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CTA To Lawmakers: End ‘Failed’ Chinese Tariffs

CTA study finds consumer tech industry has paid nearly $40 billion in Chinese tariffs, essentially "taxes paid by American businesses and consumers," and calls for Congress to eliminate them

CTA has called upon the President and Congress to repeal Trump-era China tariffs, specifically the Section 301 tariffs that impact about 55% of U.S. tech imports from China.

According to its “Analysis of Section 301 Tariff Impacts on Imports of Consumer Technology Products” report issued late last month, “consumers and the consumer technology industry paid over $32 billion in tariffs through 2021. That sum has surely grown even larger over the past six months, likely reaching close to $40 billion.”

While average tariffs on unaffected products remained around 0.2% during the report’s coverage period, the average tariff on consumer tech products from China rose from 0.4% in 2017 to 6.2% in 2021. However, these averages include Section 301 tariffs of around 16% on affected products.

(image credit: CTA)

As the report notes, the tariffs pose particular risks for the consumer technology industry given its reliance on China to produce many otherwise U.S.-branded tech products. “The final assembly location and cost of the completed product were generally the key factors in whether imports might become subject to punitive tariffs – and how much.” The report further concludes that “consumer tech companies started off at a distinct disadvantage. About 45% of U.S. consumer tech imports came from China in 2017, about twice the U.S. total and three times higher than non- tech import.”

“CTA’s report shows just how ineffective Section 301 tariffs have been at meeting their stated objectives,” insists Ed Brzytwa, CTA’s VP of international trade. “CTA China’s IP theft and forced tech transfer practices have not improved over the last four years of a tariff-led trade policy. It’s time to put an end to these tariffs that are hurting American businesses and consumers and negotiate comprehensive binding trade agreements with new markets.”

In the report’s forward, CTA president and CEO Gary Shapiro called on U.S. policymakers to:

  • eliminate tariffs on consumer technology products to mitigate inflation, lower costs and unlock the innovative power of the U.S. economy;
  • eliminate tariffs on inputs to revitalize U.S. jobs and U.S. manufacturing of technology products; and,
  • immediately create new and expand existing trade agreements.

“The tariffs on tech inputs are a high barrier to starting or expanding manufacturing operations in the United States – the opposite of what this Administration is trying to achieve,” Brzytwa asserts.

(image credit: CTA)

Tech products imported from China seem to have been particularly impacted by the tariffs. According to the CTA report, Section 301 tariffs affected about 55% of U.S. tech imports from China. “It’s clear that the tariffs have not been effective in dealing with China and are instead hurting U.S. businesses and consumers,” Brzytwa opines. “With rising prices across all sectors of our economy, removing tariffs would mitigate rampant and harmful inflation and lower costs for Americans.”

The report not only specifies how consumer tech manufacturers and consumers have been negatively impacted by the Chinese tariffs, but details the winners including Mexico, the EU, Taiwan, and South Korea, as well as countries with which the U.S. has no free trade deals: Vietnam, Taiwan, Malaysia, and Thailand, which have experienced surging tech exports.

The tariff report was compiled by the Trade Partnership Worldwide LLC, commissioned by CTA to analyze multiple sources, including trade and shipments data from the U.S. Census Bureau and employment data from the U.S. Bureau of Labor Statistics, to determine the impact on the consumer technology industry since the Section 301 tariffs were imposed.

See also: CTA Says Smartphones, Smart Home Up; TVs, Laptops Down For 2022