U.S. Trade Representative Robert Lighthizer should put in place an exclusion process from the 10 percent Trade Act Section 301 tariffs on $200 billion worth of Chinese imports, which the Trump administration imposed Sept. 24 (see 1809240015), 169 members of Congress said in a letter Monday to Lighthizer's office. The USTR allowed for exclusion requests for each of the first two lists of tariffs that took effect July 6 and Aug, 23, but the Trump administration has made no mention about a similar process for the third tranche. Such an exclusion process would "afford U.S. companies the opportunity to see relief if tariffs harm their global competitiveness and would help target the effects of the tariffs on China rather than on U.S. companies and their customers," said the lawmakers, led by Reps. Jackie Walorski, R-Ind., and Ron Kind, D-Wis. "We ... appreciated that an exclusion process was set up to further refine the first two lists," they said. "However, the lack of a process for this most recent list is a glaring omission, particularly given its size in relation to the first two lists." The exclusion process should be "fact based" and spelled out in a Federal Register notice, they said.

The International Trade Commission issued a limited exclusion order banning import of Toshiba non-volatile memory devices that infringe patents held by Macronix, said the commission Monday in a Federal Register notice. The ITC opened a Trade Act Section 337 investigation in April 2017 on allegations that Toshiba was manufacturing and importing memory cards, solid-state drives, digital camcorders, car navigation systems and other items that copy Macronix’s patented technologies. The exclusion order applies to infringing merchandise from Toshiba America Electronic Components and Toshiba America Information Systems, said the notice. The ITC also issued cease and desist orders banning import and sale by the three companies. The commission set bond at 100 percent of entered value for Toshiba flash memory devices, solid-state drives, USB flash drives and microcontroller units, and at 6 percent of entered value for Toshiba PCs, multifunction printers and air conditioners, during the 60-day period the Trump administration has to review the exclusion order. Toshiba didn’t comment Monday.

It’s impossible to forecast how many product-specific exemptions to the Trade Act Section 301 tariffs on Chinese imports the Office of the U.S. Trade Representative will grant “because we’re in uncharted territory,” David Cohen, a trade expert with Sandler Travis, told a Sports and Fitness Industry Association webinar Thursday. With Tuesday’s deadline having lapsed for requesting exemptions to the first round of tariffs that took effect July 6, USTR denied 108 requests of the more than 10,000 pending and hasn't granted exemptions, said Cohen. Requests for exemptions are due Dec. 18 on the second tranche of tariffs that took effect Aug. 23, he said. USTR has announced no process for requesting exemptions on the third tranche that took effect Sept. 24, and there’s talk the administration may wait to launch a process until after Jan. 1 when the duties are scheduled to rise to 25 percent from 10 percent, he said. “It is unclear yet whether and how many” exemptions USTR “will permit,” said Cohen. “I am optimistic that there will be some, at a minimum.” His “cynical view” is they will need to approve some “because if they approve zero, they will be sharply criticized as having this entire system be nothing more than a sham,” he said. Cohen’s firm has “advocated” for exemptions “on many fronts,” including for companies that source products from China through “a wholly foreign-owned enterprise,” he said. “In many cases, companies have invested brick and mortar on the ground in China, and for them to lift up and pick up stakes and invest in new brick and mortar in a third country is enormously cost-prohibitive.”

Customs and Border Protection “just concluded” proof-of-concept testing of the use of blockchain technology in North America Free Trade Agreement and Central America Free Trade Agreement certificate of origin processes, said Celeste Catano of BluJay Solutions at the Oct. 3 meeting of the Commercial Customs Operations Advisory Committee. CBP and trade community participants began meetings to discuss results and make a recommendation, with the comment process to wrap up by Oct. 19, said Vincent Annunziato, acting director of CBP’s Business Transformation and Innovation Division.

Master Electronics will absorb costs of Trade Act Section 301 tariffs on Chinese imports that took effect over the summer by establishing itself as a “tariff free zone,” said the electronic components distributor Thursday. It’s vowing no tariff-related price increases or surcharges “for the foreseeable future.” The first two rounds of 25 percent tariffs took effect July 6 and Aug. 23 and the third round took effect Sept. 24 at 10 percent, but scheduled to rise to 25 percent after Jan. 1. “Our prices do change regularly based on supplier prices and market elements,” says the company’s website. “There will be no price change, surcharges, or fees due to tariff policy.”

