CTA Fears $2.4B Yearly Hit From Tariffs on Connected Devices and Components

The U.S. economy will take a $2.4 billion annual hit if the Trump administration imposes 25 percent tariffs on connected devices and printed circuit assembles in a third tranche of duties against Chinese imports, said a CTA study released Friday and by Trade Partnership Worldwide. An earlier study said duties on $50 billion worth of Chinese imports, coupled with Chinese retaliation, would reduce U.S. GDP by nearly $3 billion (see 1805010062). Tariffs of 25 percent on IoT-critical connected devices imported to the U.S. from China would cost the U.S. economy $1.8 billion yearly, said the new study. “This single tariff line captures products needed by data centers to make the internet work, networking equipment that most businesses need to connect to the internet and operate office networks, as well as products that consumers need to access the web and enjoy its content.” Without tariffs, CTA forecasts smart speakers will grow to a $3.8 business in terms of 2019 factory sales, with unit shipments of 44.4 million. The association estimates 25 percent tariffs will reduce shipments by 5.3 million units. Bluetooth earbuds, which CTA forecasts will be a $1.4 billion business in 2019 on 14.2 million in factory unit shipments, would take a $588 million revenue hit. Unit shipments would be cut 1.7 million. The Coalition for a Prosperous America stands behind the administration’s plan to “consider” raising the third tranche of duties to 25 percent from 10 percent, and backs software levies, commented the conservative think tank Thursday in docket USTR-2018-0026. Well more than 1,200 comments were posted in the docket Friday, the vast majority opposed to tariffs. BSA|The Software Alliance didn’t comment. Wilson Electronics was burned in the first two tranches of tariffs on RF components and semiconductors it imports to make cellphone signal boosters in Utah, it commented Friday. Now, Wilson supports imposing 25 percent tariffs in the third tranche on finished boosters imported from China under the same heading as connected devices because Chinese competitors use “extremely aggressive pricing tactics to undercut Wilson’s sales." Tariffs on Audio-Technica's Bluetooth headphones and wireless mic systems would "have a significant negative impact on our business," commented its Vice President-Operations Richard Sprungle.