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).
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.
U.S. tariffs on products from China caused Brilliant Home Technology to price its smart-tech goods “a little higher than we planned to," about $50 higher at retail, CEO Aaron Emigh told us in a pre-product announcement. “It sounds strange to have concerns over parts that cost a penny, but that’s the thing that could constrain the ability to build these things right now,” he said of the “hundreds of capacitors” it uses per device. The CEO testified at a U.S. Trade Representative hearing last month against the duties levied over IP concerns (see 1808210047), which are also raising tech hackles (see 1809060019). Thursday it announced technology to control lights, thermostats, locks, doorbells and Sonos speakers over Wi-Fi from a smart light switch. Prices start at $299 for a switch with a 5-inch diagonal LCD touch screen.
More “tit-for-tat tariff escalation” by a third tranche of proposed duties on $200 billion of Chinese imports would “expand the harm to more U.S. economic interests,” wrote CTA, the Information Technology Industry Council, Internet Association, Telecommunications Industry Association and 146 other groups to U.S. Trade Representative Robert Lighthizer at Thursday's deadline in docket USTR-2018-0026. Holiday product disruptions are feared, said groups also including the Computer & Communications Industry Association, CompTIA, National Association of Music Merchants and Semiconductor Industry Association. The U.S. and China should “begin a comprehensive negotiation,” said the groups. "We have seen no indication of China changing course,” they said. “We request that every effort be undertaken now to initiate meaningful negotiations expeditiously. We recommend no further tariff actions be taken until those negotiations have a chance to produce significant and verifiable results, and the Administration can fully assess the impact." Lighthizer’s office didn’t comment.
CTA views the Trade Security Act introduced last month in the Senate as a "tool" to fight President Donald Trump’s “failing tariff strategy,” said CEO Gary Shapiro Wednesday. Sen. Rob Portman, R-Ohio, introduced S-3329 with three co-sponsors to boost congressional oversight of the Trade Expansion Act Section 232 tariff process and require the Defense Department rather than the commerce secretary to justify Section 232 duties on national-security grounds. Congress has “limited tools” to dispute Trump's “unfounded” national-security claims as the basis to levy Section 232 tariffs on steel and aluminum “that are hurting American business and consumers,” said Shapiro. Portman is “uniquely qualified” as a former U.S. trade representative “to address targeted reforms that set clear guidelines on the president's misuse of his authority pertaining to trade," said Shapiro. Portman was USTR for a year beginning in May 2005 under President George W. Bush.
Though the vast majority of the nearly 3,000 comments in docket USTR-2018-0026 opposed a third tranche of tariffs on Chinese goods over intellectual property disputes, Veeco Instruments supports some proposed duties on “indicator panels incorporating LCDs or LEDs,” it commented, posted Sunday. Veeco also wants U.S. Trade Representative Robert Lighthizer to impose duties on more LED-related goods not currently proposed, said a document redacted to hide “business confidential” information. But it once identified the company, and a revised document posted Tuesday no longer did. The company had about $485 million in 2017 revenue, mainly through the sales of semiconductor process equipment used to produce LEDs and other components, it had reported. Luke Meisner, the Schagrin Associates lawyer who filed the comments, declined comment.
Marketers of low-cost electronics for cars and other applications will be especially vulnerable if the Trump administration imposes a third tranche of 25 percent tariffs on Chinese imports, they commented Monday in docket USTR-2018-0026. Digital Products International (here) and car audio supplier Dual Electronics said their businesses are too profit-poor to absorb higher duties, worrying about increasing prices. Most Dual products sell for less than $100, for “people with older cars to not only have an affordable radio, but also basic connectivity features like Bluetooth,” wrote CEO Jim Braun. “Demand will surely drop for our industry” amid levies, he said. “Supply will be cut back as a result. Jobs will be lost as we, and others, adapt to a smaller business."