Any List 4 Tariffs Would Be ‘Detrimental,’ but 25% Duties ‘Could Be Catastrophic,’ Says CTA

CTA members have identified 139 “line items for technology sector products” they want removed from List 4 of the proposed Section 301 tariffs on Chinese imports, said the association in comments dated Monday and posted Tuesday in docket USTR-2019-0004. “The annual import value from China of those items alone totals over $167 billion, over half of the entire value of the products on List 4.”

About 400 companies, trade associations or individuals filed requests by Monday’s deadline to speak at public hearings that begin next Monday on the proposed List 4 tariffs. It took six days of hearings last summer to accommodate the roughly 350 witnesses who testified on List 3.

The Office of the U.S. Trade Representative is expected to release a List 4 hearings schedule Friday. The schedule will figure critically in determining when the tariffs might take effect, should the Trump administration make good its threat to impose the duties. Post-hearing rebuttal comments are due seven days after the hearings end, the final deadline in the List 4 proceedings. USTR put the List 3 tariffs into effect Sept. 24, less than three weeks after post-hearing rebuttals in that process came due Sept. 6 (see 1809180020).

That 400 have asked to testify suggests strongly that the hearings likely will spill into a second week, leaving USTR in no position to order the List 4 tariffs activated until after President Donald Trump returns from the G20 summit June 28-29 in Osaka, Japan. Trump on CNBC Monday to immediately order the List 4 tariffs into effect if Chinese President Xi Jinping doesn’t meet with him at the G20, but it’s unclear how he could do so legally before the Section 301 comment-and-reply period is allowed to run its course, as is required under the 1974 Trade Act.

A Chinese Foreign Affairs Ministry spokesperson declined Wednesday for a third straight day to confirm that a Trump-Xi meeting would take place in Osaka. “We will release relevant information when we have it,” said the spokesperson.

Any additional List 4 tariffs would be “detrimental” to CTA members, but a 25 percent duty “could be catastrophic,” said the association. Products on List 4 “impact the global enterprises of America’s most well-known brands,” plus the “heart of the American entrepreneurial spirit,” said CTA.

Targeting the List 4 products for tariffs will “hinder U.S. innovation, slow the growth engines of U.S. small and medium-sized businesses, and hit the pockets of the average American consumer,” said CTA. The “increasing integration” of information and communication technologies in other sectors, such as agriculture and transportation, means that putting “punitive tariffs” on technology products “will cause a ripple effect” of harm across “the whole U.S. economy,” it said.

Best Buy Chief Merchandising Officer Jason Bonfig will testify at the hearings “on the inefficacy of the proposed tariffs in achieving the objectives outlined by USTR in its Section 301 report and the impact of the proposed tariffs on Best Buy, the industry, and U.S. consumers,” said the retailer’s lawyers. Best Buy urges USTR to remove laptops, smartwatches, PC monitors, TVs and videogame consoles from List 4, they said. They apparently forgot to include smartphones, the largest consumer tech category on List 4 in terms of its $44.8 billion in 2018 import value, roughly 15 percent of the value of all products on List 4 (see 1905140025). They rectified the error with a second filing. Best Buy didn’t comment Wednesday.

The Retail Industry Leaders Association worries about the “negative impact” the List 4 tariffs “could have on America’s working families,” said the trade group, of which Best Buy and Walmart are members. “We agree that punishing American working families with higher prices on household basics like clothing, shoes, electronics, and home goods is not a solution.”

JLab Audio, which escaped List 3 tariffs on its Bluetooth headphones, wants USTR to again remove them from List 4, said the vendor. “Removing our products from the previous wave of tariffs has enabled JLab to hire six new employees,” it said. With sales up 80 percent year-over-year, “imposing an increased tariff now would threaten our progress and would make it more difficult for us to do what we do best: support our community and provide our customers with a quality product at a low price,” it said.

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