One panelist said it will take 20 years to know who are the winners and losers of today's tariffs and export restrictions. Another panelist said U.S. factory workers making washing machines and solar panels are clearly winning from the safeguards launched nearly two years ago, as are Vietnam and Mexico. Another panelist said Vietnam and Thailand, and Mexico to a much lesser degree. As moderator Lucas Queiroz Piers said, “It is a confusing moment." The Alston & Bird legal consultant was coordinating a panel called "U.S. Sanctions and Trade War: Winners and Losers," at an American University Washington School of Law International Trade Symposium on Nov. 5.
Apple CEO Tim Cook downplayed the impact of a potential hit from tariffs slated for Dec. 15 on smartphones and other devices during the company’s fiscal Q4 earnings call on Oct. 30 The company was already paying some tariffs prior to September and after Sept. 15 when List 4A Section 301 tariffs took effect. Cook’s view of potential December tariffs is “very positive in terms of how things are going,” he said, saying Apple’s guidance reflects that optimism. The tone of trade talks “has changed significantly, and I have long thought that it was in both countries’ best interests to get to an agreement that maybe initially doesn't solve everything but solves some things that each party may want,” he said: “I'm hopeful that that's where we're headed.”
Timing of List 4B Section 301 tariffs, due to take effect Dec. 15 on smartphones, laptops, tablets and other goods, “could not have been worse" for a consumer tech sector already facing product innovation and demand pressures, Futuresource Consulting blogged. Tech companies need to be agile and resilient as global trade and geopolitical tensions have disrupted technology supply chains that were optimized for long-term cost efficiencies, the researcher said. Companies have to optimize for the disruptions, while using trade uncertainties as an opportunity to create a strategic competitive advantage, it said. Global consumer electronics supply chains are at increased risk of “fracturing” as a result of the U.S.-China trade dispute, said Futuresource, which sees a “short-term fix” as a survival strategy, allowing companies to re-evaluate classification and product routing of key components. Long term, tech firms should consider a “China Plus One” strategy whereby companies active in China augment existing investments with a second facility to diversify risk, cut costs and reduce over-reliance on China. That’s beginning to happen, with some companies announcing they’re transferring production facilities to Vietnam, for example, it said.
Ten trade groups, all typically Republican allies, sent a letter to the White House and U.S. Trade Representative Robert Lighthizer asking that America submit a proposal for reforming the World Trade Organization's Appellate Body, with the offer that if it were adopted, the U.S. would stop blocking appointments to that body. While the administration has been clear about its concerns on how the appeals process is conducted, it has not offered a specific solution. The Oct. 23 letter also defended the dispute settlement system at the WTO, saying, "Since the United States is the world’s largest trading nation and the second-largest exporter, it has been one of the major beneficiaries of the WTO process."
The U.S. and China appear poised to reach some sort of "mini-deal" before the end of the year, said Bank of America global economists Ethan Harris and Aditya Bhave in an Oct. 18 report. "In our view, both sides see the other as being in a weakened negotiating position," the analysts said. "The US can point to the bigger economic slowdown in China than in the US. China can point to President [Donald] Trump’s impeachment investigation and his desire to maintain a healthy economy going into the election. This argues for a relatively balanced 'win-win' deal."
A new report on the economic impact of the tariff reductions on 1,655 products covered by the Miscellaneous Tariff Bill finds a tiny effect on GDP from the $179 million in duties saved over seven months.
Although the International Chamber of Commerce’s 2020 incoterms did not make the significant revisions that industries expected, it did introduce several changes that may require updated contacts between importers and exporters.
Fitbit will shift production to "outside China," starting in January, for “effectively all of its trackers and smartwatches” to escape exposure to the tariffs on Chinese goods, the company said Oct. 9. "[T]hose products will no longer be of Chinese origin and therefore not subject to Section 301 tariffs.” Smartwatches and fitness trackers, comprising the entire product line, were hit with 15 percent List 4A tariffs Sept. 1 as part of the broad category of 8517.62.00.90 goods that also includes smart speakers and Bluetooth headphones (see 1908140031). The company began exploring potential alternatives to China last year, Chief Financial Officer Ron Kisling said. It altered its supply chain and manufacturing operations with “additional changes underway,” the company said. Fitbit will give additional details on its Q3 call within the month.
August TV unit imports from China increased 22.3 percent sequentially from July, and 37.5 percent year over year, according to newly published Census Bureau statistics accessed Sunday through the International Trade Commission’s DataWeb tool. Observers will debate whether the August spikes were evidence of importers speeding product through U.S. ports to beat the 15 percent Section 301 tariffs on finished TV sets from China that took effect Sept. 1.
The U.S. Chamber of Commerce, the Information Technology Industry Council and 25 other trade groups, including groups from Africa, Asia, South America and Europe, have issued a position paper on what they'd like to see in the plurilateral E-Commerce Agreement at the World Trade Organization. The U.S. and China are both in these talks, and some are concerned that China will oppose what business groups describe as high-standard planks, such as prohibiting data localization and no restrictions on cross-border data flows.