Understanding the Impacts of US Tariffs on Component Costs

In March 2018, the US government began announcing intentions to apply Tariffs on goods imported into the United States. These Tariffs were to be applied to countries perceived of unfair trade practices. This article provides insight into the additional costs of electronic and PCB related components exported from China for products produced or assembled in the US.

Initially the Tariffs impacted Steel and Aluminum imports from China, Mexico and Canada, but expanded rapidly to include three rounds of new Tariffs affecting many products identified by their HTS or Harmonized Tariff Schedule code. One could argue that the Trump administration primarily targeted China based on a huge and increasing US trade deficit and "unfair transfers of American technology and intellectual property to China". In fact, in 2018 the US trade deficit with China stood at $419 billion USDs.

Tariffs were applied to Chinese imports in three rounds, Initially, a tariff involving US$34 billion in imports imposed a 25% duty on goods which went into force on July 6, 2018. The second round added a 25% duty on another US$16 billion in imports, which went into force on Aug 30, 2018. The third round add a 10% duty on an additional US$200 billion in imports. This duty was changed to 25% on May 10, 2019. More recently, there has been some discussion on adding a fourth round of Tariffs and the remaining Chinese imports totaling US$300 billion. Listing of the actual HTS codes for each round of Chinese Tariffs are available on the US Trade Representative website ustr.gov and identified by the first 8 integers of the HTS code. The lists of Tariff items:

• List 1
• List 2
• List 3

Many of the HTS codes impacted by these tariffs include electronic and PCB level components. Understanding component part numbers impacted by tariffs requires knowledge of the HTS code for the component and the Country of Origin or final assembly location. Tariffs impact over 800 products and over 6000 unique HTS codes from 18 major PCB component part types. Impacted HTS codes carry a 25% duty if final assembly was done in China. Tariff duties are paid by the importer and past down the supply chain to the end customer.