Tariffs and trade with China has been a hot topic in the news recently. The tariffs impacting the steel and automobile industries have been widely covered but there are many additional industries that could potentially feel the effects of these tariffs, including our own.
Last week the US Trade Representative to China, Robert Lighthizer, released a list of additional goods (800 products, 6,031 tariff subheadings) worth $200 billion that could face 10% tariffs after a public comment period. Printed circuit boards (PCBs) were included on that list (HTSUS Subheading 8534.00.00). Although most people might assume that a tariff on PCBs would only impact PCB manufacturers and distributors, this tariff would cause an unavoidable cost increase that could potentially be passed on to any industry or manufacturer that requires PCBs. This would mean nearly the entire electronics industry and all of its subsidiaries will feel the financial impact of tariffs.
Value of Imports from China in 2017
“87 percent of [IPC US members] import raw materials, components, and/or equipment from China.”
When asked to rate the effect of the tariffs on their business on a scale of 0 (no impact) to 100 (threat to survival), 35% said the impact would be severe, 23% predicted moderate impact, and 42% stated minimal impact. IPC also states
“Survey respondents also expressed concern that the tariff increases would increase the cost of base materials to produce high-reliability electronics. Higher prices would depress demand among customers and make U.S. Manufacturers less competitive in the global marketplace. Another respondent suggested the tariffs will create cost confusion in the marketplace and impose new administrative burdens as inventoried goods are mixed with newly imported goods.”
These tariffs have not been officially decided upon by the US government and they will not go into effect until after August 30, 2018. Currently there is a public comment period where impacted industries can voice their concerns. If the tariffs are enacted as is, the electronics industry can expect an increase in cost as the majority of the PCBs used in our very competitive industry are made in China.
Tariffs Could Raise Costs for PCBs
What can be done?
If you feel like your industry or your company will be impacted (either negatively or positively), you can make your voice heard with the federal government and the office of the United States Trade Representative. To file your comment, simply go to regulations.gov and click on “comment now”. You may also contact your senator or representative directly (though electronic submissions at regulations.gov are strongly preferred). The deadline for public comment is August 17th.
It is not our job to determine if tariffs or public policy is good or bad, however, it is our job to work hard to make sure that we keep our customers' costs down as much as possible to keep them competitive in their marketplaces. We appreciate your business, we will continue to communicate with you if and when anything changes that will have an impact on your supply chain.