Friday 6 April 2018

The effects of tariffs?

Though not strictly automation the "trade-war" between the US and China may have implications for manufacturers of automation products and hardware. This release from the British Electronic Component Supply Network (ECSM) examines some possible implications.

US Trade Representative proposes an additional tariff of 25% on products produced in China and imported into the US. Imports of Chinese steel and aluminium products have grabbed the news headlines but further analysis of the US Government’s Notice of Determination of Action Pursuant to Section 301: China Acts, Policies and Practices Related to Technology Transfer, Intellectual Property and Innovation reveals that many electronic components are also included.

Adam Fletcher,
Chairman, ecsn / IDEA
The current list released on 3th April contains over 1,400 products includes all tantalum, aluminium, ceramic, paper or plastic capacitors, many carbon, composition or film resistors, fuses, relays, LEDs, transistors, thyristors lithium, air zinc and silver oxide primary cell batteries. It also includes some consumer products, many automotive products and industrial equipment.

Members of the International Distribution of Electronics Association (IDEA) are in the process of formulating a position paper to submit to US Trade Representative requesting that electronic components are removed from the Annex during the consultation process which begins with submission of written comments on 11th May ‘18.

According to ecsn and IDEA Chairman Adam Fletcher, the application of the proposed tariffs to these electronic products would obviously increase direct costs to customers in the US but also transactional costs for manufacturers and manufacturer authorised distributors involved in the import of goods from China into the US and then onward shipment to international customers. To avoid the tariff manufacturers and manufacturer authorised distributors would have to drop ship goods or pay the incoming tariff and claim it back on exported products, they will also have to ensure goods were not re-shipped into the US from China via a third-party country. “It’s an additional administrative burden for the entire electronic components supply network where the lead-times for passive components are already significantly extended,” said Fletcher.

“There have been some suggestions that the current products listed on the Harmonised Tariff Schedule Annex are part of a wider negotiating strategy between US and Chinese Officials,” continued Fletcher. “I hope that is the case, but our industry must react quickly to request that all electronic components are removed from the proposed schedule during the consultation process”.

However, the findings of the investigation into China’s acts, policies and practices related to technology transfer and intellectual property and innovation by the US Trade Representative concluded they are an ‘unreasonable or discriminatory and burden or restrict US commerce’.

“We need to prepare for the worst and hope for the best,” concluded Fletcher.

#ecsn #PAuto #IDEA #USA #China

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