The president’s decision to begin imposing tariffs on the first wave of products imported from China, apparently won’t have a big impact on most China-made televisions and displays sold here, but could still be coming if a trade war ensues, experts warn.
President Trump said early Friday that the United States will impose a 25% tariff on $50 billion of Chinese exports, triggering China to declare its immediate plan to retaliate by imposing tariffs on certain U.S. exports.
The U.S. tariffs will be enacted in two parts. More than 800 exports, representing some $34 billion, will get tariffs starting in July. Televisions were removed from that list. Some 280 more products will undergo a public comment period, before going into effect later.
The administration said American companies will be able to apply for an exemption from the tariff, through a process to be disclosed in coming weeks.
The removal of consumer-focused televisions and monitors shipped from China to the United States from the first wave is a break for TV brands, said Paul Gagnon, TV market analyst with IHS Markit.
Complicating matters, however, was the inclusion of various television-reated components carried over from the first draft, which could apply to some products and companies “wanting to assemble TVs in the U.S.,” Gagnon added, saying he needed to study the potential ramifications further.
The president said he went forward with the tariff measure to help to even a long-running, unfair trade imbalance between the two nations. It is also viewed as a punitive measure against China for the theft of American intellectual property and trade secrets. The first phase of the tariffs impact mostly the aerospace, robotics, manufacturing and auto industries.
The use of tariffs has drawn opposition from some members of Congress and trade organizations, who warn that a resulting trade war will ultimately harm U.S. consumers.
According to a statement issued Friday by Michael Petricone, senior vice president, government and regulatory affairs for the Consumer Technology Association (CTA): “Tariffs go against the interest of the American people. The economy will respond to the president’s tariff agenda by increasing the cost of goods that people use every day, harming the U.S. economy and sinking the stock market. Imposing tariffs on Chinese goods could cost Americans hundreds of thousands of jobs. The $50 billion in tariffs being imposed today is no exception. And the anticipated retaliation by China will escalate the U.S.-China trade war and reduce U.S. gross domestic product by nearly $3 billion, based on a CTA and National Retail Federation (NRF) study on the initial White House tariff proposal.”
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But President Trump said Friday that due to the greatly lopsided nature of the ongoing trade imbalance, China will ultimately become the biggest loser if it retaliates. He suggested that a retaliatory move could lead to further tariff escalation. He has previously suggested the China tariffs could extend to up to $100 billion.
Gagnon told us that “the tariff situation is very difficult to anticipate, but [if China-made consumer televisions are impacted] it will be a very significant disruption. Although many brands will shift production to Mexico if they think it will be a long term situation, it will take time and costs will rise regardless.”
In the meantime, Sharp Electronics, under the recent stewardship of Taiwan-based Foxconn, has scheduled a groundbreaking for an LCD panel plant and industrial park in Wisconsin on June 28th, and both Trump and Foxconn Chairman Terry Gou are expected to attend.
The facility was originally announced as a 10.5-Gen plant that would make large panels for a variety of applications, especially televisions, but a Nikkei report last May cited display industry sources saying plans could be changing to a 6 or 8.5 Gen plant, which would make smaller screen sizes more suited to iPhones, autonomous cars, aircraft and various commercial and education market displays, in addition to televisions.
Plans for the plant could have changed, the report said, due to the need for supply sources, like Corning, Asahi or some other glass cell maker, to construct a glass plant on or near the campus. This is a logistical requirement due to the difficulty and cost in shipping such large cells over long distances.
In addition, the company is already building a 10.5 Gen LCD plant scheduled for startup next year in the southern Chinese city of Guangzhou.
Representatives for Sharp/Foxconn could not be reached for comment as this went to post.
Nevertheless, a Foxconn executive was quoted in April by The Journal Times in Racine County as saying that the Wisconsin Valley Science and Technology Park would have at least four manufacturing facilities, including one LCD plant and one assembly plant.
By Greg Tarr
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