Best Buy CEO Hubert Joly estimated that some 7 percent, or $2.3 billion, of the total cost of goods sold were affected by the 10 percent tariffs imposed at the end of September under Section 301, he said during a Nov. 20 Q3 earnings call. Many of the products on that list of goods were accessories, he said. Costs have been mitigated “in a variety of ways” and the impact affects a “very small portion of our business,” he said. Looking to Jan. 1, when tariffs are scheduled to rise to 25 percent, Joly said his personal view is that “the journey may not be linear, [but] the negotiations with China will progress,” and Best Buy is working with vendors to reduce the effects if tariffs do rise at the first of next year.
The exemption from Section 301 tariffs for goods entered as Section 321 de minimis shipments amounts to a "loophole" that blunts the intended effects of the tariffs, said Michael Stumo, CEO of the Coalition for a Prosperous America, in a Nov. 20 post on the conservative website LifeZette. "It’s a rather strange decision by CBP," Stumo said. "The administration had imposed a tariff on thousands of products that fall within the Section 301 list. But CBP then decided that, as long as an importer brings in less than $800 worth of an item on a particular day, no duties will be collected." Stumo alleged that there's no "statutory or regulatory foundation for the decision, and it contradicts the administration’s goal of changing China’s behavior."
Cisco saw “immaterial” impact in its Q1 ended Oct. 27 from the 10 percent Section 301 tariffs that took effect Sept. 24 on $200 billion worth of Chinese imports, because the tariffs kicked in with only a month to go in the quarter, CEO Chuck Robbins said on a Nov. 14 earnings call. Though Cisco hiked prices on Chinese-sourced goods in Q1 to cover the higher tariff costs, it “saw absolutely no demand change” between the week before and the week after the price increases took effect, he said.
International Trade Today is providing readers with some of the top stories for Nov. 5-9 in case they were missed.
Imports at major U.S. retail container ports slowed in September from their “pre-holiday peak,” but stayed at “unusually high levels” as retailers continue bringing in merchandise before the Section 301 tariffs increase to 25 percent in January, the National Retail Federation said on Nov. 9. Retailers know that tariffs “are set to more than double in just a few weeks,” NRF said. “If there are shipments that can be moved up, it makes sense to do that before the price goes up.” Imports customarily drop off “significantly by this time of year, but we’re still seeing numbers that could have set records in the past,” NRF said. U.S. retail ports handled 1.87 million 20-foot containers or their equivalents in September, down 1.3 percent sequentially from August, but up 4.6 percent year-over-year, it said.
It’s “not resolved” whether the Consumer Technology Association will file a lawsuit blocking the Section 301 tariffs on Chinese imports before they rise to 25 percent, as scheduled for Jan. 1, CTA President Gary Shapiro said at a CTA event Nov. 8. CTA hired Akin Gump to draft a court complaint to block the tariffs and is shopping the draft around to other trade groups seeking their legal and financial support (see 1810290020).
Lipstick packaged in China from U.S. origin lipstick mass is not subject to Section 301 tariffs because its country of origin remains the U.S., CBP said in a Nov. 2 ruling. The lipstick, which is shipped from the U.S. to China before being poured into Chinese-made lipstick tubes and caps, does not undergo a substantial transformation that causes its country of origin to be China for the purposes of the additional duties, CBP said in NY 301371.
NEW YORK -- Clients are asking "how can I make a bad situation better," said Mary Jo Muoio, senior vice president for trade services for Geodis, a customs broker firm. Muoio, who was speaking on a panel on "Tackling the Trade War: Solutions for Companies Across the Supply Chain" at the Apparel Importers Trade and Transportation Conference, said some of those client questions and plans are not sophisticated. She quoted one client who asked: "If I send it to Taiwan and label it Taiwan, does it get me out of the 301?" She quipped, "Well, it gets you in jail."
NEW YORK -- The assistant U.S. trade representative for textiles acknowledged there are changes to NAFTA "you may not like," before he pitched changes to the pact that could be beneficial for the garment industry. Bill Jackson, who noted that textiles is the only sector to have a dedicated office at USTR, was speaking Nov. 7 at the Apparel Importers Trade and Transportation Conference. United States Fashion Industry Association President Julia Hughes, who was interviewing Jackson, agreed that the rewrite is "a mixed bag" for her industry.
NEW YORK -- The Section 301 tariffs largely have spared apparel, but U.S.-China Business Council Vice President Erin Ennis told industry representatives that tariffs on all remaining Chinese goods could follow. "You should hope for the best, but, as businesses, you should be planning for the worst on that front," she said. "We're not at the end of this yet." Ennis was speaking at the Apparel Importers Trade and Transportation Conference Nov. 7.