i3 | April 02, 2020

The Tariff Front

Gary Shapiro
On January 15, I was thrilled to be at the White House with many leaders in Washington when President Trump signed phase one of a trade deal with China's Vice Premier. I was even more thrilled when he called out my name to publicly thank me as part of his speech before the signing.

The deal was a breakthrough between two of the world's top economic powers, and hopefully foreshadows a warming relationship after a rocky two years of negotiation, tariffs and counter-tariffs.

The best news for our industry was that the 25% tariffs on some of our major categories (smartphones and tablets) were taken off the table (for now). More, 15% tariffs on technology products such as smartwatches, fitness trackers, desktop computers, digital cameras and lithium batteries were scaled back to 7.5%.

But the bad news is 25% tariffs remain on a host of products and accessories on the first two lists. I have spoken with many in the industry whose companies have been devastated by these taxes.

 I look forward to a trade deal with China in 2020, getting away from two steps forward, one tweet backward. 
Gary Shapiro President and CEO, Consumer Technology Association.
Gary Shapiro
Gary Shapiro, President and CEO of the Consumer Technology Association. 

For this reason, our response publicly to the deal was muted. We applaud the president for reaching this deal but view it as a step towards a more comprehensive deal where all extra tariffs would be removed.

As a practical matter, I am skeptical that much will happen this election year. The Democrats have not criticized the deal, nor did they praise it. In fact, on the very day of the White House event, Speaker Pelosi held a press conference, voted on the impeachment and had a highly publicized delegation walk over the impeachment document to the Senate.

The good news for us a nation is that we are at a warmer place with China, are likely to see some stability through 2020 on the tariff front and the economy, and Wall Street has responded favorably to the deal. With the coronavirus and challenges with Hong Kong and Taiwan, China may be more amenable to warming its relationships with the U.S. While we still face huge long-term challenges, I look forward to a trade deal with China in 2020, getting away from two steps forward, one tweet backward. 

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