Fossil Group filed for an exemption to the 15 percent List 4A Section 301 tariffs it has paid since Sept. 1 on the traditional watches it imports from China under tariff subheading 9102.11.2520, said a Dec. 6 posting in the Office of the U.S. Trade Representative’s public docket. “Fossil continues to look for ways to diversify its sourcing for traditional watches,” the vendor said. It recently invested in a factory in India that has “capacity to address our product needs” for the local market, but can’t “address our product needs in the global markets,” it said. “Watch manufacturing is a highly specialized skill which cannot be readily duplicated.” Moving traditional watch manufacturing out of China “is not feasible at this time, especially in the very challenging market for traditional watches that Fossil has been experiencing over the last couple of years,” it said. The exemption request doesn’t list Fossil smartwatch imports, which also have List 4A exposure. Fossil also requested exemptions on four classifications of watch straps imported under subheadings 9102.11.10.30, 9102.11.25.30, 9102.11.30.30 and 9102.11.45.30, plus three on the watch cases it imports under subheadings 9102.11.10.20, 9102.11.30.20 and 9102.11.45.20.

September imports of smartphones and computer monitors from China spiked significantly from August, according to Census Bureau statistics accessed through the International Trade Commission’s DataWeb tool. The surge was likely evidence of importers’ rush to beat the 15 percent List 4B Section 301 tariffs scheduled to take effect Dec. 15 on those products.

Jasco Products didn’t conceal its anger in seeking exclusions from the 15 percent List 4A Section 301 tariffs it pays on the plastic AC outlet safety covers and seven other classifications of tech accessories it imports from China. Jasco is “being forced by its own federal government to undergo a worldwide scouting expedition” for alternative sourcing, “and is actively evaluating several dozen suppliers outside of China,” the supplier said in each of its eight exclusion requests posted Dec. 2 in the Office of the U.S. Trade Representative’s public docket. Finding alternative sourcing “will take years and tens of millions of dollars along with extensive business disruption due to the time and resource commitment involved,” Jasco said. “It takes time to identify potential suppliers and perform audits to ensure that the factories meet Jasco’s rigorous standards for quality, safety, labor conditions, and environmental protections.”

Best Buy is taking multiple steps to counter effects of tariffs, Chief Financial Officer Matt Bilunas said on a Nov. 26 earnings call. He said the retailer is bringing in products ahead of tariff implementation; making strategic decisions on vendor and SKU assortment; instituting promotional and pricing strategies and sourcing changes; and developing strategies with vendor partners. The most relevant tariffed categories for Best Buy for Section 301 List 4A products are TVs, headphones and smartwatches; and for List 4B products are computers, mobile phones and game consoles, Bilunas said.

IRobot started making some models of its Roomba vacuum line in Malaysia as part of an effort to shift away from China, the company said in a Nov. 21 news release. “Establishing manufacturing operations in Malaysia is a fundamental component in our initiative to diversify iRobot's manufacturing and supply chain capabilities, while also mitigating our exposure to current and prospective tariffs on products that are imported from China," said Colin Angle, CEO at iRobot. The company previously announced the plans to begin a production line in Malaysia (see 1910230027).

Consumer electronics company Sonos forecasts a $30 million blow to fiscal year 2020 profits, resulting from the 15 percent Section 301 List 4A tariffs that took effect Sept. 1, Chief Financial Officer Brittany Bagley said on a Q4 call Nov. 21. Most of the impact will be in the holiday quarter, she said. Citing “frequent speculation” about trade negotiations, Bagley said, “We are assuming for the purposes of this call that this remains in effect for the full year at 15 percent.” To mitigate tariff exposure, the company is diversifying its supply chain out of China and has accelerated production of U.S.-bound products in Malaysia. That capacity is “ramping up quickly, and we believe we will have largely eliminated the go-forward impact of tariffs by the end of the fiscal year,” Bagley said.

An economics working paper found that importers are paying nearly as much for Chinese goods hit by tariffs as they did before Section 201 and 301 tariffs, which means Chinese companies are not the ones bearing the burden, contrary to President Donald Trump's claims. The Harvard University, University of Chicago and Federal Reserve Bank economists said they documented “that the tariffs were almost fully passed through to total prices paid by importers," but that doesn't mean Chinese companies aren't harmed, too. The tariffs would likely reduce the volume of U.S. purchases, even if Chinese companies are able to maintain their profit margins, they said.

Countries frequently used to hide the origin of goods from China before import in the U.S. seem to be making strides in preventing transshipment, Sidley Austin lawyer Ted Murphy said in a blog post. Murphy highlights one recent story in which Vietnam Customs "seized $4.3 billion worth of Chinese-origin aluminum that had been relabeled as Vietnam-origin and destined for" the U.S. "The story also mentions recent seizures of bicycles, machinery, clothes, shoes and electronics that were falsely labeled as being of Vietnam origin after being transshipped from China, through Vietnam, to the United States."

Imports at major U.S. retail container ports this month are expected to see their “final surge” of 2019 ahead of the 15 percent List 4B Section 301 tariffs set to take effect Dec. 15 in Chinese goods, the National Retail Federation said. “Retailers are encouraged by reports that China and the United States have agreed to remove at least some of the existing tariffs once a ‘phase one’ deal is signed,” NRF said. “We are eager to see concrete evidence that the trade war is coming to an end with a final deal that removes all tariffs.” There is “no word” from the Trump administration on the fate of the List 4B tariffs still set for December, it said. “Industry planning is in a state of confusion with the on-again, off-again tariff increases and the widening of trade disputes.”

Fewer than one in three of the 3.9 million finished TV sets the U.S. imported from all countries in September originated in China, according to Census Bureau statistics released Nov. 7 through the International Trade Commission’s DataWeb tool. That nearly two-thirds of TV unit shipments in the month were sourced from Mexico showed the unmistakable measures U.S. importers took to eliminate exposure to the 15 percent List 4A Section 301 tariffs that took effect Sept. 1 on finished sets from China.