The United States has just announced tariffs of 10 percent on approximately US$200 billion worth of Chinese imports, among which are security-related items that US security players had asked the government not to include in the final tariff list.
In the latest round of the ongoing trade war between China and the United States, the US Trade Representative’s Office (USTR) announced on September 17 that the U.S. would impose tariffs of 10 percent on $200 billion worth of Chinese goods. The tariffs would take effect on September 24, and the 10 percent rate would increase to 25 percent starting January 1, 2019.
Prior to the announcement of the final list, the USTR had sought the opinions of leaders of industries that might be affected by the tariffs. To this, Don Erickson, CEO of the US Security Industry Association (SIA), published comments on September 6 asking the USTR to remove 29 security-related items from the final list. His effort was to no avail as all of the items that he requested be removed made the list. These include the following, as listed by their subheadings (nesoi means “not elsewhere specified or included”):
Hurting US security players
In his recommendations, Erickson mentioned that while the sanctions were meant to curb China's allegedly unfair trade practices in the market, the measures would ultimately hurt US companies and consumers. “North America is the largest market worldwide for security products. The U.S. is the largest contributor, where the security industry employs well over 1 million Americans,” he said. “Our members continue to be concerned that employing these measures will have significant negative consequences for the security industry and the U.S. workers it employs both directly and indirectly. Rather than change the unfair Chinese business practices they are intended to rectify, escalating tariffs will simply raise costs for businesses and consumers in the U.S.”
According to him, security players are dependent on a global value chain, which he said the newly-imposed sanctions did not adequately consider. “Not only will the additional tariffs hurt U.S. security manufacturers by increasing the cost of key components as they compete globally, but additional applicability to finished goods will directly increase the cost of several critically important security products that are widely utilized throughout the US security industry – such as burglar and fire alarm systems and video surveillance cameras.”
The impact on systems integrators would be significant as well, Erickson said. “They may have little ability to absorb the cost of increased tariffs, alter supplier arrangements, or to pass additional costs on to consumers. The vast majority of these companies are small businesses that compete fiercely for business within their region,” he said. “Together they provide thousands of skilled workers with good paying jobs, selling and installing equipment that helps protect the lives, homes and businesses of those in their community. Imposing significant cost increases of up to 25 percent on products they commonly use could force many of these small companies out of business, costing middle class jobs for security and fire alarm systems installers in the U.S., who earn an average of $47,100 annually.”
He added SIA and its member companies “favor open markets, competitiveness and innovation, as well as effective protection of Intellectual Property Rights (IPR), which are crucial to the business models of many of our members, both in the United States, China, and elsewhere. The Administration should focus instead on working with industry and international trade partners to develop a joint approach to press China to make changes on issues of mutual concern.”