The Trump administration’s proposed Trade Act Section 301 tariffs on a third tranche of Chinese goods worth about $200 billion in customs value “would target many key components that make cloud computing possible,” reported the Information Technology and Innovation Foundation Tuesday. The administration “in theory” initiated the tariffs to “counteract unfair Chinese trade practices and improve U.S. competitiveness,” said ITIF. “But their practical effect would be to advantage foreign technology competitors, thereby threatening U.S. leadership in both the adoption and provision of cloud computing, and stunting U.S. economic growth,” it said. Though Chinese “innovation mercantilism” is a “laudable and necessary mission,” the administration needs to “seek alternative policy measures that do not raise the cost of key productivity -- and innovation-enhancing capital goods and services such as information technology and cloud computing,” it said. ITIF fears that tariffs would raise prices for businesses and consumers and force cloud-service providers to cut costs through job reductions or curtail spending on new data centers or the R&D “needed to stay ahead of international competitors,” it said. It also worries that cloud providers “may be forced to invest elsewhere to remain competitive,” it said. Tariffs also “threaten to disrupt finely crafted global supply chains for the manufacture of information-technology products,” it said. Those supply chains can’t “easily be reinvented in the short term without significant detriment to, and dislocation of, U.S. industry,” it said.

Though the vast majority of the nearly 3,000 comments in docket USTR-2018-0026 opposed a third tranche of tariffs on Chinese goods over intellectual property disputes, Veeco Instruments supports some proposed duties on “indicator panels incorporating LCDs or LEDs,” it commented, posted Sunday. Veeco also wants U.S. Trade Representative Robert Lighthizer to impose duties on more LED-related goods not currently proposed, said a document redacted to hide “business confidential” information. But it once identified the company, and a revised document posted Tuesday no longer did. The company had about $485 million in 2017 revenue, mainly through the sales of semiconductor process equipment used to produce LEDs and other components, it had reported. Luke Meisner, the Schagrin Associates lawyer who filed the comments, declined comment.

EBay views as good news the de minimis value threshold in Mexico as part of the U.S.-Mexico trade deal (see 1808280003), it announced Wednesday. "This allows low-value shipments to cross borders with minimum effort, allowing for stronger global trade" and "the eBay Government Relations team has long advocated that countries raise their de minimis thresholds to promote trade," it said. The trade deal would double Mexico's de minimis to $100, though it's still well below the U.S. de minimis of $800.

Best Buy CEO Hubert Joly said tariffs could lead to price hikes for consumers, on a Tuesday earnings call after reporting results for its Q2 ended Aug. 4 that accompanied a stock decline. “When there’s a price increase, there’s an impact,” he said, though the Trump administration has “very important international trade goals.” Effects from tariffs will be “tightly linked” to gross profit margins, Joly said. A 25 percent tariff on an item with a gross profit of 20 percent will result in a 20 percent price increase, said the executive, noting vendors’ ability to absorb tariffs and over time diversify their supply base. The retailer's Q2 online sales growth slowed to 10 percent after 31 percent sales growth in the year-ago quarter over the prior-year quarter, said Chief Financial Officer Corie Barry, underscoring the retailer’s “mature” position in e-commerce. It's gaining market share online, said Barry, now at 15 percent of domestic revenue. Barry called the consumer electronics segment “mature,” with customer buying patterns that moved online “earlier than most.” But the company beat some expectations in Q2 on strength in wearables, mobile phones and gaming, she said. The stock closed the day down 5 percent at $77.57.

As the U.S. and Mexico move forward in talks to renew the trade relationship between the countries in the North American Free Trade Agreement (see 1808270048), a senior administration official told reporters Monday that investor-state dispute settlements [ISDS] will have some changes. Some sectors, including telecom, “will get the old-fashioned ISDS,” he said. It also would establish a notice-and-takedown system for copyright safe harbors for ISPs, announced the Office of the U.S. Trade Representative.

