An Update on Tariffs

There is a lot of confusing talk about tariffs these days. It seems that everyday something new is tweeted, leaked, released or reported and most of it is very concerning. This spring, the Trump administration's position has swung from one side of the argument to the other. Often times the swings have occurred on back-to-back days and have come from President Trump himself or one of his senior aides.

In addition to all of the rhetoric, the issue of tariffs is further complicated by the numerous industry segments affected.

Indirectly, tariffs on steel and aluminum could impact the lighting industry or the country as a whole in terms of product availability/ supply needs, not to mention, potential retaliatory actions from affected countries. In the final days of May, the Trump administration placed tariffs on steel and aluminum imported from Canada, Mexico and the European Union. All three of those trading partners had been seeking exemptions to potential tariffs, but final agreements were not reached. Mexico and the EU have already announced plans to retaliate against American goods. 

In the past, President Trump used tariffs as a negotiating tactic, having the habit of negotiating by making tough opening demands only to quickly give ground. The White House clearly did not take this approach towards aluminum and steel.

More specific to our industry is the alarming language included in the 48 page list of products imported from China, that have been identified by the Trump Administration with regards to the 301 trade case. If President Trump were to finalize the list of identified products associated with the 301 trade case, a 25% tariff would be placed on LED parts and component pieces. Allowing the tariffs to go into effect would have a devastating impact on the domestic manufacture of LEDs and LED products. There was a comment period which ALA participated in by submitting comments that outlined one main concern, the inclusion of LED componentry. ALA requested for LED components to be removed from the list.

A common question in the lighting industry is, what about finished/ integrated LED products? Those products are not listed and the proposed 25% tariff is not considered to be a factor for these items. However, as this endeavor moves forward, there is the potential to have products not just removed, but also added to the list before it is made final. If someone or some group appealed to the proper authority, LED finished products could be added to the final list.

This ordeal has been very fluid which has been a real challenge for all parties caught up in the 301 trade case. Not having a clearly defined process/ timeline paves the way for a scary reality to play out: having a product listed, could cripple an existing or emerging industry without any form of recourse.

ALA remains engaged on this issue as it continues to develop.

The ALA comments can be reviewed here, and the joint comments can be seen here and here.