Christmas lights producers outside China appear to have doubled their volume of exports to the U.S. after the Section 301 tariffs more than doubled the tariffs on Chinese lights, according to the Coalition for GSP. The group decided to look at Christmas lights because nearly all of the imports happen from August through October, so the impact of the tariff jump on Chinese lights from 8 percent to 18 percent on Sept. 24 would show up immediately.
Although PricewaterhouseCoopers expects trade will not return to normal with China for more than three years, experts on a Dec. 20 webcast said clients are mitigating increased tariffs through a variety of strategies, including lowering customs value, bonded warehouse use, modifying tariff codes and negotiating with suppliers or customers. "Probably 20 percent can be mitigated without making any changes to the supply chain," said Scott McCandless, a trade policy specialist for the firm.
The three rounds of Section 301 tariffs since July on $250 billion worth of Chinese goods are costing the tech industry more than $1 billion a month in added fees, the Consumer Technology Association reported. CTA teamed with The Trade Partnership to analyze recent U.S. import data and found tariffs on tech products imported from China jumped to $1.3 billion in October, a sevenfold increase from the same month a year earlier. That includes $122 million more in duties on 5G-related imports in October, compared with $65,000.
GoPro will move most of its U.S.-bound action-camera production out of China by summer as a hedge against its products’ exposure on “any new” Section 301 tariffs list, the company said on Dec. 11. GoPro escaped tariffs through the three rounds of duties imposed between July and September. “Today's geopolitical business environment requires agility, and we're proactively addressing tariff concerns” with the move, Chief Financial Officer Brian McGee said. “This diversified approach to production can benefit our business regardless of tariff implications.” McGee spoke on a quarterly earnings call in early November of GoPro preparations to move production out of China if “necessary.” President Donald Trump threatened Sept. 17 to "immediately pursue" a fourth tranche of tariffs on $267 billion worth of additional imports if China retaliated for the duties that took effect Sept. 24. China did retaliate, but Trump never acted. GoPro didn’t comment on where it’s moving production to.
The U.S. Chamber of Commerce will support the new NAFTA, and will lobby for its passage, the group announced Dec. 10. CEO Thomas J. Donohue wrote that the group will be working to resolve a handful of outstanding issues, but only specifically mentioned the Section 232 tariffs on Mexican and Canadian steel and aluminum. He spent far more time scolding President Donald Trump for his intention to terminate NAFTA "in order to present the incoming Congress with a choice between the new agreement and no agreement. We disagree with this strategy." Donohue wrote, "Issuing this threat against a co-equal branch of government is neither necessary nor productive and could actually cost votes." A prominent free-trade Democrat in the House of Representatives made the same point on Dec. 10 (see 1812100024).
There's been some significant growth in imports of products eligible for Generalized System of Preferences benefits in recent months, the Coalition for GSP said in a blog post. The coalition, which advocates for keeping the GSP program in place and is run by a consultancy called Trade Partnership Worldwide, said October set another record for GSP imports. The GSP benefits in October saved U.S. companies $105 million, an increase of $12 million, or 13 percent, over the previous record set in August, the group said.
October imports at major U.S. retail ports exceeded 2 million containers in a single month for the first time as retailers continued to rush merchandise into the country ahead of the now-postponed Jan.1 increase in Section 301 tariffs on goods from China, the National Retail Federation said. President Donald Trump “declared a temporary truce in the trade war” when he put a 90-day hold on hiking the 10 percent tariffs to 25 percent, but “these imports came in before that announcement was made,” NRF said. “We hope that the temporary stand-down becomes permanent, but in the meantime there has been a rush to bring merchandise in before existing tariffs go up or new ones can be imposed.” U.S. ports handled 2.04 million 20-foot containers or their equivalents in October, the latest month for which after-the-fact numbers are available, NRF said. That was up 9 percent from September and up 13.6 percent year-over-year, it said. The previous single-month record, 1.9 million containers, was set in July, it said. NRF estimates ports handled 2.01 million containers in November, a 14 percent year-over-year increase. It forecasts 21.8 million containers will be handled in 2018, a 6.5 percent increase from the record 20.5 million handled in 2017. It sees a “significant slowdown” in 2019 import growth “as the market adjusts to higher prices due to the Trump tariffs and the impact on consumer and industry confidence going forward.”
Importers paid more than $6 billion total in tariffs in October, the first full month that there were additional tariffs on $200 billion in Chinese goods, according to an analysis from Tariffs Hurt the Heartland. The group said that amount -- which is $3.1 billion more than was paid in October 2017 -- has not slowed imports on the tariffed goods, but has drastically cut exports that are subject to retaliatory tariffs. The group is funded in part by farm interests, who have been particularly hard-hit by retaliation. Their Dec. 7 release said that imports subject to new tariffs declined 0.6 percent in October, while exports targeted for retaliation fell 37 percent. About two-thirds of the increase is for Section 301 tariffs, while steel and aluminum tariffs cost an additional $446 million. The goods on the Section 301 list would have cost $394 million in tariffs before the action; in October, tariffs on those imports were $2.6 billion. CBP recently said it has assessed more than $10 billion under the recent Trump administration Section 201, 232 and 301 trade remedies (see 1811260010).
Roanoke Trade released an online bond sufficiency calculator to help "determine the appropriate continuous customs import bond amount," the surety said in a blog post. Bond sufficiency issues have increased in recent months and are expected to continue due to the new tariffs (see 1808210029). The calculator can help importers predict bond sufficiency levels before CBP issues mandated bond increase notices. CBP issued 2,300 such notices in September, Roanoke said. The agency would typically issue fewer than 200 a month before the new tariffs were put in place, the surety said.
With the U.S. “on the cusp” of Section 301 tariffs scheduled to rise to 25 percent Jan. 1, 2019, on $200 billion worth of Chinese imports, President Donald Trump “has taken the authority that he does not have under the law” when he ordered the imposition of the duties, Consumer Technology Association President Gary Shapiro told the American Legislative Exchange Council’s States & Nation Policy Summit on Nov. 29. Speaking before an audience of mainly conservative state legislators, Shapiro stopped well short of threatening a CTA court challenge to block the higher tariffs from taking effect (see 1811090044).
The tariffs will hurt “thousands” of American tech companies, but also “our farmers and others as China is retaliating,” Shapiro said. “I travel around the world. I talk to government leaders. This is just not a China-U.S. issue. Every developed country in the world is concerned about this tariff war, which can not only lead us into a recession, but potentially a depression.” By imposing the tariffs, the administration is “going against” the American “brand of freedom” in trade and the “welcoming in” of foreign trade partners, Shapiro said. He conceded that China “is not a fair player, by the way. But raising tariffs, in our view, is not the way” to curb China’s unfair trade practices, he said. CTA didn’t comment.