Secretary of Commerce Wilbur Ross said he appointed former federal prosecutor Roscoe Howard of Barnes & Thornburg to be the U.S. government’s special compliance coordinator leading monitoring ZTE’s compliance with the settlement that lifted the Department of Commerce’s ban on U.S. companies selling telecom software and equipment to ZTE. The settlement, which took effect in July, included $1.76 billion in fines and other fees and an agreement for ZTE to allow U.S. inspectors to monitor the company's compliance with U.S. export control laws (see 1807130048). Congressional pique over Commerce’s lift of the ZTE ban failed to result in a reversal of the decision. Capitol Hill passed a conference version of the FY 2019 National Defense Authorization Act that contained language to bar U.S. agencies from using “risky” technology produced by ZTE or fellow Chinese telecom equipment firm Huawei, rather than harder language that would have reinstated the ZTE ban (see 1807200053 and 1807260049). “Today’s appointment is the continuation of the unprecedented measures imposed on ZTE by the Department of Commerce,” Ross said in a Friday news release. Howard “is exceptionally well-versed in corporate compliance, having tried more than 100 cases as a federal prosecutor, as well as helping those in the private sector on compliance and ethics issues.” Commerce didn’t comment on reports Ross had earlier chosen former Commerce Assistant Secretary-Export Administration Peter Lichtenbaum to lead the U.S. compliance team but rescinded the offer after learning Lichtenbaum was among a group of national security officials who signed onto an August 2016 letter opposing President Donald Trump’s candidacy.

Australia is taking a stance similar to the U.S. in banning Chinese equipment maker Huawei from supplying equipment for 5G networks being built there. The U.S. restricted Huawei and ZTE participation in U.S. markets (see 1808130064). The Australian government announced 5G restrictions without mentioning any company. “Involvement of vendors who are likely to be subject to extrajudicial directions from a foreign government that conflict with Australian law" may "risk failure by the carrier to adequately protect a 5G network from unauthorised access or interference,” it said. “As 5G and related technologies continue to develop, new risks relating to the technology may emerge and require further Government consideration.” Huawei confirmed it was targeted. This is “extremely disappointing,” the company tweeted: “Huawei is a world leader in 5G. Has safely & securely delivered wireless technology” in Australia for 15 years.

Comcast is extending until Sept. 12 its deadline for Sky shareholders to weigh in on its bid for takeover, it said Wednesday. The original deadline was Wednesday, and it said that as of then it received acceptances representing 0.21 percent of ordinary shares. The Diffusion Group analyst Rob Silvershein blogged that Comcast is likely to win in the bidding war with Disney but "whoever ends up with Sky will ultimately pay a hefty premium." He said the formal bid from Fox -- which Disney is buying -- earlier this month triggered a waiting period ending Sept. 22 in which either party can raise its price, and if by then there's not a clear winner, the next step is a five-day auction process to determine whose offer will be recommended to shareholders. He said Disney/Fox will likely raise its bid, and Comcast will "aggressively counter" and ultimately win because it needs Sky more than Disney does, and the premium Disney is paying for Fox limits Disney's ability to counter it.

The Office of the U.S. Trade Representative should expand its use of the Generalized System of Preferences to encourage beneficiaries to make policy and enforcement changes, the Information Technology and Innovation Foundation said in a report released Monday. The agency's foreign trade barrier and intellectual property reports should more directly guide decisions "to self-initiate reviews of whether GSP beneficiaries are breaching the program’s trade, market access, or intellectual property criteria," the ITIF said. The USTR is already reviewing GSP benefits for Indonesia, India, Kazakhstan, Thailand and Turkey over various issues. If the GSP reviews don't produce the intended changes, "USTR should partially or fully suspend or withdraw that country’s access to GSP benefits -- as this has clearly dragged on for far too long for many GSP beneficiaries," the ITIF said. The criteria for GSP "graduation," based on income and trade competitiveness, should be more strictly enforced, it said. That should start "with revoking Turkey’s access to the program," the ITIF said.

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.