Tariffs : Key Chinese Electronic Parts and Seafood Targeted in Latest U.S. Tariff Threat

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07/11/2018 | 02:42 pm


By Yoko Kubota in Beijing and Dan Strumpf and Shan Li in Hong Kong



Chinese electronic components used to run computer networks and secure critical internet connections are the big target in the Trump administration's new plan to expand tariffs, but the proposed levies will also hit fish, furniture and lighting fixtures.



Some Chinese suppliers said they planned to start negotiating soon with their American buyers over how to handle the proposed tariff and who would absorb the costs of the levy. The move also was seen accelerating an existing trend to return some production to the U.S. and other developed markets.



Landy Chow, general manager of the China division of seafood supplier Siam Canadian, said: "It's definitely going to affect us. ...The tariffs were just announced, so we don't have a plan right now."



The White House's latest tariff list would add 10% duties on $200 billion in Chinese goods, including a broad range of products embedded in the electronics supply chain.



That includes $23 billion in switches, routers and other devices for data transmission that the U.S. imported from China last year, according to the International Trade Centre, a global trade organization.



The list also includes $11.6 billion in printed electronic-circuit assemblies that are used for data processing, according to the international agency, which compiled the list based on U.S. Census Bureau data.



The tariffs would hit both Chinese and foreign companies based in China that ship components to the U.S., where they are used in assembling a wide range of electronics products, said Rajiv Biswas, economist at IHS Markit who focuses on the Asia-Pacific region.



"Those are basic components of any kind of modern electronic equipment, so it would be in communications equipment, smart devices -- all of those kind of things would need these kinds of pieces of equipment, which is why it's such a big item," said Mr. Biswas.



But those final products were largely spared from the list. "The reason is the U.S. doesn't want to hurt its own consumer," he said.



"In the case of Guangdong province and the rest of South China, the tariffs imposed by the U.S. administration are clearly targeted to the region's new strength: electronics and high-tech hardware manufacturing, " said Juan Rojas, an associate at Dezan Shira & Associates, an advisory firm that helps foreign investors in Asia.



The U.S. last week imposed 25% tariffs on $34 billion of Chinese imports, and an additional $16 billion in Chinese imports would be hit by a looming second round, also at the 25% rate.



China has imposed tariffs of its own in retaliation, hitting U.S. farm and auto exports. So far the impact has been limited, but economists and companies say damages would be far greater should the U.S. go ahead with 10% tariffs on a further $200 billion in Chinese goods, as the Trump Administration threatened Tuesday.



The proposed $200 billion round would also hit a wide range of items used by homes and businesses, including metal and wooden furniture, lighting fixtures and travel and sports bags. Last year, the U.S. imported around $3.9 billion of some types of metal furniture, $3 billion of wooden furniture, $1.9 billion of electric lamps and lighting fixtures and $1.6 billion of travel and sports bags, the International Trade Centre list showed.



The tariffs could also make dinner more expensive, with dozens of varieties of seafood making the U.S. list.



Americans have a big appetite for Chinese seafood, buying millions of dollars of tilapia, shrimp, salmon and cod each year, often sent by container ship. In 2017, the U.S. imported nearly $2.7 billion of fish and shellfish from China, up 7.8% from a year earlier, according to the U.S. Census Bureau.



Mr. Chow, the executive with the China division of seafood supplier Siam Canadian, said he expects to start negotiating soon with the company's American buyers over how to handle the proposed tariff. "Since 10% isn't a huge amount, we're hoping that our buyers will absorb 5% and we will absorb 5%," said Mr. Chow, who is based in Guangdong. "We can split it down the middle."



One long-term impact of all the tariffs could be to accelerate an existing trend in some sectors to bring production back to the U.S., or other developed markets, from emerging markets, said Shaoxuan Liu, a professor at the Ningbo Supply Chain Innovation Institute China.



Such companies manufacturing in China have already been facing a rise in labor costs, and the tariffs would push up costs further, Mr. Liu said. "Definitely the tariffs will make a difference," he said.



The measures would not go into effect for at least two months, with the White House convening hearings on the proposed levies Aug. 20-23.



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Xiao Xiao



in Beijing contributed to this article.





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