The Office of the United States Trade Representative (USTR) officially released the finalized list of products covered by the second round of tariffs on China. This list, covering around $16.0 billion worth of products, includes 279 specific product lines. Set to begin in enforcement on August 23, this round of tariffs continues to address import injury concerns from a Section 301 investigation by the commerce department. With this list, the target was clearly technology focused. Computer and electronic parts account for the largest portion of industries affected by this round of tariffs, particularly industries with high import penetration.
Products listed in tariff schedules are typically specific, technical items; however, it is important to realize that these items are produced by much broader industries. The industries receiving protection in the form of government assistance are primarily manufacturers. IBISWorld has identified 43 distinct industries, which produce products that will gain trade assistance from this round of tariffs.
When measured by the value of industry imports, manufacturers in the Machinery Manufacturing and Computer and Electronic Product Manufacturing sub-sectors have the most to gain from these tariffs. A closer look at the Computer and Electronic Product Manufacturing sub-sector reveals the extent of where trade protections could affect industry activity. Communication Equipment Manufacturing was anticipated to face imports exceeding $106.1 billion in 2018, with imports accounting for 93.2% of domestic demand. Of this import load, China is expected to account for 62.6%. While the products listed do not cover all of this industry, a 25.0% import duty on even a fraction of these goods would be significant.
The ongoing tariff situation is a matter worthy of constant attention. An understanding of where trends are moving and being able to step back and analyze the full industry helps provide context. For the most part, the industries covered by these tariffs are large manufacturers. However, as cost pressures reverberate throughout the supply chain, the effects become more widespread. Even within the Computer and Electronic Products sub-sector, the effects on costs can become muddied. Navigational instrument manufacturers purchase from semiconductor manufacturers and the same relationship exists for communication equipment makers. As the connections and effects of tariffs get more complicated, having a full sense of an industry’s makeup becomes even more vital. With this context, more intelligent decisions can be made, even as the day-to-day information continues to be volatile.
Industry Impact: Communication Equipment Manufacturing; Circuit Board & Electronic Component Manufacturing; Semiconductor & Circuit Manufacturing; Navigational Instrument Manufacturing; Machinery Manufacturing; Computer & Electronic Product Manufacturing; Petroleum & Coal Products Manufacturing; Chemical Manufacturing; Transportation Equipment Manufacturing; Electrical Equipment, Appliance & Component Manufacturing; Miscellaneous Manufacturing; Plastics & Rubber Products Manufacturing; Primary Metal Manufacturing; Fabricated Metal Product Manufacturing; Nonmetallic Mineral Product Manufacturing; Paper Manufacturing