A third tranche of tariffs, on $200 billion worth of Chinese imports, takes effect Sept. 24 at a 10 percent rate, rising to 25 percent after Jan. 1, said President Donald Trump Monday evening. The administration will “immediately pursue” a fourth batch of duties, on $267 billion of additional imports, if China retaliates against the third installment, said Trump. "China has been unwilling to change its practices.”
The American Watch Association, Fitbit and Fossil opposed tariffs on smartwatches imported to the U.S. under a classification that includes a broad assortment of connected devices and networking products. “American consumers will ultimately feel the brunt of this tariff when they seek to purchase watches, innovative wearable devices, and accessories,” Fossil commented. “Tariffs on smartwatches from China will increase costs for these members and, in turn, could result in" less U.S. R&D, AWA commented. Remove that entire subheading from the targeted duties list or yank wearables or delay the levies' implementation, Fitbit said. The comments in docket USTR-2018-0026 came after many tech heavy hitters opposed the penalties over the countries' IP disputes (see 1809120049).
Tech and telecom interests are ratcheting up opposition to U.S. tariffs on Chinese products being imposed over intellectual property disagreements between the countries. CTA, the Information Technology Industry Council, Internet Association, Telecommunications Industry Association and some 80 others wrote congressional leaders of their concerns and began Americans for Free Trade. It's a “major campaign against tariffs,” said the group Wednesday. Industry also continues telling the U.S. Trade Representative of concerns (see 1809110044), with tech heavy hitters teaming up after IBM earlier expressed concerns.
IBM seeks “plurilateral agreement among the world’s largest economies” to curb China’s allegedly unfair trade practices, commented the company in docket USTR-2018-0026 in opposition to the proposed third tranche of duties. Such global agreement with China’s “largest trade and investment partners” could help “establish broad new norms,” it said. The EU and Japan “would be logical, willing partners,” it said. Though Nvidia doesn't make graphics processing units in China, some of its “platforms and cards” are assembled there, and “third-party resellers and partners” import them to the U.S., it commented. Those goods are targeted for tariffs of up to 25 percent, “even though the vast majority of their value derives from [U.S.] engineering work," Nvidia said. It’s “working diligently” with those partners “to mitigate possible negative impacts,” it said. “That work will not be completed before the anticipated time” the third tranche takes effect, so it’s asking that those products be exempted. Other tech interests also are concerned about levies over intellectual property disagreements between the countries (see 1809100056).
CBS, within 30 days, will donate $20 million to “one or more charitable organizations that support the #MeToo movement and equality for women in the workplace” under its separation agreement with Les Moonves, who resigned Sunday as chairman, president and CEO amid allegations of sexual misconduct (see the personals section of the Aug. 3 issue), said the company in an SEC filing Monday. Moonves will pick the charities “in consultation with” CBS, it said. CBS also will pay $120 million into a “grantor trust” and will keep the money if its board determines that Moonves was fired for cause and he doesn’t seek an arbitration appeal, it said. The board will make that determination within 30 days after independent investigators from Covington & Burling and Debevoise & Plimpton submit their report on the allegations, but “in no event later” than Jan. 31, it said. If the board finds Moonves was fired for cause, CBS will have “no further obligations” to him, it said. Until that determination, Moonves will perform “transition advisory services” for a year and will be given “office services and security services” for up to two years, it said. Moonves would collect the $120 million from the grantor trust if the board determines he was fired without cause, it said. The CEO's departure came in an announcement Sunday that the group of TV stations and its controlling shareholder affiliated with the Redstone family ended their litigation. That shareholder, National Amusements, confirmed it doesn't plan to propose combining CBS and Viacom and won't do so for at least two years, and "will give good faith consideration to any business combination transaction or other strategic alternative that the independent directors believe are in the best interests of the Company and its stockholders." CBS shares closed 1.5 percent lower Monday at $55.20, while Viacom's stock was little changed, too.