Costco sees “many moving parts” in an “extremely fluid” environment now that Trade Act Section 301 tariffs are in effect on $250 billion worth of Chinese imports, said Chief Financial Officer Richard Galanti on an earnings call Thursday. Working with suppliers “to see what can be done to reduce and/or absorb some of the costs” is one of the strategies Costco is “exploring,” said Galanti. “Reducing our commitments on certain impacted items” is another possible remedy, he said. There’s “limited ability” to find “alternative country sourcing,” even where that’s “possible and feasible,” and that “takes time,” he said. “We’ll have to see how customers and competitors react to tariffs, and what impacts it will have.” It’s in Costco’s “DNA” to be the last to raise prices on consumers, and “we want to work with any supplier to figure out how to not do that,” said Galanti. That Costco has more than $138 billion of purchasing power “affords us, I think, some opportunities that perhaps make it a little easier for us,” he said. People “smarter than me” don’t like tariffs, he said. “Whatever negative” they bring, “we can weather it better than others,” he said. Costco, through membership in the Retail Industry Leaders Coalition representing big-box retailers, lobbied unsuccessfully against the three rounds of tariffs.

Past administrations of "both parties" gave "some lip service" to curbing China's unfair trade practices "but never followed through," National Economic Council Director Larry Kudlow said during a Q&A at the Economic Club of Washington Thursday. President Donald Trump "is following through" with the three rounds of Trade Act Section 301 tariffs he imposed over the summer, Kudlow said. He acknowledged he's "more of a doctrinaire free trader" than his boss, and that he opposed the administration's Section 232 tariffs on steel imports before joining the White House from CNBC. But there's "a lot of unfair trading practices" worldwide, and "the biggest culprit is China, and that can't be left alone," said Kudlow. "China has played fast and loose with the rules," he said. "The World Trade Organization needs reforms to enforce those rules. China's taken advantage. They're not a third-world country anymore. Why should we have to suffer?" Trump wants "a level playing field" with China, said Kudlow. "He wants reciprocity. Ultimately, he wants zero tariffs, zero non-tariff barriers, zero subsidies." Kudlow acknowledged tariffs "may be painful in some cases," but Trump is "a disrupter." Kudlow is "quite patient" with the policy, and confident a deal with China "can be negotiated" as a result, he said. It has been only "four or five months" since Trump first imposed tariffs, Kudlow said: "Let him do his work."

Alcatel-Lucent Enterprise through year-end will “absorb” the “significant” cost increases of tariffs on Chinese imports of networking equipment and components that took effect Sept. 24, ALE said Wednesday. The Trump administration removed imports of Bluetooth headphones, smartwatches and fitness trackers under the 817.62.00 line item but let 10 percent duties stand on networking equipment imported under the classification (see 1809170052). The tariffs will rise to 25 percent after Jan. 1. “Many vendors have chosen to pass the cost through to channel partners and customers by immediately increasing prices,” but ALE “will absorb the current 10 percent increase and give partners the opportunity to place orders before a potential need to adjust pricing in the new year,” it said. Most U.S. customers “locked in 2018 budgets long ago and are already in planning cycles for next year,” said ALE. “We recognize an unexpected price increase could aggravate a budgeting process that is often already complex.” It vowed three months’ notice of any 2019 price increases.

The Internet Association has joined tech groups hailing the trilateral trade agreement the Trump administration reached last weekend with Canada and Mexico (see 1810020035 or 1810020001) but is concerned the deal’s copyright provisions fall short, said CEO Michael Beckerman Wednesday. The digital-trade provisions “will promote and protect U.S. digital exports and support millions of American jobs,” said Beckerman. Digital trade benefits “businesses of all sizes in every industry, and this agreement reflects key parts of U.S. law that have created a $160 billion American digital trade surplus,” he said. “In the copyright area, however, the agreement includes only a portion of the core U.S. legal framework.” IA hopes the administration will include "key provisions in U.S. law like fair use-style rights."

The National Retail Federation and two tech groups expressed support Monday for the new trilateral trade deal the U.S., Canada and Mexico reached this weekend. NRF hails the deal because it preserves the “framework” of the North American Free Trade Agreement, said CEO Matthew Shay Monday. The agreement is “critical to protecting North American supply chains that support millions of American jobs,” said Shay. “Modernizing NAFTA for the 21st century” was a goal that U.S. retailers “have shared from the start,” he said. “We will carefully review all the details of the agreement to ensure it promotes U.S. economic growth and maintains access to the products American families need at the prices they can afford.” The Information Technology Industry Council regards the agreement as “a significant step toward creating a foundation for North America’s economic prosperity for years to come,” said CEO Dean Garfield. “While we are still reviewing text, we’re encouraged this plan will build upon the prior economic success of NAFTA and adapt it to the fundamentally digital economy in which we live through new rules on digital trade, intellectual property, and trade in goods.” The tech industry likes the "digital trade chapter that removes barriers to cross-border data flows," said Computer and Communications Industry Association CEO Ed Black. The group also likes "protection for intermediaries to ensure U.S. internet services can be exported around the world," he said.