Ricoh Americas is “currently assessing the potential impact” of the proposed List 4 Section 301 tariffs of up to 25 percent “on nearly all remaining goods manufactured in China and imported to the U.S.,” the vendor emailed in an announcement to business customers on June 17. “The government-proposed tariff increases are not specific to Ricoh and span far beyond our industry,” it said. “Be confident that we continue to review and optimize our global supply chain to minimize the potential impact for both Ricoh and your organization wherever possible.” While Ricoh will do its best to mitigate any impact, “it is possible that the outcome cannot be avoided, and we anticipate there may be some impact to pricing,” the vendor said. “If, despite our efforts, there becomes a need to increase pricing for new purchases, we will work with you to create solutions that optimize cost, delivery, and value.”
Broadcom expects its semiconductor business to take a $2 billion revenue hit from the U.S.-China trade war, including the Trump administration's "Huawei export ban,” CEO Hock Tan said on a fiscal Q2 call June 13. The trade frictions are “creating economic and political uncertainty and reducing visibility for our global OEM customers,” he said. “Demand volatility has increased and our customers are actively reducing inventory levels to manage risks.” The $17.5 billion in semiconductor revenue Broadcom now expects in the fiscal year ending in February will translate into a year-over-year decline in the high single-digits, Tan said. Huawei generated about $900 million of revenue for Broadcom last year, but the market softness that prompted the company to shave $2 billion off its semiconductor revenue forecast “obviously extends beyond just one particular customer,” Tan said. “We're talking about uncertainty in our marketplace,” and that’s causing “compression” in the supply chain that’s reducing orders, he said. “It's broad-based.” With the revised forecast, “we tried to capture everything” in the business “environment,” including the impact of the proposed List 4 tariffs on Chinese goods, Tan said. The environment “is very, very nervous, and that's why we see a very, very sharp and rapid contraction of the supply chain and orders out there from our customers,” he said.
Tariffs Hurt the Heartland sent a letter to President Donald Trump June 13 saying that he should push China to change its trade practices, but said, "broadly applied tariffs are not an effective tool to change China’s unfair trade practices." The letter, signed by 520 companies and 141 associations, said, "We remain concerned about the escalation of tit-for-tat tariffs. We know firsthand that the additional tariffs will have a significant, negative and long-term impact on American businesses, farmers, families and the U.S. economy."
Ford Motor Company is "evaluating our options following the most recent ruling" on tariff engineering and the applicable duty rate for the Ford Transit van (see 1906070061), the company said in a June 12 Securities and Exchange Commission filing. The U.S. Court of Appeals for the Federal Circuit on June 7 overturned a Court of International Trade decision that had said vans imported by Ford are classifiable as passenger vans and dutiable at 2,5%, even though the stripped-down rear seats included in the vans were removed right after clearing customs. "If we ultimately receive a favorable ruling, we will receive a refund of the contested amounts paid and we will treat the refund as a special item," the company said. "Similarly, if we are required to pay the higher rate for prior imports, the payment will be treated as a special item." Neither event would affect the company's earning guidance, it said.
Trade groups that represent steel-consuming industries say it's wrong to think that just because there haven't been massive job losses the tariffs aren't economically significant to their members.
Canalys expects 2019 smartphone shipments to decline 3.1 percent to 1.35 billion units, a downgrade from an earlier forecast it said was necessitated by various trade "uncertainties," including the Trump administration's recent actions involving equipment maker Huawei. The forecast assumes stringent restrictions will be imposed on Huawei, after a 90-day reprieve expires that will have a “significant impact on the company’s ability to roll out new devices in the short term, especially outside of China.” Canalys said Huawei is acting to mitigate the effect of component and service supply issues but expects overseas potential to be “hampered for some time.”
Five trade groups, representing domestic shoe manufacturers, shoe importers and shoe retailers, are telling President Donald Trump that putting 25 percent tariffs on Chinese shoes, shoe components and machinery used to make shoes would have catastrophic consequences for the industry. "Although our members have been diversifying from China, that process cannot take place overnight," the letter said. "The U.S. footwear domestic manufacturing and U.S. footwear import industries stand united in expressing our grave concerns these tariffs won’t help any segment of our industry," the American Apparel and Footwear Association, the Rubber and Plastic Footwear Manufacturers Association, the Outdoor Industry Association, the Sports and Fitness Industry Association and the Footwear Distributors and Retailers of America wrote in a letter sent May 30. The increased costs of shoe components could drive American factories out of business, they said. And AAFA talked about the U.S. jobs in design, logistics and compliance that could be lost if fewer shoes are purchased because of increased costs for consumers.
HP’s forecast for its fiscal year 2019 ending Oct. 31 only factors in the expected financial impact to the company from the List 3 Section 301 tariffs currently in place, including the increase to 25 percent from 10 percent that took effect May 10, Chief Financial Officer Steve Fieler said on a fiscal Q2 earnings call May 23. “We have not included the impact from any future tariffs,” he said, referencing the List 4 duties proposed May 17 on the $300 billion in Chinese imports not previously tariffed. HP continues to operate “in a dynamic environment that includes ongoing industry component constraints as well as macroeconomic, geopolitical and tariff uncertainties,” CEO Dion Weisler said. “But we have a highly experienced team and know how to navigate through complex market conditions.”
The Trump administration remains “on track to hit the industry” with 25 percent Section 301 tariffs on $300 billion in Chinese goods not previously dutied because trade talks with China “have deteriorated” in the past two weeks, emailed the Sports & Fitness Industry Association to members May 22. “Both sides have retreated to their corners and dug in, with no clear pathway for resolution in the immediate future,” it said. The next possible breakthrough in the talks could come at the G-20 summit June 28-29 in Osaka, Japan, where presidents Donald Trump and Xi Jinping are scheduled to meet, SFIA said. SFIA is organizing a petition drive for members to urge the removal of apparel, footwear, smartwatches and fitness trackers from List 4.
The Section 301 tariffs on Chinese imports “has been a fluid situation for quite some time now,” and Target is “monitoring this very carefully,” CEO Brian Cornell said on a fiscal Q1 earnings call May 22. “As we think about tariffs, we reflect on the impact it could have and will have on American families that are going to be paying higher prices,” he said. Target’s supply-chain “teams have done a very good job of trying to mitigate the impact in the short term,” he said. That Target has a “multi-category portfolio” gives it a “huge advantage in this environment,” he said. “Our ability to flex our focus from category to category is something that’s somewhat unique to Target versus single-category retailers.” Target also has “some very sophisticated vendor partners that for years now have been working to diversify their manufacturing base,” he said.