Trump’s China Tariffs Raised U.S. Consumer Tech Costs Without Creating Jobs, Industry Report Says

By Doug Palmer

07/19/2022 09:00 AM EDT

Tariffs imposed by President Donald Trump on around $370 billion worth of Chinese goods have raised costs for American consumer technology companies and their customers without creating new jobs in the United States, according to a new study from the Consumer Technology Association shared first with POLITICO.

The report comes as President Joe Biden considers whether to remove some of the tariffs to help fight inflation. U.S. trade officials are also in the midst of a four-year review of the tariffs as required under the Section 301 statute that Trump used to impose them.

“The most surprising thing to me [about the report] was the fact that the trade with China still continues,” said Ed Brzytwa, CTA’s vice president of international trade. “There's demand in the United States for certain inputs that are made in China and there's so much concern about shifting production or supply chains elsewhere that companies are willing to pay the tariffs. So this is really just a cost for U.S. manufacturers.”

The group, whose members include Apple, Samsung, Panasonic and a range of other consumer technology firms, has long been one of the biggest opponents of the tariffs that Trump imposed on China in four separate tranches beginning in 2018.

Since then, American importers have paid more than $32 billion in additional tariffs on more than 1,600 consumer technology products from China, including $1.8 billion for wireless earbuds, headsets and other connected devices, the report found.

Other consumer technology products that face additional tariffs because of Trump’s action include desktop computers, digital cameras, phone chargers, vacuum cleaners and insulated electrical cables and wires. A long list of technology inputs used by manufacturers to make products in the United States have also been hit by Trump’s duties.

Deena Ghazarian, CEO and founder of Austere, a small business that sells technology accessories, said strong consumer demand for electronics during the pandemic took some of the sting out of Trump’s tariffs for her three-year-old company.

But the duties still absorbed more than 30 percent of her initial investment costs, and now inflationary pressures are making consumers who purchase big ticket items like TVs more reluctant to buy Austere products like HDMI cables or surge protectors, she said.

"In the last three years, we've moved every cable product out of China and now we're producing most of it in Taiwan," Ghazarian said. But for power items, like surge protectors or light products that can potentially cause a fire in a consumer's home, it's harder to find a manufacturer outside of China with the necessary experience and expertise, she said.

The new report was prepared by Trade Partnership Worldwide, a Washington-based analytical firm, which has produced several other reports criticizing Trump’s tariffs.

In its preface, CTA President and CEO Gary Shapiro calls on the administration to eliminate tariffs on consumer technology goods and on Chinese-made inputs, arguing “the tariffs have not been an effective approach to addressing our economic disputes with China.”

In contrast, a wide range of groups are calling for the tariffs to be continued either in whole or in part. The Biden administration’s Labor Advisory Committee, which includes representatives from all the major labor groups, wants all of the 301 tariffs to be maintained.

“CTA’s study is not surprising coming from an industry where a substantial number of its members want to simply protect the production and supply chains they’ve been offshoring for years,” said one labor trade adviser, who asked not to be identified to speak candidly. “Many of CTA’s members have been reaping huge profits which they are desperate to protect.”

Other groups, such as the National Council of Textile Organizations and the American Iron and Steel Institute, have called on USTR to maintain the 301 tariffs that protect their sector in order to preserve jobs in the United States. Altogether more than 325 groups, companies or individuals have called for at least some of the tariffs to be continued.

Other findings in the CTA report include:

— About 55 percent of U.S. tech imports from China were hit by 301 tariffs ranging from 7.5 percent to 25 percent.

— Imports of those goods fell by 39 percent between 2017 and 2021. However, they have started to rise since mid-2020, suggesting the tariffs stopped motivating companies to leave China nearly two years ago.

— Imports of some products hit with 25 percent tariffs, such as digital cameras, certain cooking appliances and vacuums, were higher in 2021 than in 2017.

— Section 301 tariffs did not lead to a noticeable increase in U.S. production or employment for tech sectors. In numerous sectors affected by Section 301 tariffs, tech manufacturing jobs are flat or below 2017 levels. In some sectors, job trends worsened after tariffs were imposed.

— Computers and electronics accounted for the highest value of imports hit by the tariffs, but U.S.-made sales of those products have followed their basic pre-tariff trend.

— Communications equipment products faced substantial tariffs, but employment in the sector was essentially flat before and after the tariffs were imposed.

— China’s share of the U.S. import market for tech goods hit by 301 tariffs fell to 17 percent in 2021, from 32 percent in 2017, but other countries made up the lost sales.

— Vietnam and Taiwan were the biggest winners because of an immediate boost in their exports to the United States, while South Korea and Thailand saw more delayed growth.

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