming American families, consumers, and businesses, and it’s undermining longstanding relationships with our allies.” Murphy is the lawmaker who confronted USTR Robert Lighthizer at a Ways and Means hearing in February with questions about a tech firm constituent she said had been “upended” by the List 3 tariffs (see 1902280010). Her legislation would require USTR to report to Congress on the goals and strategy behind proposed tariff actions, and Congress would be able to block the tariffs through a joint resolution of disapproval, subject to presidential veto. “We agree with the need to deliver fair and balanced trade deals, but taxing Americans isn’t the answer -- especially without a single vote from Congress,” said David French, NRF senior vice president-government relations. USTR didn't comment Wednesday. The proposed List 4 tariffs run afoul of the 1974 Trade Act, because neither sections 301 nor 307 "authorizes the additional $300 billion in List 4 tariffs," commented CTA last week (see 1906180038).

The U.S.-China trade war “is taking its toll, especially on China,” reported eMarketer Tuesday, cutting its 2019 outlook for China and the U.S. As a result, China won't surpass the U.S. in total retail sales this year, as expected, and won't, based on current conditions, until 2021, when it's forecast to pass the U.S. by $93 billion. EMarketer forecasts China retail sales will hit $5.3 trillion this year, up from $5.1 trillion in 2018 vs. U.S. retail sales of $5.5 trillion this year, up from $5.3 trillion. Slowing auto sales are the main drag on the Chinese economy, it said. The U.S. “is not immune to the effects of retaliatory Chinese tariffs,” said the research firm, cutting its previous outlook for U.S. retail sales growth from 3.2 percent to 3, amounting to $5.47 trillion. By share, the U.S. has 21.9 percent of the global retail market vs. China at 21.1 percent, but China’s e-commerce market -- “by far the largest” globally at $1.93 trillion -- is three times that of the U.S.; that forecast is “largely unchanged.” Despite the slight slowdown this year, it said, U.S. e-commerce sales are expected to exceed 10 percent of total retail sales for the first time, with e-commerce growing 14 percent to $586.9 billion.

The Office of the U.S. Trade Representative will begin accepting exclusion requests for the List 3 Section 301 tariffs on Chinese imports through a new online portal (exclusions.ustr.gov) that opens June 30 at noon EDT, said an agency notice Thursday. Exclusion requests will be due Sept. 30 through the portal, with responses due 14 days after the request is posted there, it said. Exclusions that are granted will be retroactive to Sept. 24, when the List 3 tariffs took effect at 10 percent on $200 billion worth of Chinese goods. The Trump administration raised the tariffs to 25 percent on May 10.

The proposed List 4 Section 301 tariffs cover “all of Apple’s major products,” and would harm the company’s “global competitiveness,” said the iPhone maker in heavily redacted comments posted Thursday in docket USTR-2019-0004. “The Chinese producers we compete with in global markets do not have a significant presence in the U.S. market, and so would not be impacted by U.S. tariffs,” said Apple. “A U.S. tariff would, therefore, tilt the playing field in favor of our global competitors.” Tariffs also would reduce Apple’s “U.S. economic contribution,” it said. It vowed last year “to make a total direct contribution to the U.S. economy of over $350 billion over 5 years and we are pleased to report that we are on track to achieve this contribution,” the company said now.

Ricoh America is “currently assessing the potential impact” of the proposed List 4 Section 301 tariffs of up to 25 percent “on nearly all remaining goods manufactured in China and imported to the U.S.,” emailed the vendor to business customers Monday. “The government-proposed tariff increases are not specific to Ricoh and span far beyond our industry,” it said. “Be confident that we continue to review and optimize our global supply chain to minimize the potential impact for both Ricoh and your organization wherever possible.” Ricoh will do its best to mitigate any impact, but “it is possible that the outcome cannot be avoided, and we anticipate there may be some impact to pricing,” said the vendor. “If, despite our efforts, there becomes a need to increase pricing for new purchases, we will work with you to create solutions that optimize cost, delivery, and value.”