25 Percent Tariffs on $200B from China Will Hurt Small Businesses and Cost Americans More
August 21, 2018
- Author: Sage Chandler
The use of tariffs as a remedy to shortcomings in Chinese national policy and practice is more likely to cause adverse short- and long-term consequences to our economy than incentivize change in China’s discriminatory IP practices. If enacted, new tariffs impacting $200 billion in trade will continue the destructive ripple effect the administration started with its first round of tariffs, not only through the entire consumer technology industry but also the U.S. economy.
CTA has identified 380 tariff codes which would cause significant harm to our industry and member companies and consumers. Of concern are items that allow Americans to access the internet such as servers, desktop computers, printed circuit assemblies and connected devices. Connected devices cover a vast array of tech products including e-readers, smartwatches, speakers and fitness devices, as well as the components and the infrastructure products that make them work such as modems, routers and gateways.
Products on this list disproportionately impact small companies, many of which manufacture and assemble in the United States, and startup companies that design and engineer U.S. intellectual property.
A study commissioned by CTA found that 25 percent tariffs on printed circuit board assemblies and connected devices will cause price increases of up to six percent, impacting even products made entirely with U.S. labor and components. Those price increases are expected to reduce consumer purchasing by 12 percent.
Price shock and drop in demand have the potential to devastate our industry. Overall, the impact of a 25 percent tariff on connected devices alone is expected to cost American shoppers an extra $3.2 billion annually. And that contradicts USTR’s stated aim in the product selection process of avoiding goods commonly purchased by American consumers.
At a time when the United States is reaching to achieve greater digital integration, advanced telecommunications technology and increase internet access for rural populations, tariffs on technology are counterproductive. Tariffs are taxes on Americans, not foreign governments. They undermine the competitiveness of American companies and threaten the spirit of entrepreneurship that the United States has for decades inspired—by the greatness of our freedoms of choice.
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