TV Retailers May Seek US Assembly in Response to Talk of New Tariffs on China and Mexico
The TV and display global supply chain is facing its “greatest political challenge with the presidency of Donald Trump,” a Display Supply Chain Consultants blog post said (here), predicting an uptick in “assembled in the USA” products. Calls for import tariffs on goods from Mexico and as much as a 45 percent import tax on goods from China “would profoundly disrupt the industry," DSCC President Bob O’Brien said. Some 95 percent of TV imports into the U.S. come from those two countries, he said.
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Retailers are looking to add a U.S.-based product to their portfolio to gain an import duty advantage, O’Brien said. TVs imported from outside North America are subject to a 3.9 percent duty, while TVs imported into the U.S. from Mexico are duty-free under NAFTA. “If NAFTA is renegotiated as promised by President Trump, all bets are off,” O’Brien said. TV “kits” comprising all the parts of a TV, but in incomplete or unfinished form, can be imported to the U.S. duty-free from any country under most-favored-nation rules, he said. Savings on returns and damage is another reason to assemble products in the U.S., O’Brien said. A half-percentage point difference in return rate can “more than pay for the labor cost of U.S. assembly,” he said. Performing final inspection and testing on a U.S. assembly line, coupled with shorter supply and shipping times, “improves reliability,” he said.
O’Brien said Walmart sells one of the few electronics brands assembled in the U.S.: TVs from Winnsboro, South Carolina-based Element Electronics. Element’s line of 19-inch to 65-inch TVs sells exclusively through Walmart, and “an important part of their value proposition is that the product is assembled in the USA,” O’Brien said. But decades ago, Walmart contributed to the growth of China’s assembly industry by shifting sourcing of electronics and other goods from U.S. suppliers to China importers, O’Brien said. “As labor costs in China increased, though, and perhaps recognizing the shifting political landscape, Walmart started in 2013 to push for increased U.S. manufacturing.”