Escalation Of Tariff Hikes Threatens Consumer Tech
President Donald Trump said Sunday that he has grown impatient with China’s delaying tactics in tariff negotiations and will hike the List 3 Section 301 tariffs on $200 billion worth of Chinese goods from 10% to 25% Friday.
Further Trump, in a spate of tweets over the weekend, threatened to raise tariffs shortly on another $325 billion of goods. Among the most vocal opponents of the move have been members of the consumer technology industry who warn the hikes will act as a tax that will impact a wide range of U.S. citizens, with workers and retirees looking for new solutions for broadband access and affordability, potentially among the more deeply affected classes.
On the plus said, consumer-connected devices including mobile devices like phones and tablets were removed from the final list of the $200 billion worth of targeted products, but other devices like routers, circuit assemblies and networking equipment still are in line for added taxes, if manufacturers pass the costs along. This, opponents say, could adversely impact the build out of new 5G networks.
In a statement Sunday denouncing the latest tariff turn, Consumer Technology Association president Gary Shapiro said: “The president is seeking a better trade deal with China. But he must understand the Chinese don’t pay for these U.S. tariffs – American families, workers and companies pay for tariffs. Tariffs are taxes. And implementing these 25% tariffs on just five-days’ notice would roil our markets, damage U.S. businesses and do serious harm to Americans’ retirement funds and pensions.”
The tariff increase was originally scheduled to take effect Jan. 1, 2019, but was delayed by Trump after he expressed his feeling that negotiations were making good progress. But on Sunday, Trump said those negotiations had slowed down, and the Chinese delegation was seeking to renegotiate certain provisions previously agreed to, like making changes to certain articles of Chinese law. The President flat refused this.
Furthermore, Trump said he could also impose tariffs on the next wave of $325 billion of goods that “remain untaxed, but will be shortly.”
According to published reports, some sources in Washington believe the threats are part of Trump’s hard-line negotiating tactics. The threatened measures were announced as China sent a large negotiating party to Washington to resume talks beginning Wednesday.
Thus far, the tariffs have not impacted television sets coming out of China. But future rounds of tariffs might. TV brands with the most exposure would be mostly value-brands and private labels that purchase goods directly from China-based assembly facilities. This could include brands like Best Buy’s private label brand Insignia line, some Vizio models, TCL, Hitachi and others. Hisense, which is a China-based TV maker, assembles televisions in a factory in Mexico acquired as part of its deal with Sharp several years ago, and would skirt taxes on direct shipments from China.
Potentially, those impacted brands that source products from China could shift suppliers and start acquiring products assembled in regions like Taiwan, Malaysia and other Asia Pacific countries, but making such changes in time for this year would be difficult and unlikely.
Other major brands like South Korea’s Samsung and LG, would see little impact, as would Sony. But overall supply shortfalls could impact price promotions and the supply of screen sizes under 40-inches.
In some cases, retailers began ordering these smaller screen models more heavily last year in anticipation of Trump’s threatened measures.
By Greg Tarr
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