September 10, 2018

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Not Just Apple: Intel and Others Object to Trump's China Tariffs

By
Levi Sumagaysay
The Mercury News

(This article originally appeared in The Mercury News on September 10, 2018.)

Apple last week filed an objection to tariffs the Trump administration is proposing to impose on China — saying they would raise the costs of Apple Watches, AirPods and more — prompting President Trump to renew over the weekend his call for the company to make its products in the United States.

Other Silicon Valley tech companies may not be getting the president’s attention on Twitter, but they are also raising concerns about the planned $200 billion tariffs, which they say would raise the prices of most consumer electronics.

One of those companies is Intel, which called this third round of tariffs “a game changer for the American consumer.”

The Santa Clara-based chip giant said the tariffs “would result in widespread harm to the U.S. economy as they target both consumer products… and components that are incorporated into consumer products.”

In a letter to U.S. Trade Representative Robert Lighthizer last week, Intel identified examples: consumer products such as digital processing units and transmission devices, and components such as printed circuit boards, network equipment and optical fiber cables.  A proposed 10 percent to 25 percent tariff on those products and components could cause prices of many consumer electronics to rise, from cell phones to laptops and desktop computers to internet-connected home appliances, Intel said.

Most of the telecommunications infrastructure that powers the internet would also be affected, according to Intel.  The company warned that the tariffs would raise the costs of that equipment and affect upgrades to 5G wireless technology, which it called critical to maintaining “U.S. industrial competitiveness.”

Other tech companies and trade groups also filed objections last week, ahead of the Thursday deadline to file comments about the proposed tariffs.

TechNet, which represents CEOs and top executives, warned against tariffs on servers, transmission devices and other components.  It also addressed one of President Donald Trump’s rationales for imposing tariffs on China: that nation’s theft of U.S. technology and intellectual property.

“In essence, should these tariffs be implemented, they will not only hurt the American tech sector the administration is working to protect from China’s unfair trade practices; they will hurt many more workers across various sectors whose operations rely on cloud computing and data management tools,” TechNet President and CEO Linda Moore wrote to Lighthizer.

Lastly, beyond the potential price increases the tariffs could bring about, Intel also said the Trump administration isn’t taking into account how much American companies rely on global supply chains.

“U.S. ICT (information, communication and technology) industries… are heavily dependent on global supply chains to produce goods and deliver services cost effectively and according to local needs,” Intel said.  “We are puzzled as to why the Administration may be using tariffs in part to re-engineer global ICT supply chains that have served U.S. companies so well.”

Fred Foldvary, an economics lecturer at San Jose State University, agrees.

“Tariffs are bad for business and consumers as taxes that makes things more expensive,” he said Monday.  “It interrupts the entire global network of trade.”

Foldvary put it another way: “Would California be better off imposing tariffs on goods from other states?”

Friday, the Trump administration announced an additional $267 billion in proposed tariffs on Chinese goods, which combined with the previous rounds of tariffs would effectively impose tariffs on all Chinese goods entering the United States.

The USTR, which did not return a request for comment Monday, has received thousands of comments and has not made a final determination about which tariffs to impose in this third round.

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