The Information Technology Industry Council, like CTA, questions whether President Donald Trump's "action" proposing a third tranche of 25 percent Section 301 tariffs on $200 billion worth of Chinese imports "is legal" under the 1974 Trade Act, emailed spokesman Jose Castaneda Monday. ITI has made no “final decision” whether to pursue “litigation” against the administration to block the tariffs from taking effect, he said.
CTA is “skeptical” the Trump administration’s third tranche of tariffs on $200 billion of Chinese imports can withstand a court “challenge” because the duties are "unlawful" under the 1974 Trade Act, said the association Friday and in comments at Thursday's deadline in docket USTR-2018-0026. “We are reviewing all options,” emailed a spokesperson when asked if CTA will sue to block the levies. The package of tariffs “may be vulnerable to a legal challenge because they are not based on the required legal finding” of unfair Chinese trade practices, “and instead are retaliatory in nature and require a separate Section 301 investigation,” which U.S. Trade Representative Robert Lighthizer “did not conduct,” said CTA. Section 301 “authorizes actions following fact-based investigations, not the responses to China's retaliatory actions,” it said. Lighthizer’s office didn’t comment. President Donald Trump reportedly said the installment could start “very soon” and he's preparing a fourth wave on $267 billion on Chinese imports.
Consumer "loyalty" often “trumps content” or price as the determining factor in over-the-top subscriber churn or retention, David Browne, Comcast Technology Solutions senior director-product management, told a Parks Associates webinar Thursday. “There really is no silver bullet for countering churn,” said Browne. “If you consider churn part of the natural ebb and flow of your business, you come to the conclusion that some consumers, you will never win back. It doesn’t matter how many dollars you throw at that win-back campaign.” There’s the “inverse conclusion” some customers “will come back anyway” when an OTT service streams content they are interested in, he said. “If you’re a stackable service” that specializes in “short-form” content that’s “topical,” there's a much different “churn profile” than more “general” OTT entertainment services, he said.
Qualcomm regards 2019 and 2020 as likely “building years” for 5G smartphones as a prelude to the market reaching “scale” in 2021, said Chief Financial Officer George Davis at a Citi investors conference Wednesday. Every major smartphone OEM will have “rolled over to 5G” by 2021, he said. That Qualcomm knows of one “very large OEM” customer that plans no 5G smartphone launch in 2019 leads the company to believe that the market won’t be “ready for scale” until 2020 or later, he said. The componentry that Qualcomm markets for 4G smartphones “has an integrated modem,” he said. “Everything is very efficient and uber-effective” and is a “great value proposition for the supply chain,” he said. “You’ll have all that” with 5G, but not until 2021, he said. That will give Qualcomm at least a year and a half for the “debugging of everything,” learning all the “pain points that come with any generation change,” he said. It’s not easy to compare the predicted 5G ramp with the launch of 4G six years ago, said Davis. Average selling prices (ASPs) of the componentry that will go into a 5G smartphone will go up because those devices “are more complex,” he said. “They're bigger. They provide more functionality. So, that's a positive.” With the 5G ramp, “you won't have the same degree of unit growth behind it” as the industry had with the 4G launch, because the smartphone market is more mature and can’t support that same “sheer growth,” he said. Nevertheless, “from our standpoint, it's a very important time for improving share and improving ASPs and I think that's really what plays out over the over the next few years,” he said.
The head of the UHD Alliance hopes for more very high definition content and expects more deals to educate the public about 8K, he told us in Berlin at IFA. Aside from NHK plans to launch 8K broadcasting by the 2020 Summer Olympics in Tokyo, “there is only limited 8K content being produced,” which means displays will need to upscale content, said President Mike Fidler Friday. “We still have lots of work to do with 4K. We still have to build the ecosystem out.” The alliance saw Amazon launch its “Witness the Revolution” webpage about a month ago to guide shoppers through Ultra HD product complexities. The project took nine months from inception to its going live in August, including negotiations and getting required studio clearances to display Ultra HD Blu-ray titles onscreen, Fidler said: The alliance is “working with others” for similar collaborations.